Canadian HR Reporter

CANADIAN HR REPORTER May 18, 2015 20 FEATURES Find these suppliers and more in the HR Vendors Guide – your source for human resources vendors, suppliers, consultants and professional development from across Canada. Visit www.hrreporter.com/hr-vendors-guide HR VENDORS GUIDE HR VENDORS GUIDE Are you looking for help with recruitment? Training and development? Recognition? Information on HR professional development and post- secondary programs? innovation in the workplace. In addition, paying for profes- sional development shows work- ers the company cares about their needs, which can improve em- ployee loyalty. Bridging the gap If the survey results contained one lesson for managers, it's this: Don't assume you know what workers want. If you assume and then fail to offer the perks your staff covet, your efforts to moti- vate them could fall short. Instead, communicate with your teams to find out which workplace perks are most mean- ingful to them, and use the infor- mation to re-evaluate the current benefits package. Perhaps the best way to find out what employees really want is to initiate an anonymous sur- vey. Employees will feel more comfortable saying exactly what tops their wish list if they don't have to identify themselves — no one wants to appear greedy or ungrateful. Any kind of communication about preferred perks is better than none, so if a survey isn't an option, use one-on-one meetings or performance reviews to ask staff what they want. Listen and take notes, and try to reserve your judgment or opinion so workers are more likely to give honest feedback. Whatever method you choose, make sure to evaluate the firm's incentives often — even once a year, if you can. Attitudes can shift over time and what your employees want this year might fall down the list a few notches next year. Not every company may be in a position to provide large salary raises or bonuses. But it's still im- portant to offer top performers a reason to stay — and to give the top candidates for job openings a reason to come onboard. Perks can serve that purpose, providing a powerful attrac- tion for current and potential employees. Dianne Hunnam-Jones is the To- ronto-based district president at Ac- countemps, a Robert Half company and staffing firm for temporary ac- counting, finance and bookkeeping professionals. For more information, follow Accountemps at twitter.com/ RobertHalf_CAN. Ask about preferences PERKS < pg. 19 PENSIONS How much do you need to retire? HR helps employees prepare for retirement, but they also need to be ready themselves By Michael Prittie H R professionals spend their careers helping others navigate a path to retirement, but it's equally important to ensure their own future is solid — especially in retirement. Here are some steps to consider: Determine income needs Traditionally, as a general rule, the average Canadian will require about 70 per cent of her pre- retirement income to support a similar lifestyle post-retirement. However, individuals may require significantly more or require less — it all depends on their non- discretionary and discretionary spending habits. Non-discretionary takes into account shelter, utilities, food and the like while discretionary items may include travel or other activi- ties in retirement that will acceler- ate spending. Consider the need to care for others and any debt, such as a mortgage you may still carry. is may translate into a higher income need than tradi- tionally thought. Reduce or eliminate expenses In preparation for retirement, consider the following: Will you continue current registered re- tirement savings plan (RRSP) savings, pension contributions and other expenses, such as travel to and from work? Will you need two cars in retirement? A good exercise to do is write down all the expenses you incur now and then reduce or eliminate each one to reflect the situation in retirement. If too many still exist, such as a mortgage or other non- tax deductible debt, work out a plan to eliminate the most costly ones prior to retiring. e result- ing number is what needs to be replaced with retirement income. You may choose to categorize the list into non-discretionary and discretionary items. Determine retirement income Employment and Social Develop- ment Canada offers a simple tool online to help people determine their Canada Pension Plan (CPP) entitlements. Current retirees aged 65 and over are entitled to $1,065 per month while those wishing to receive benefits as early as 60 years of age will face reduc- tions of up to 36 per cent. Old Age Security (OAS) benefits are avail- able at 65 and provide $564 per month. Recent legislative chang- es allow for a deferral of CPP and OAS benefits depending on age and need. ere are two main types of pensions: a defined benefit (DB) plan and a defined contribution (DC) plan. A DB plan provides an income payment for life re- gardless of economic conditions or the plan's performance. e amount is based solely on a spe- cific formula. In contrast, a DC plan will provide a retirement payout based on how the chosen investments perform. If you have a private pension plan, the most recent summary will show the pension income at retirement age. Lastly, you'll need to take into account your savings within RRSPs, tax-free savings accounts (TFSAs) and non-registered in- vestments. Similar to a DC plan, these vehicles provide retirement income dependent on how cho- sen investments perform. As a very general rule, it should be safe to assume an average five per cent payout under a balanced investment approach. With a reg- istered retirement income fund (RRIF), the annuitant (the benefi- ciary of an annuity or pension) is subject to minimum annual with- drawals starting at age 65. e minimum percentage required to withdraw increases as people age. As an example, at 65 years of age, the minimum withdrawal from a registered income plan is four per cent while at 71 years of age, the minimum amount that must be withdrawn is 7.38 per cent. RRIF withdrawal minimums are established by the CRA and apply to plans established prior to Dec. 31, 1992. RRIFs established before this date may have different minimum withdrawal limits. You will now have a net income figure that will determine whether or not your OAS is clawed back in retirement. If you earn more than $72,800 of net income, each additional dollar of income above this threshold will require you to give back 15 per cent of your OAS benefit. However, there are ways to mitigate this and a qualified advisor can provide solutions, such as income splitting and flow- through limited partnerships. Surplus or deficit? is is where it gets a bit more complicated. Ernst & Young has an online personal tax calcula- tor to help calculate after-tax re- tirement income, which you can compare to your retirement in- come needs. Simply plug in your total income and if you are living common law or married, be sure to do this separately. Remember to compare individual after-tax income to determine if your spending needs will be covered. Future health-care needs When planning for retirement, family history and health play an important role. If you have a fam- ily history of longevity, you may want to consider protecting your- self against outliving your income. is applies mostly to those with- out a DB pension plan. Alterna- tively, if you feel your health may become a concern, it may be wise to consider long-term care insur- ance to protect against the grow- ing cost of homecare or assisted retirement living care. ese can run into the thousands of dollars per month and erode retirement savings quickly. The earlier you know your number, the better. is allows you to adjust expenses and in- crease savings now to meet future retirement needs. Discuss the sit- uation and consult with a financial advisor to determine what steps need to be taken today, if addi- tional tax savings can be found or if existing investments are prop- erly structured to meet goals and objectives. There are three factors that will affect retirement income: the amount invested, the rate of re- turn achieved and the investment time horizon. If, after calculations, you are short of your target, there are three options: put more mon- ey away each month, adjust the as- set mix or selection of securities to obtain a potentially higher re- turn, or delay retirement to allow for more time to compound your savings and delay their erosion. A popular retirement planning adjustment is to take some part- time work in an area you are pas- sionate about — this can be fun and rewarding. With advance planning and attention to the details, you can achieve a comfortable retirement. Michael Prittie is a registered port- folio manager at Mandeville Private Client in Ottawa. He can be reached at mprittie@mandevilepc.com. When planning for retirement, family history and health play an important role.

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