Creating first national, portable retirement plan
Non-profit sector plan aims to offer financial security to 850K workers
Carolyn Bailey never planned a career in the non-profit sector when she signed up for an apprenticeship on an organic farm after university more than a decade ago.
She “fell in love” with the work and can’t imagine doing anything else. But Bailey, 35, who has worked for numerous nonprofits, also knows the sacrifices she and others make in a sector notorious for modest pay, precarious employment and little long-term financial security.
“I live in one of the most expensive cities in Canada in an apartment I can afford for now,” she says. “But the older I get, the harder it is to put off thinking about whether I can afford to do it into the future — if it’s the right financial choice.”
It is a concern shared by some of Canada’s largest non-profit agencies and foundations that are spearheading the creation of the country’s first national, portable retirement income plan for 1.7 million workers in the sector, almost half of whom work part-time or on contract.
A national information campaign and online survey are being launched Thursdayto gauge interest and get the ball rolling. Common Wealth, a retirement security company dedicated to designing plans for Canadians not served by traditional pensions or government programs, will use responses to develop a convenient and low-cost way to help non-profit workers save for retirement and give nonprofit employers a tool to help their employees build longterm financial security.
If workers show enough interest — a viable program could be created with as few as 20,000 contributors within five years — the proposed “Common Good Retirement Plan” could be launched as early as next year, according to Common Wealth.
The initiative dovetails with provincial election proposals from all political parties to give more workers access to private pensions, said company founding partner Alex Mazer.
Only about one-third of Ontarians are enrolled in a pension plan, a percentage that drops to about one-quarter for younger workers such as Bailey. The Common Good Retirement Plan, however, requires no changes to provincial policy or regulations and does not rely on the outcome of the provincial election, says Mazer, who worked for the Ontario government on enhancements to the Canada Pension Plan that begin in 2019.
Other members of the company have been involved in the management of the Ontario Teacher Pension Plan and the Ontario Municipal Employees Retirement System.
“The fact that political leaders of all stripes are talking about this shows retirement security is an issue of concern for many Canadians, regardless of their politics,” Mazer says. “So it’s an important time for leadership and innovation on this topic and that is what the non-profit sector is providing.”
Prosper Canada CEO Elizabeth Mulholland, one of four non-profit sector leaders steering the retirement plan, says the need is urgent.
“A growing number of private sector workers don’t have access to good retirement income options and in our sector it has always been abysmal,” she says.
Roughly half of non-profit sec- tor workers — some 850,000 people — have no access to a workplace retirement plan while many others are in lowquality, high-fee plans, Mulholland says.
The proportion of non-profit workers employed in part-time or contract positions is also high, with about 47 per cent in precarious employment compared to just12 per cent to18 per cent in the broader economy, she adds.
“Our focus at Prosper Canada is on building financial health for people on low incomes. But you can’t do it at the expense of the financial health of your employees,” says Mulholland. “As employers, we’ve got to put our money where our mouth is.”
Social policy expert John Stapleton, an innovation fellow with the Metcalf Foundation, has spent more than a decade advocating for better retire- ment instruments for people living on low incomes and is among nine “sector champions” of the initiative.
He says, “the beauty of the Common Good plan is that it is based on Tax Free Savings Accounts which are tax-free on retirement and therefore don’t trigger government benefit clawbacks.”
Bailey says she is “thrilled” sector leaders, including her current employer Loran Scholars Foundation, a national charity that supports young leaders, are behind the idea.
“It gives me hope that I can continue doing the work that I love and also have financial stability in my retirement,” says Bailey, who like most non-profit workers has no efficient way to save for retirement.
“I hope it will promote more economic stability for everyone who works in this sector.”