Canadian employers are increasing contributions to their group retirement plans and more employees are maximizing their contributions to get full employer matching contributions, according to the 2009 Capital Accumulation Plan Benchmark Report.
Sponsored by The Great-West Life Assurance Company and based on a survey by Benefits Canada/Canadian Institutional Investment Network, the fifth annual report shows that employers contributed 4.6 per cent of salaries to their defined contribution pension plans in 2009, up from 4.5 per cent the prior year; and contributed 4.3 per cent of salaries to their group RRSPs in 2009, up from 3.9 per cent a year earlier.
The benchmark report also shows that more employees are maximizing their DC pension plan contributions: 80 per cent of responding employers with DC pension plans said their plan participants maximized their contributions so they can get full employer matching, up from 75 per cent in 2008.
For group RRSPs, 82 per cent of plan participants were reported to be maximizing their contributions, up from 75 per cent a year earlier.
Among firms with fewer than 100 employees, 91 per cent reported that their employees maximize their contribution in order to optimize matching contributions from their employer.
"This research clearly illustrates how robust employer-sponsored retirement plans are in Canada," said Bill Kyle, Senior Vice-President, Group Retirement Services at Great-West Life, which administers one in three Canadian defined contribution retirement plans.
"The report shows that Canadian employers make significant commitments to group retirement plans and that employees value this benefit by taking maximum advantage of employer matching programs."
"The annual survey is an essential tool for monitoring the health of Canadian Capital Accumulation Plans (DC Pension, Group RRSPs, and Deferred Profit Sharing Plans), which play a growing role in Canada’s retirement landscape," Kyle added. "In fact, over 50 per cent of private sector workers now enjoy retirement plans at work, with over 70 per cent of this coverage being provided by CAPs."
Other findings in the report:
- Overall, employer participation in group RRSPs rose in 2009: 46 per cent of respondents said the company contributed to their group RRSP, up from 32 per cent in 2008.
- Smaller companies were more likely to put money into their group RRSP. Among employers with fewer than 100 employees, 70 per cent make contributions, while 67 per cent of employers with 100 to 199 employees make contributions.
- Respondents reported that employees contributed an average of 4.5 per cent of salary to their DC pension plan in 2009, up from 4.2 per cent in 2008.
The 2009 CAP Benchmark Report is based on data collected in 2009 from 264 organizations. The average DC pension plan surveyed had assets of $93 million and the group RRSPs surveyed had assets of $22 million on average.