Here are some of the highlights of the discussion.
What is your greatest challenge, as a small employer, from a pension/benefits perspective?
We have had problems meeting our legal requirements when terminating employees. A provision of the Employment Standards Act [ESA] includes continuation of all benefits for prescribed periods. Unfortunately, our carrier has indicated that while the legal requirement is there for our organization to provide the benefits, it’s not the benefit carrier’s issue. They refused to cover the long-term disability (LTD) of one of our employees who was entitled to 13 weeks under ESA, until we had our brokers really push back multiple times. Our understanding is that if the person had become ill during this period of time, we could have been legally liable for their health coverage costs until age 65. They were only in their 40s at the time, so the costs would be astronomical.
—Geoff Bagg, The Bagg Group
Our greatest challenges are:
• Keeping costs low for employees while maintaining quality coverage [that is] applicable and valuable to employees from multiple generations.
• Helping employees to view benefits as a large part of the overall compensation package, in terms of actual value/cost.
• Maintaining a low loss ratio—individual usage really affects our overall costs, especially with a small employee base.
—Jessica Cerato, Hostelling International, Canada
Our challenges are:
• Expenses/cost of benefits, as the economies of scale for small businesses are not the same.
• Gaining access to product and underwriters can be challenging.
• Employer and employee costs, as many larger companies use a 100% employer-paid model—from a recruitment perspective, this can present challenges.
• Administration of benefits for smaller organizations that may not have a payroll/HR position.
—Kim Macey, Benefits by Design
Keeping the cost of benefits under control is our major problem. Since the cost is based on usage and sector experience, this would be a problem no matter what the size of the organization. Health [and] dental are our major problem areas. This could be addressed with reasonable health costs and expectations.
—Murray Kirkpatrick, Queens Association for Assisted Living
I am the only person responsible for all aspects of HR and payroll. It can be a huge undertaking to ensure the plan is administered in the right way and that people are informed and responsible for their [pension] funds. Our broker and provider have been diligent in offering outstanding assistance to ensure that the plan is administered appropriately.
—Arlene Rampersad, Mitutoyo Canada Inc.
We are finding it difficult to provide some flexible benefits in our plan while still keeping the costs affordable. —Susan Manning, Kingston Ross Pasnak
We started about eight years ago with virtually no benefits for our employees. Our biggest problems were getting a reasonable package that offered our employees protection that was competitive with other industries in this area and doing so with cost-effectiveness. With no claims history, it was a very difficult undertaking, but today, we have a full range of benefits and have found that [an] administrative services only [model] has been a great help in minimizing costs.
Our pension benefit is a matching contribution plan to the employees’ RRSPs. The plan was fairly easy to set up, but there is a constant need to educate our employees on their investment decisions. Our brokers have been a godsend in this regard.
—Dave Dee, Visioneering
How difficult is it to compete with large employers offering generous pensions and benefits?
As long as the base wage is competitive, we have had little trouble attracting new employees. We have had very low turnover. We like to think this is because we try to operate as a “family” and our employees find their workplace interesting and challenging. We do not have to offer exceptional benefit packages, but rather, a competitive total package.
—Dave Dee, Visioneering
It is becoming increasingly difficult to retain employees who are often courted away by larger employers [that] can offer greater compensation packages. Our industry is extremely specialized, so skilled workers can be hard to find in the shrinking labour market, and being able to compete with total compensation packages can be a stumbling block.
—Arlene Rampersad, Mitutoyo Canada Inc.
We do not experience this at this time, as we are in a small rural community and one of the larger employers in the area. Our benefits package is better than most of the other small businesses in the community.
—Murray Kirkpatrick, Queens Association for Assisted Living
How well do the insurance, consulting and pension industries meet your needs as a small plan sponsor? What could they be doing better? What services/products could they be providing?
It is difficult to create an argument that says the industry is not providing the right products. However, the biggest problem is being able to differentiate between the products and determining cost/benefit analysis. I don’t know how many times we have made decisions on the basis that we have a solution that “fits” our criteria, but have been left wondering whether or not there was a better solution. The consulting group plays an important part in helping us determine the best cost-effective solution. It is important to us to see that the consultants and company representatives are knowledgeable and have opinions, and that these opinions are sometimes at variance with [one another]. Therefore, continuing education is the key to the improvement of services.
—Dave Dee, Visioneering
We have found that communication with our present insurer leaves a bit to be desired. When the companies are not local, we experience less of a responsive interaction. As the companies try to increase profits and downsize [their] workforce, their attention to the small employer seems to suffer. [They need more] communication and attention to the small user.
—Murray Kirkpatrick, Queens Association for Assisted Living
[The industry] could develop and market easy-to-administer pension plans more geared toward small business with low overheads. The consultants need to focus on giving quality information so [that] good decisions can be made. —Geoff Bagg, The Bagg Group
We are very lucky to have an exceptional consultant who does a great job of communicating both to us and our insurer, as well as provide information sometimes even before we ask for it.
[But] sometimes the options that are offered are better suited for a larger organization. Offering online services is huge for us, as we have employees in three provinces. This seems the easiest way to get/provide support. [They could] provide more comparisons with employers of our size/industry instead of comparing us with their other clients. This would require more information sharing among both the insurance companies and consultants, which I’m not sure is done readily.
—Jessica Cerato, Hostelling International, Canada
What do your employees or prospective employees expect you to provide them with, in terms of retirement savings and health benefits?
Retirement benefits seem to be less on people’s radar until about [age] 35 to 40, at which point a light seems to go on. Once people find out that a defined benefit (DB) plan is not on the table, then they look at the choice between a defined contribution (DC) plan and a group registered retirement savings plans (group RRSP). People seem to like the flexibility of a group RRSP, particularly when they find out that DC plan funds will probably be locked up in a life income fund. Employer contributions, with additional matching for employee contributions, seem to be popular. People like to reduce co-pay components of health and dental coverage. short-term disability and LTD coverage are popular. Employee assistance programs (EAPs) don’t tend to come up. Life and accidental death & dismemberment coverage seem less important to younger employees. Once people learn about health care spending accounts—they like the flexibility—especially if it can offset co-pay costs for them.
—Tom Arnould, Envisioning + Storytelling, Inc.
Generally, applicants are looking at whether or not we provide pension and benefits at all, since there seems to be an increasing amount of contract work out there as opposed to full-time permanent employment. A lot of applicants tend not to be altogether informed on what pension plans can do for them and what they are being offered. They seem to be satisfied to know that the company is willing to contribute toward their retirement. Applicants are always happier if 100% coverage is offered, as opposed to, [for example,] 80% coverage on extended health. An EAP is not offered at the present time, but requests are frequently made.
—Arlene Rampersad, Mitutoyo Canada Inc.
Truthfully, I think they’d like full coverage and no premium. As that isn’t an option, I think they’d like a pension that would guarantee an income at retirement. As an employer [a group RRSP] is an option but I don’t think it meets employees’ needs at retirement, as they can access the funds over their term of employment and therefore compromise their position in the long run. DC plans are similar, though the benefit here is that the funds are locked in and protected to provide a pension at retirement. It is limited by the choice of investment and that can be an issue as, early on, individuals aren’t interested enough to educate themselves on the choices they have to build this retirement.
DB plans offer a basis of a monthly income and, together with one’s own savings plan, perhaps are the most beneficial to the retirement status of the average individual. Therefore, in this present environment I’d suggest this last one is what people would see as the way to go. They want great [health] benefits at low prices. Health issues are a concern [for] most people. They expect the employer to supply a plan that protects them. Our employees want a complete range of benefits that don’t compromise their financial health.
—Murray Kirkpatrick, Queens Association for Assisted Living
As we employ many young workers, many have no prior experience with which to compare. That said, the young worker today is sometimes more benefit savvy and in tune with progressive treatments/offerings, so having flexible practitioner coverage (i.e., acupuncture, naturopathy) is important to them and sometimes even more so than the LTD, etc. A lot of our employees are also interested in ease of use, [for example], drug cards and direct billing to providers. Our employees both expect and enjoy the employer-matching group RRSP. This allows the younger worker to start saving, but also gives them the opportunity to take it with them when they change careers.
—Jessica Cerato, Hostelling International, Canada
About half of our workforce could be described as entry-level positions. When recruiting for these positions, people are often happy to find employment and are not particularly worried about benefits.
For the more skilled and established employees, medical, dental, drug, [vision care], LTD, life insurance and a reasonable pension plan are important. It is important to keep the plans up to date with the fee schedules. When we do this, there is little complaint from the workforce.
Our plans are not “Cadillac plans,” but rather attempt to provide good basic coverage. Specifically concerning pensions, the younger the employee, the less concerned [he or she is] with a pension benefit. We have also observed that the more senior the position, the less concerned [candidates are] as they invariably have set [up] their own RRSP programs. However, it is still important to provide a benefit that is competitive in the marketplace and have some flexibility on when you provide that benefit.
—Dave Dee, controller, Visioneering
