Match Factor

SNC-Lavalin, a Montreal-based global engineering and construction company, offers its employees two savings options. The first is a group registered retirement savings plan (RRSP) combined with a deferred profit sharing plan (DPSP), which the company has dubbed The Harvest Retirement Savings Program. Employees contribute to the RRSP, and the company match goes into the DPSP. Patrick Desrosiers, senior manager, retirement and savings plans, corporate HR, with SNC-Lavalin, estimates that 80% of the 10,000 Canada-based employees participate in this program. And, 90% of participants contribute 5% of base pay—the plan maximum. The second option is an employee share ownership plan (ESOP), which also has a matching component.

What’s the secret to the Harvest program’s success? The communication efforts around the program are a contributing factor to its high enrollment rate, but the company’s matching component is likely the main success factor. SNC-Lavalin matches employee contributions at 60% and puts in an additional variable contribution that is based on company performance.

“If someone is putting in 5%, they will automatically get 3% from the company,” explains Claire Leboeuf, vice-president, compensation and benefits, corporate HR, with SNC-Lavalin. “In addition to that, we make our variable contribution. It can be interesting when you add it together. It’s quite an attractive plan.”

Matching Game
Over the last five years, the average rate that the company has paid (the combined base and variable contributions) is 7.6%. Thanks to the company’s strong financial results last year, employees will be eligible to receive a 9% employer match in 2009. “We have never paid out at 9% before,” Leboeuf says. And, because of the significant match that employees can receive, getting them to join the program isn’t a challenge. “Employees get more than 100% of what they are putting in,” she says. “It’s not hard at all. It’s kind of a no-brainer.”

The employees in the Harvest program also seem to understand the value of investing wisely. “The default fund isn’t a problem for us,” continues Leboeuf. “Participation in that fund is miniscule. It’s less than 1%.” To better the retirement savings of the few who are in the default fund, last year, SNC-Lavalin changed the default option to a balanced fund. “Even if they remain in the default option, it’s still a decent accumulation fund for the future,” explains Desrosiers.

Short-term Pain, Long-term Gain
Plan members everywhere are feeling the hit to their
balances, and the Harvest program, too, has suffered. But it seems that SNC-Lavalin employees aren’t overly anxious about the current conditions. “As with all capital accumulation plans, we have been affected by the returns—but participation hasn’t really decreased,” says Desrosiers. “We remind employees to keep focused on the long term.” He adds that most members haven’t changed their investment mix or their contribution rates, despite the market volatility. This could be due, in part, to the 9% match that most employees will be receiving this year.

Leboeuf adds, “I think employees see that their investments outside [of] this plan aren’t doing any better, so they understand it’s not because of our plan; it’s the market.”

Unlike a typical group RRSP and DPSP, the Harvest program has a steering committee that operates similar to the Quebec-mandated committees that organizations with pension plans must have. The group meets quarterly to review investment results and participation rates, as well as discuss employee feedback and communication needs. “We communicate annually with people who are eligible to join but didn’t, to make sure it was a conscious decision and not a matter of forgetting to fill out a form when they were hired,” Leboeuf says.

Although the Harvest program is by far the most popular with SNC-Lavalin employees, interest in the ESOP is growing. A few years ago, the participation rate in the ESOP was 25%. Now, Desrosiers says, participation is almost 45%. “We started doing a better job of communicating the plan,” explains Leboeuf. “We found that local HR staff didn’t understand the plan that well; therefore, it wasn’t being promoted as well as it could have been.”

In the ESOP, employees can contribute up to 10% of pay, and the company provides a 35% match paid out over two years. “This provides a retention element,” says Desrosiers, adding, “employees typically participate in the Harvest program first but when you also consider the ESOP, it is an interesting part of the total package.”

Both Desrosiers and Leboeuf feel that the retirement and savings programs at SNC-Lavalin give the company a competitive edge. And, with high employer contribution rates and employee participation, employees may be able to get the upper hand on saving for retirement, even when combatting poor market conditions.

April Scott-Clarke is assistant editor of Benefits Canada.
april.scottclarke@rci.rogers.com

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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the May 2009 edition of BENEFITS CANADA magazine.