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 a report sponsored by The Great-West Life Assurance Company.

The 2009 Capital Accumulation Plan (CAP) Benchmark Report shows that employers contributed 4.6% of salaries to their defined contribution (DC) pension plans in 2009, up from 4.5% the prior year; and contributed 4.3% of salaries to their group RRSPs in 2009, up from 3.9% a year earlier.

The report also shows that more employees are maximizing their DC pension plan contributions: 80% of responding employers with DC pension plans said their plan participants maximized their contributions so they can get full employer matching, up from 75% in 2008.

For group RRSPs, 82% of plan participants were reported to be maximizing their contributions, up from 75% a year earlier. Among firms with fewer than 100 employees, 91% 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,” says 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.”

Other findings in the report:

Overall, employer participation in group RRSPs rose in 2009: 46% of respondents said the company contributed to their group RRSP, up from 32% in 2008.

Smaller companies were more likely to put money into their group RRSP. Among employers with fewer than 100 employees, 70% make contributions, while 67% of employers with 100 to 199 employees make contributions.

Respondents reported that employees contributed an average of 4.5% of salary to their DC pension plan in 2009, up from 4.2% in 2008.

The 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.

IE