Most Canadian employers have yet to begin preparing for changes to the Canada Pension Plan (CPP).
A survey of 250 Canadian organizations conducted by Aon Hewitt reveals that just 13% have started to plan for the CPP reforms that will come into effect in 2019, and only 35% say they will begin planning by October 2017. Aon Hewitt notes that 95% of the companies that participated in the study offer some form of pension plan, be it a defined benefit (DB), defined contribution (DC) or hybrid DB/DC plan.
65% are worried about the increased cost
“The CPP enhancement is big enough to provide meaningful benefits, yet small enough that it won’t cause the elimination of workplace pension plans,” says Allan Shapira, Managing Director and Senior Partner, Aon Hewitt. “The challenge for employers now is how best to integrate a bigger CPP into their overall compensation and rewards strategies.”
About two thirds (65%) of the respondents said they were worried about the increased cost of the CPP enhancements, although there was no consensus on how best to deal with the issue; 27% said they plan to absorb any cost increases, 8% will make changes to current retirement plans, and 6% plan to change other employee compensation. The remaining admitted they simply did not know how they would handle the problem.