Boost retention with a retirement savings plan that’s a perfect fit for your employees — and you
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Providing retirement savings programs for your dealership employees can boost morale and ease financial stress on your team and provide another means to address total compensation. All factors that your HR Department grapples with every day in achieving their objectives — employee retention.
“Our CADA 360 Retirement Savings plans are easy to sign up for and require very little day-to-day work for the dealership,” said Cindy Robinson, Director, Governance & Plan Management, CADA Employee Life & Health Trust. “The plans are customized to fit the dealership’s approach, and are managed through convenient payroll deductions. Employees are then able to access their plan 24/7 online.”
Robinson said the CADA 360 Retirement Savings program can provide Group RRSP, Group RPP, DPSP, and TFSA, and dealerships can decide how much to match of an employee’s contribution and even create a tiered system that aligns with their retention goals.
So why don’t more dealerships sign up for the programs?
That’s a mystery to Michael Psotka, the CFO and Director of Member Services for the Canadian Automobile Dealers Association (CADA). “Providing retirement programs can cost less than your employee turnover,” said Psotka, who looks after the CADA 360 Retirement Savings program on behalf of the Association.
In a recent article in Applauz, the costs of replacing an individual worker are estimated at between half to four times an employee’s annual salary. Of those costs, the authors say 30-40 per cent are hard costs and 60 per cent are soft costs, which are things such as the time managers and executives devote to HR-specific tasks related to hiring new employees.
A 2023 Express Survey conducted by the Harris Poll of more than 500 Canadian decision-makers found that replacing a worker costs employers $30,674 on average, covering the cost to rehire and lost productivity. That amount is even higher for dealership employees, since the 2024 CADA Workforce Study found that the average dealership employee weekly earnings in 2023 were 56 percent higher than the average weekly earnings for all Canadian employees in 2023.
The CADA Workforce Study also found total annualized employee turnover in Canadian dealerships in 2023 was very high: 31 per cent.
“We know it’s a competitive job market out there, and that’s why dealerships really need to consider the whole package they are offering their employees and potential hires. That includes salary, benefits and additional perks like having your employer contributing to your retirement savings,” said Psotka.
Psotka said the CADA 360 Retirement Savings program offers tax-effective and professionally-managed investment funds that deliver strong returns with lower-than-retail fees.
The sheer size of the CADA plan, with more than 13,000 members, and with more than $360 million in assets under administration, gives the CADA and their members much more clout.
“Helping employees plan for their future really shows you care about their financial well-being — even after they aren’t working for you any longer.”
— Cindy Robinson, Director, Governance & Plan Management, CADA Employee Life & Health Trust
“If you look at the total assets under administration, the CADA group retirement plan is already considered a large plan in Canada by many metrics,” said Psotka. “CADA continues to use its buying power to make plan enhancements and deliver even greater value to its dealers and dealer employee members. CADA is always looking for ways to improve our offerings, and we expect to be able to launch additional improvements to the fee structure and employee education component of the plan in the next several months.”
Many dealer groups have entrusted their retirement savings to this plan, and with the enhancements to come, CADA expects even more dealers to take advantage of the plan on behalf of its members.
There is no cost to the dealers in setting up a plan(s). Whether a dealer opts to match some or all of employees’ contributions is entirely at their discretion. According to Robinson: “Some dealerships offer varying levels of matching, depending on the employee’s seniority or tenure. They may also choose to vest contributions, requiring employees to remain for a specific period before gaining access to dealership funds.”
Robinson said more education on the topic from the dealership can help boost awareness — and plan enrollment. “Many Canadians are working longer, and aren’t in a position to retire. Helping them plan for their future really shows you care about their financial well-being — even after they aren’t working for you any longer,” said Robinson.
A recent report released by Toronto Metropolitan University’s National Institute on Ageing that tracks retirement readiness among those aged 50 and older, found only about a third of those over 50 (35 per cent) who plan to retire indicated they were financially prepared to do so.
In another study by the Canadian Payroll Association, financial stress was cited as the number one source of stress for Canadians and they estimated it costs Canadian employers $16 billion annually due to lost productivity.
“Showing your employees you care about them is good business,” said Tim Reuss, CADA’s President and CEO. “Utilizing the CADA 360 Retirement Savings Programs is the best way to do this.”
Interested dealers can contact their CADA 360 Employee Benefits advisor or contact CADA’s Director of Employee Benefits, Cindy Robinson directly at: crobinson@cada.ca.
