Providing a pension

Providing a pension

Q: I’d like to start offering a pension plan to my employees. We compete with bigger players that have plans and I want to use it as a recruitment and retention tool. But I’m a small business owner. What can I do?

A: When deciding on a plan, employers need to consider the cost associated with the different types of plans, figure out what they can afford, and then factor that into the total compensation package for their employees.

A defined contribution (DC) pension plan is the most popular option these days and an employer can establish it for a group of employees. With this plan, individual employees essentially assume the risk of the return realized by the assets in the pension. Depending on the plan, both you and the employees would contribute a certain percentage into it. Unfortunately, these plans can be onerous and costly to manage.

A group RRSP plan may be the answer for smaller organizations. Part of the individual employee’s compensation goes into the RRSP – you might put in a certain amount of money, too. Whatever the plan earns is what the individual will draw when he or she retires. Financial institutions are good at helping small business owners set up group RRSP plans, which are much more economical for the employer because the cost involved in setting them up are lower.

Another idea is a deferred prot sharing plan, where a certain percentage of the company’s prots are contributed to the plan for the employee. Such a plan may be possible, but is more complex than a group RRSP. A stock option plan may also be an alternative to attract and retain recruits and oer the added benefit of aligning key employees with the objective of growing the organization.

- Tony Italiano, Partner, KPMG LLP (Canada); KPMG Enterprise, Tax

Q: Summer is around the corner, and I’ve been thinking of letting my hard-working employees work from their cottages or their homes. What’s the best way to go about doing this? I don’t want to sacrifice output, but I also want to become a more flexible boss.

A: Intuitively, you think you’re going to be more flexible – and you are – but you need more structure around flexibility for it to really work. You’ve still got to keep people engaged and your eye on the output.

First, be clear about the results you want and what the process will be like. Second, make sure your people have the technology in place to access their files, do their work and communicate with each other. For example, people in cottage country may not have wireless Internet set up, so you might have to give them equipment, finance their Internet access from their cottages or subsidize it from their homes. The key is making sure people can connect.

Then, you need to establish the way that you are going to communicate. Besides using e-mail, they may need to talk to each other. Skype or GoToMeeting are good options for holding meetings when people are in different places.

Once you do all that, ask yourself: “What’s going to be produced and by when?” “What’s the process to get there?” Are you going to check in along the way or just see it at the end? How do you want to connect and communicate? That’s all part of the structure.

Also, don’t make the assumption that everyone wants to do this. Maybe an employee has two small kids and prefers to go to the office because he wouldn’t get anything done at home. You need to make sure this benefit meets everybody’s needs.

- Laura Croucher, Partner, KPMG LLP (Canada)