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Employers Unprepared For Enhanced CPP


Most Canadian employers have yet to begin preparing for the integration of the expanded Canada Pension Plan (CPP) with their total rewards strategies, says Aon Hewitt. In fact, its survey shows less than half of Canadian employers say they will be planning for CPP enhancement this year and nearly the same proportion do not know when they will begin the planning process. When it comes into effect in 2019, CPP enhancement could have a significant impact on employee compensation, pension funding formulas, total rewards strategies, and other factors. "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 at Aon Hewitt. "The challenge for employers now is how best to integrate a bigger CPP into their overall compensation and rewards strategies." Only 13 per cent of employers have started to plan for CPP reform and 35 per cent will begin planning by this October 2017. Meanwhile, 46 per cent do not know when they will start preparing for CPP reform. Employer concerns include increased administrative complexity and potentially negative employee reactions. The chief concern, cited by 65 per cent, is increased cost, although there is no consensus on how best to address this challenge. About a quarter (27 per cent) plan to absorb any cost increases; eight per cent will make changes to current retirement plans, and six per cent plan to change other employee compensation.

Courtesy of Benefits and Pensions Monitor website News Alerts 

 

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