Is a mandatory savings plan at work the solution?
I read an article in the June edition of the Benefit and Pensions Monitor called “Make It Easier For Employers”. Here’s an interesting excerpt:
Government needs to make it easier for employers,includingsmall- and medium-sized enterprises, to step up to bat and do more for their employees, says Joseph Iannicelli, president and CEO of The Standard Life Assurance Company of Canada.
Speaking at the Canadian Club of Toronto, he said Canadians should be given greater access to workplace retirement plans. “If every workplace with 20 employees or more was required to provide a group plan, it would ensure that 80 per cent of private sector workers have access to a group plan, compared to only about 50 per cent currently.” This could be done by allowing any employer, including self-employed workers, to participate in a single Defined Contribution plan for multiple, unrelated employers. The financial services industry also must continue to be a pivotal player in interacting with and educating the consumer, he said. It can offer fewer products with better explanations of which financial objectives are met, the degree of risk associated with the product, and a realistic analysis of what taking that risk means to the consumer.
My two cents
Obviously, I am an advocate of more benefit plans and education in the workplace but how is a mandatory group defined contribution plan any different than Canada Pension Plan? OK, CPP is more like a Defined Benefit Plan but is this really the solution? Why is it that we have to force Canadians to save in a public type plan? Why should it be the employer that has to implement this and will the employer have to bear the costs? Employers already have to share in the cost of CPP.
Financial education in the workplace.
I think financial education is the foundation for good financial decisions and the best place for financial education is in the workplace. Many people think we need more financial education in school and although I don’t entirely disagree, I do think our priorities are not financially related then.
We currently put financial education programs in the workplace and in my experience, the best results come with the employees over the age of 40. In all these workshops, the most common comment I get is “I wish I would have learned this information sooner. These workshops should be mandatory for people in their 20’s and 30’s.” It would be tough for anyone to disagree with this in principle but the problem is when to course is offered to the 20 and 30 somethings, it is tough to fill the room? Why are young people not interested in financial education? Maybe it’s that they have different priorities. Maybe it’s a generational thing. Maybe it’s that they have no money.
I don’t really know the reason but I do think school children care even less about this stuff. I’m all for more financial education in the school system but it has to be pretty basic; It has to be interesting and it has to be engaging.
I think Financial Education is better in the workplace.