Half of Canadian Organizations Offer a Defined Contribution Pension Plan

October 29, 2007

Contact:
Brenda Rood
(262) 373-7756
brendar@ifebp.org

Brookfield, Wis. — A new survey by the International Foundation of Employee Benefit Plans, Employee Benefits Survey: U.S. and Canada 2007, looks at the prevalence of employee benefits offered in Canada and the United States.

The survey found that 51.4% of Canadian respondents offer a defined contribution (DC) pension plan, also known as a capital accumulation plan (CAP). The most popular DC plans offered are the registered DC or money purchase plan, offered by 70.3% of respondents. The second most common is the group registered retirement savings plan (RRSP), offered by 54.1%.

“More than half of all Canadian respondents offer at least one capital accumulation plan. This is quite common in corporations and professional service firms, with more than 60% of employers in these sectors offering them,” said Julie Stich, Senior Information/Research Specialist at the International Foundation. “While CAPs are offered by public employers and multiemployer funds, they’re more likely to offer some type of defined benefit pension (DB) plan.”

Overall, more than 78% of organizations provide a matching contribution to their DC pension plan, however no multiemployer plans match contributions. The most common maximum match range among respondents is 1% to 9%.

Other key findings from the Canadian survey results include:

• Of the organizations surveyed, 51.2% of employers estimate they spend 11% to 30% of total payroll on employee benefits. The most common range specified was 21% to 25% of payroll (23.6%), followed by 26% to 30% of payroll (15.4%) and 11% to 20% (12.2%).
  
• Nearly all respondents, 97.9%, offer prescription drug coverage. The most prevalent cost-management technique is a pay-direct card plan offered by 72.3% of employers. Other common techniques include mandating or promoting the use of prescription drugs and using a drug formulary.
  
• The survey found that 94.4% of respondents offer extended health care plans to their employees and participants. More than half fully or partially self-fund these plans.
  
• Sabbaticals are more common among public employers than the other sectors. Unpaid sabbatical leave is offered by 38.9% of public employers, and 11.1% offer paid sabbatical leave. Of all Canadian respondents, only 29.3% offer unpaid leave and 4.9% offer paid leave.
  
• Just under half, 47.1%, of respondents use a flexible benefit arrangement to offer health benefits, with the corporate sector being the most likely to use some type of flexible benefit arrangement. The survey showed that the most common flexible benefit arrangement provided is a health care spending account (HCSA), offered by 24.4% of respondents.

“This survey is unique in that it presents side-by-side benchmarking data highlighting the similarities and differences in benefit offerings for four employment sectors,” Stich said. “We’re fortunate that we can tap our diverse membership in Canada and the U.S. to gather this data.”

The survey is especially beneficial to organizations in Canada because of the lack of resources available to help Canadian employers benchmark their plan.

“Over the years, Foundation members and staff have been frustrated by the lack of readily available benefits benchmarking data for Canada,” said Stich. “We see our survey as filling this gap.”

The in-depth survey looks at the prevalence and design features of defined benefit (DB) and DC pension plans, health care, dental and prescription drug benefits, life insurance, voluntary benefits, adoption benefits, holiday benefits, sick leave, and short- and long-term disability. The survey data covers four employment sectors: corporations, professional service firms, public employers and multiemployer benefit plans in both Canada and the United States.

More than 1,200 respondents from across both countries participated in the survey. It includes summaries, charts and comparison tables.

To purchase Employee Benefits Survey: U.S. and Canada 2007, visit www.ifebp.org/books.asp?6368 or contact the Publications Department at (888) 334-3327, option 4, or bookstore@ifebp.org. The book is 100 pages and costs $141 Can$ (I.F. Members $94 Can$) plus shipping and handling. It is available in print, CD-ROM and e-book formats.

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The International Foundation of Employee Benefit Plans is a nonprofit educational association serving the employee benefits and compensation industry. Total membership includes more than 35,000 individuals representing over 8,300 trust funds, corporations, public employee groups and professional advisory firms in the United States and Canada.