Édition du 29 April 2008

Which small businesses are best suited to set up a pension plan?


In order to broaden the retirement market, employers-small businesses in particular-must be convinced of the advantages of pension plans. Their and workers' confidence in these plans must also be increased.

Businesses that are "right" for a pension plan

Our study on the retirement savings behaviours of small business owners enabled the Régie's experts to create a profile of the small businesses that are best suited to set up an employee pension plan. We found that these organizations:

  • Understand a pension plan's importance in recruiting, retaining and planning for the retirement of employees in a competitive job market. Of the small businesses without a pension plan, 13% recognized that these plans offer a number of advantages and said that they intended to set up a plan in the near future.
  • Have low employee turnover. Of the small businesses without a pension plan, 38% said employee turnover was a factor hindering participation in a plan. Of the small businesses with a pension plan, 50% said employee turnover was a factor.  
  • Are mature and financially sound. Of the small businesses without a pension plan, 46% had been in business for over 20 years and 75% had at least 1 000 000 $ in sales. Of the small businesses with a pension plan, 71% had been in business for over 20 years and only 29% had at least 1 000 000 $ in sales.
  • Already offer a group insurance plan (supplemental, life, disability). Eighty-six percent of small businesses that have no pension plan also have no group insurance plan.
  • Have 5 to 100 employees. As a potential market, businesses with fewer than 5 employees are of limited interest. The market is small for businesses with 100 or more employees because they are few in number and already have high rates of pension plan coverage.


Though they are not often thought of in regard to pension plans, non-profit organizations also hold out real potential. They account for 16% of the organizations that do not offer a pension plan and 38% of those that do.


Winning conditions

It will be easier to raise awareness among organizations without a pension plan if:

  • Owners are aware of the important role they play in ensuring their employees' financial security at retirement. Among business owners, 64% said that employers play a somewhat or very important role in ensuring workers' financial security at retirement.
  • Owners have a thorough understanding of pension plans. Currently, 22% of them said they have a very good or somewhat good understanding of the various types of pension plans.
  • Employees are represented by a union. Ninety-four percent of small business employees are not unionized. This number drops to a third for small businesses with a pension plan.
  • Employees are open to the establishment of a plan or have requested one. Employees asked their employers to set up a pension plan in only 5% of small businesses without such a plan. However, a recent survey showed that 60% of employees without a pension plan would prefer to have one instead of a salary increase.


It goes without saying that the small business market changes constantly. The Régie must stay abreast of these changes and tailor its actions accordingly if it is to achieve its goals.