Customizing Your Plan
Sign of an industry and community leader
Employers use group health insurance benefits to attract and retain valuable employees. It’s an indication that the company wants to be perceived as an industry and community leader. Employees who have group benefits and / or pensions reciprocate with higher productivity and loyalty towards their company.
Group benefits, broadly speaking, means group insurance and either defined benefit or defined contribution pension plans. Results from a recent survey of members of the Canadian Federation of Independent Business (CFIB), with more than 40 employees, found, that only 45% of them have a plan of any kind in place.
Group insurance coverage can include:
- Life insurance
- Critical illness insurance
- Short term and long term disability insurance
- Extended health
- Vision care
- Health and wellness
Health and Welfare Trusts (HWT)
- Executives, business owners, self-employed individuals and their employees.
- HWT are sanctioned by the Canada Revenue Agency (CRA) as tax-avoidance structures.
- A business creates a HWT to pay for the trust members (and family’s) health care costs. Funds placed in the trust by a business are 100% tax-deductible in the year they are contributed - even if the money is not spent in that year.
- Benefits are non-taxable for the individuals who receive them.
Defined Benefit (DB) Pension Plans
- These plans are less popular now than in the past. This is due to sponsor liabilities that occur if there are any pension funding shortfalls as determined by actuaries and trustees administering the plan.
- Usually found in larger companies or governments. Many companies with DB plans are looking at ways to transition to a Defined Contribution (DC) Pension Plan as a way to mitigate costs and risks (see below).
- DB plans fall under the rules and regulations of the Federal Pension Benefits Standards Act (PBSA) of the Department of Justice and are administered by the province in which the plan is deemed to be domiciled. These complex rules and regulations are a barrier to entry for new DB plans as sponsors see the potential for escalating costs.
Defined Contribution (DC) Pension Plans
- Although small companies with fewer than 100 workers account for 48% of the total workforce in Canada, only 7% of these companies have a DC plan.
- No cost DC plans i.e., group RSP’s are gaining in popularity because there are no administrative set up costs. Some plans do charge minor administrative fees but these are tax deductible to the company.
- No dedicated staff resources required to set-up and maintain because computer technology has dramatically simplified group plan administration.
- Payroll deduction – automatic processing.
- We help your employees choose which investments are right for them with personalized retirement planning education and regular updates.
- Employer matching contributions not required, unlike DB plans.
- Portable - they go wherever the employees go.
For a free consultation, a second opinion, or a quote on your company’s Group Benefits, HWT, DB, or DC Pension Plans please call 1-877-830-7000 or contact us.