The Canadian Life and Health Insurance Association (CLHIA) is recommending changes to dramatically boost participation in workplace retirement savings plans.

CLHIA’s recommendations include expanding access to multi-employer pensions plans and protecting savings in group RRSPs through locking-in employer contributions.

New research by the Environics Research Group finds that 89% of Canadians want workplace-based retirement savings programs made available to all workers. Fifty-six per cent of those not already in such plans are interested in joining one, with younger workers particularly keen (69% of 18-29 years olds; 68% of 30-44 year olds.).

“We need to expand access and promote more use of workplace-based programs. That includes cutting the red tape and expense that hold back small business from offering them,” said Frank Swedlove, president, CLHIA.

Currently only about 50% of Canadian private sector workers participate in a workplace-based savings program such as an employer-sponsored pension or group RRSPs.

CLHIA’s recommendations are included in a new policy paper, Saving More for the Future: An Achievable Goal for Canadians, released Wednesday.

Key recommendations include:

• Reduce employer costs by amending pension legislation to permit any employer (including the self- employed) to participate in a (DC-MEPP);

• Increase the number of workers with access to retirement savings plans by requiring businesses with 20 or more employees to offer their own pension plan either via a DC-MEPP or a group RRSP;

• Lock-in employer contributions to group RRSPs;

• Remove saving a barriers for the self-employed and professionals by broadening the definition of “earned income” for RRSP purposes to include items such as royalties, active business income, rental
income.

“This country does not need another big government savings plan,” said Swedlove. “What we need is to build on the solid foundation of the retirement savings system and untap the potential for Canadians to save more through workplace plans, particularly in small businesses — Canada’s fastest growing area of employment.”

CLHIA’s recommendations come as the federal and provincial governments begin consultations on Canada’s retirement savings system and with a finance ministers’ meeting planned for May.

CLHIA members manage more than 45,000 employer pension, group RRSP, and other savings programs serving more than 4.9 million Canadians with more than $105 billion in assets.

IE