In fact, 97 per cent of DC plan sponsors and 90 per cent of group RRSP sponsors are meeting their capital accumulation plan (CAP) objectives through their current plans, according to the 2014 CAP Benchmark Report from Great-West Life. The report summarizes the results of a survey of 373 organizations across Canada offering a DC plan and/or a group RRSP to employees.
In 2014, the participation rate among eligible employees rose for DC plans (to 94 per cent; up three points from 2013), however, the participation rate dropped for eligible employees in group RRSP plans (to 53 per cent; down 12 points from 2013). This, perhaps, is due in part to the fact that participation in group RRSPs is more likely to be voluntary than participation in DC plans. Voluntary plans typically experience lower rates of participation. According to the report, the participation rate was 79 per cent in voluntary DC plans versus 98 per cent in mandatory DC plans. For group RRSPs, the participation rate was 51 per cent in voluntary plans versus 74 per cent in mandatory plans.
The report also found that very few organizations already offering a voluntary DC plan (one per cent) or group RRSP (two per cent) are thinking about introducing a mandatory plan in the future.
Many group RRSP (55 per cent) and DC plans (37 per cent) offer immediate eligibility to employees. Larger organizations with 500 or more employees are more likely to offer immediate eligibility to participate in both plan types than smaller organizations.
"While there are a number of options sponsors can use to structure their group plans, offering early eligibility appears to be an effective way to increase overall participation rates," Ken Millard, vice-president of national accounts and group retirement services for Great-West Life, wrote in an analysis presented in the report. "Sponsors may want to consider the benefits of decreasing the waiting period for plan eligibility to increase the likelihood of member participation."
The authors of the report calculated DC plan assets had a total market value of $156 million in 2014, while group RRSP assets totalled $69 million.