Expand Team With Building Employee Loyalty.
If you are a small business owner looking to expand your team, you must know how important it is to recruit, reward and retain your top talent. The loss of a key employee can be very expensive to an organization, so give some thought to find ways to motivate key employees and keep them focused on the company’s priorities. This not only affects business continuity, but also protects the knowledge pool that your organization has accumulated within. This will be very helpful in making effective succession planning decisions when the time comes.
Helping Employee Retirement
Planning a better retirement is the best way to provide security to your employees. Funds accumulating within a retirement plan for individual members are generally locked-in by provincial or federal legislation. There are two kinds of retirement pension plans:
- Defined Contribution – Employees in DC pension plans choose the investments within their individual plans and the retirement benefit is based on the value of the investments in the plan when the employee retires.
- Defined Benefit – Employees in DB plans enjoy a specific benefit at retirement, calculated using a formula based on earnings and years of service. DB plans generally specify an age, usually 65, at which employees are expected to start receiving retirement income.
DC is generally a less costly option than a DB plan for an employer and is easier to administer. Because you are making the investment decisions and guaranteeing a fixed benefit to the employee at retirement, as an employer, you face a potentially greater obligation with a DB plan than a DC plan. If there are insufficient funds in the plan, you may also be required to top up the plan by making a greater current cash flow commitment to the DB plan than expected. However, if there is a surplus in the plan, you may have reduced payments.
Here are a few saving plans that you can offer to your employees to make them feel secure in their job at you company and remain loyal.
Group Retirement Savings Plan
They could be an option even for a small business owner. You can use this to encourage your employees to save for retirement throughout their careers. These plans operate like regular monthly savings, possibly with additional restrictions, and can be more cost-effective and easier to administer than pension plans.
Employer-Sponsored Savings Plan
Employer-sponsored savings plans are one of the most important aspects of retirement planning and can help you ensure that your employees enjoy a financially secure retirement. Before setting up a retirement plan, discuss the options with your professional legal, tax and/or financial advisors. Every employee is increasingly conscious of the necessity to provide for their retirement today. Considering this, here are some of the more common types of retirement plans offered by employers.
Registered Pension Plan
This is employer-sponsored pension plan. In general, employer and employee contributions are tax-deductible and the income earned within the plan grows tax-deferred. Provide enhanced benefits to attract and retain top talent.
Supplemental Executive Retirement Plans
A SERP helps to bridge the gap between the maximum pension available under the company’s RPP and what a higher-income employee would otherwise have received. It can also be a way to help you retain your valuable employees and encourage their long-term loyalty, hence covering up for the limits on registered plan contributions and benefits that can otherwise leave your higher-income employees with retirement benefits that are inadequate to maintain their standard of living.
Retirement Compensation Agreement
This is one of the most common forms of a SERP. It is a nonregistered pension arrangement that can help you provide supplemental pension benefits for key employees and can be utilized whether your company has an RPP or not.
A notable benefit of RCAs is that they have no contribution limits, as long as the contributions are reasonable, and no investment restrictions. Employees may also be able to benefit from certain investment strategies involving life insurance. This can provide supplemental tax-exempt investment income and may yield better results than alternative investments.
To know more about easy ways to enhance your business and increase employee loyalty, enrol for our free one hour session especially designed to help small business owners decide what’s best for their business.
