I’ve been saving for retirement in an RRSP since I began working, but my past employers haven’t done a great job of communicating the benefits of saving in their retirement savings plans. Companies should constantly remind members about the retirement savings plan(s) they offer. Send emails, hold monthly sessions—do whatever it takes to let employees know about your DB or DC pension plans.
If your communications indicate management fees for mutual funds are lower than what retail investors pay, tell your employees how much they’ll pay as a member of your group plan compared to what they’ll pay as a retail investor. Most employees also likely don’t know how a lower management expense ratio (say, one percentage point lower than a retail mutual fund) will impact their savings over the course of five, 10 or 20 years. Use a chart to illustrate it.
If you offer a group RRSP and members are told they’ll receive immediate tax savings, how will they get those savings? Create an interactive calculator to show them the amount they’ll receive for each pay period.
Also, show employees the benefits of compounding through saving on a biweekly or monthly basis instead of making an annual contribution.
If there’s an employee match, emphasize that not joining is giving up free money. Use a graph to show the benefits and make them easier to understand.
Workplace pension plans play a key role as one of the three pillars of Canada’s retirement income system. But not all workers understand or see their value. Your employees are your greatest asset, so show them the benefits of building up their assets.
Agree or disagree? Let me know. craig.sebastiano@rci.rogers.com