With the changing nature of work, the nonprofit sector has an opportunity to support all of its employees in planning their financial future.
Common Good would allow nonprofit organizations to offer a retirement income plan without getting into the retirement business.
A collective approach to retirement has the potential to enhance satisfaction among workers, improve employee retention, and strengthen the sector.
A Common Good Plan can:
- Help workers retire better without the administrative burden and legal liability and risk
- Can work with or without an employer contribution or match
- Offer employees a more competitive benefits package
- Improve productivity by reducing employee financial stress
How it would work for employers
- Offer participation in the Common Good Retirement Plan to your employees
- Set up the system (e.g., through payroll) for your employees to make contributions
- For organizations that are able to make employer contributions, contribute to employee accounts (e.g., matching contributions)
The design of Common Good
The Common Good Retirement Plan would have the following features:
- Minimal administrative burden for participating employers – your main responsibility would be to make or facilitate contributions through the plan’s easy-to-use, self-service administration
- No fiduciary duty or compliance responsibilities for the employer – the plan would take care of these
- Ability for sector employers to provide matching contributions, if they so choose
- Overseen by an independent board with a duty to put plan members’ interests first and composed of a combination of pensions and investment experts, and leaders from the nonprofit sector
- A low-cost, simple, professionally managed investment approach tailored to the age and retirement date of members
- Allows lower- and moderate-income earners to preserve Guaranteed Income Supplement benefits through a Group TFSA structure
- Allows middle- and upper-income earners to save thousands of dollars per year through a hybrid Group TFSA/RRSP structure
- Allows members to transfer in savings from other RRSP and TFSA accounts
- Provides assistance to members in the post-retirement phase, including low-cost investments, help with when to claim OAS, GIS, and CPP, and ways to turn your nest egg into a stream of income
Commit to the Common Good
In order to launch Common Good, the initiative needs confirmed support from at least 50 employers who are publicly committed to offering the plan to employees, should it proceed. Having your organization on this list would be a powerful step towards making Common Good a reality.
We know that the decision to offer or switch to a new retirement plan is not a simple one. We can provide you with the resources to guide your organization through this process. Download our toolkit to learn more about becoming a participating employer, and together we can bring retirement security to the nonprofit sector.
Frequently Asked Questions
The Plan will be overseen by a nonprofit corporation governed by a board of directors with a fiduciary duty to act in the best interest of the Plan’s members. All service providers to the Plan, including the Plan’s administrator and investment managers, will be accountable to the board, which will be responsible for continuously improving the Plan in the interests of its members.
Your primary role would be to offer participation in the Plan to your employees and members, as well as provide the appropriate education to help facilitate their enrolment.
Employers would be responsible for setting up the system (e.g., through payroll) for your employees, and remitting and reconciling contributions. Common Wealth can also easily set up workers who are freelancers and/or who wish to make additional contributions on their own to contribute directly through their own bank accounts.
Common Wealth would also work with your organization to design and deliver educational sessions to ensure the Plan is well-understood by your employees/members and share best practices with you on how you can support your employees/members to effectively save for retirement.
Your organization would also have the option of making design decisions to encourage employee/member participation and saving. An example could include making the Plan mandatory if you’re also contributing matching dollars.
Offering the Common Good plan could provide the following benefits:
- A practical, easy way to help all of your employees/members to build their economic security without the administrative and legal liability and risk associated with traditional pension plans.
- Access to a much higher-value retirement income plan for your employees/members than the marketplace currently offers. Experience from Common Wealth’s existing plan designs suggests modest earners can achieve up to 2-3 times the retirement income and higher income earners will save thousands of dollars in fees compared to current retail alternatives.
- You can help reduce employee/member financial stress and, for employers, associated productivity issues arising from financial insecurity. Recent Conference Board of Canada research shows that 28% of Canadians struggle with their finances, while related research from Towers Watson shows that financially stressed workers lose an average of 12.4 days per year of productivity due to distraction and “presenteeism.”
- Improved ability to offer a competitive total rewards package to employees. High-quality retirement income plans can help make workplaces more competitive when it comes to attracting and retaining talent. Associations can strengthen their relationship with their members, attract new members and reduce member turnover in the same way.
We understand the need for nonprofit organizations to avoid unfunded liabilities and risks, and the Plan’s structure and governance model are expressly designed to protect participating organizations against these:
- Participating employers/associations have no obligation to contribute to employee/member accounts unless they wish to do so under policies and terms they themselves will set and can changes as appropriate to their needs.
- There is no investment risk to the participating organizations, unlike a traditional pension plan. The risk of investment volatility would be borne by individual savers enrolled in the Plan. However, investment providers and products will be selected using a rigorous process and investment choices curated based on best outcomes for Plan members, balancing risk and reward over time. This would include investment choices treated as appropriate default investment options in other jurisdictions (e.g., low-cost target date funds).
- The Plan’s proposed structure exceeds existing regulatory requirements for group retirement plans, and organizational by-laws and policies will employ industry best practices and standards with respect to governance, fee/cost disclosures and member education and communication.
- The Plan’s non-profit incorporation and fiduciary role together ensure that all decisions are made on the sole basis of members’ interests. Unlike commercial retirement saving options for individuals, there is no opportunity for conflict between the provider’s commercial interests and the Plan’s members. Non-profit organizations can trust that their employees’/members’ interests will be paramount.
Organizations who participate as a Plan sponsor with a representative on the Plan’s Board of Directors will have legal obligations, but all directors will be protected by D&O insurance. While the board of directors will provide strategic oversight of the Plan, all operational risks will be delegated by the board and borne by the service providers.
Lead the way to a better retirement for your employees
Whether you offer a retirement plan or not, let us show you how your organization could benefit from Common Good.
Email us to find out more about participating in Common Good
Fill out our survey so we can better understand your retirement needs