A Catalyst for Change: Special Senate Committee Recommends Pensions for the Charitable Sector
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- Posted on: 15th July, 2019
Link's Alberta Link Pension Plan (ALPP) helps reward and retain top talent
The charitable sector is known for caring, compassion and improvement of the human condition.
As Canadian federal officials rightly point out, that focus needs to be trained inward, as well.
In recent weeks, the Special Senate Committee on the Charitable Sector released Catalyst for Change, a roadmap to ways Canada can better support the important work of the two million people employed by 86,000 registered charities and 85,000 non-profits nationwide.
These organizations “struggle to compete with public- and private-sector employers in terms of pay, pension, benefits and training,” says the committee report, which notes the need for “a human resources renewal plan to ensure the long-term sustainability of the workforce.”
One of its key recommendations is that the Government of Canada “support the development of pensions for the charitable and non-profit sectors that are portable across provincial and territorial jurisdictions.”
Link Investment Management’s own Alberta Link Pension Plan (ALPP), a multi-employer Defined Contribution (DC) pension plan, represents an ideal solution. “Link wholeheartedly supports the Senate committee’s recommendations,” says Brian McClennon, President and Chief Executive Officer of Link Investment Management. “Our ALPP is tailor-made for small to midsize businesses, including charities and non-profits, that are looking to reward and retain their best and brightest employees.” The ALPP allows smaller, unaffiliated businesses in Alberta to offer the multiple advantages of a true pension plan (whose assets must be used to provide retirement income)—with immediate benefits for employers and employees alike.
Significantly, the ALPP allows members to keep their assets in the plan after they terminate employment or retire, unlike Group RRSPs and Group TFSAs. By remaining in the plan—until age 71, or until they convert those assets to income—members benefit from fiduciary, professional and regulatory oversight and low investment fees.
Link’s ALPP reduces the complexity, cost and burden of traditional DC pension plans to small and midsize businesses because:
- • Link assumes the role of plan sponsor and administrator;
- • Link is responsible for ensuring compliance with pension legislation and the Income Tax Act;
- • Link assumes the role of fiduciary, with the duty to act in the best interest of plan members;
- • There’s no pension committee required by the employer;
- • Employer contributions are tax deductible to the employer – no payroll taxes on the employer contribution; and
- • Link offers low administration overhead and fees.
As for employees, this sensible, more generous workplace pension option creates a culture of caring within a company, charity or non-profit, boosting employee engagement through:
- • Fast and easy onboarding;
- • Simplified investment approaches, using either Link’s automated asset allocation portfolios (which align with an employee’s risk tolerance, timeline and investment objectives), or target date funds;
- • Low investment fees through the use of Exchange Traded Funds (ETF) and institutional pricing, which promotes better retirement outcomes;
- • Portability and transfer options;
- • Immediate tax advantages, with employee contributions made on a pre-tax basis; and
- • The benefit of full employer contributions, without taxes or source deductions.
“Those who choose careers in the charitable sector are special people with a gift for making the world a better place,” says Mr. McClennon. “The Senate committee is right in pointing out that these people need better supports and benefits—and a pension plan is an excellent step in the right direction.”
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