Rethinking Employee Compensation In "Times Like These"

Inflation is high, employee retention is low; we need a solution that addresses both issues.

Tax season is just around the corner (but so is spring, so can we call it even?) and RRPSs are on everyone’s mind. And if they’re not, they should be. With record inflation to contend with, it’s likely that many employees won’t be looking to increase their monthly retirement contributions in 2023. That is, unless they get a raise.

According to LinkedIn, January is the most common time for employees to ask for a raise. Seasoned business owners approach this time of year with a plan to deal with the onslaught of salary adjustments. It’s a delicate balance between a healthy bottom-line, and fairly compensating valued employees, in a job market where retention is frankly, challenging. This year, in the spirit of employee retention, let’s rethink how we traditionally increase compensation from year to year.

...in the spirit of employee retention, let’s rethink how we traditionally increase compensation from year to year.

If you don’t already have a Group RSP or Pension Plan for your company, this might be the time to learn just how big of an impact they can make. When it comes to stretching a dollar, a group retirement plan is magic. While salary increases and bonuses are great, they count towards an employees' taxable income; by directing those increases and bonuses into a Group RSP, members receive an immediate tax savings. Check out the example below:

A great way to help save for the future, a Group RSP is most commonly set up as an employee matching plan. As an organization, you match the employees contributions up to a maximum percentage of salary or flat dollar amount (like the $167 monthly shown above).

There are many benefits to contributing to a group RSP:

• "Pay yourself first." We’ve all heard it before, but when times are tight, it's harder to make sure that money makes it into a savings account
• Immediate tax savings and tax free growth!
• Low cost! Group RRSP’s offer lower fees than the traditional big bank RRSPs that your employees have access to.
• Matching programs. Group RSP's are great way for you to create loyalty and let your employees know that you are invested in their future.

At Bloom Benefits Group we want to help your organization take care of your employees. Their financial heath is a big part of that. Financial resiliently contributes to happier, healthier people - it’s a fact. Call today and let us lead a conversation that informs and urges your employees to save for the future.