Lack of understanding of diets has a cost

A misunderstanding can affect productivity and thus the company’s performance. (Photo: 123RF)

INSURANCE AND PENSION. Group insurance and group annuity programs are valuable tools for recruiting employees, increasing productivity and retaining employees. But if they are misunderstood, they can backfire on employers. Communication plays a key role in avoiding slip-ups.

Many employers who offer generous group insurance and group annuity plans fail to properly communicate them to their members. Very often they just give them a brochure without going any further. The employees thus do not know the extent of the benefits they have access to, or do not know the extent of the employer’s contribution.

“It’s a bit like throwing an employee the keys to a luxury car, but without telling him it’s because he’s entitled to a company car,” illustrates Louis-Philippe Corbeil Girard, insurance and benefits advisory group at Tim Cummings Management.

He says workers who don’t fully understand their plan may end up seeing the amount taken from their pay as just an expense. “They may become frustrated with their employer if they feel their program lacks generosity,” he says, “or they may leave their job to accept another that offers slightly better pay but fewer benefits. . . .”

The price of miscommunication

These types of problems can affect productivity and thus business performance. “The better a group insurance or pension scheme is understood, the more effect it has on the general well-being of employees, that is, on their financial, physical and mental health at the same time”, says Patrice Latour, Regional Vice. President of Sales, Group Insurance and Savings Solutions at IA Financial Group.

In 2021, a Manulife study revealed that mental health problems interfered with work for four out of ten people. More than two in ten respondents said their mental health had interfered with their work very often or extremely often. No fewer than 68% of respondents claimed that they would have been a little or a lot more productive at work if their personal finances had worried them less.

Lack of understanding of plans also has a cost. For example, the level of understanding of the group insurance plan plays a major role in controlling the cost. In fact, “if more members abuse the plan, this risks increasing the price for all participants and therefore causing frustration,” stresses Patrice Latour.

Another example: more and more employers offer an employee assistance program or access to telemedicine. The aim is generally to act upstream to prevent the worsening of certain physical or mental health problems and thus reduce absenteeism or attendance. “A lack of communication too often leads to the underuse of these tools, which means that the employer’s investment does not produce the expected results,” laments Louis-Philippe Corbeil Girard.

The issue of financial literacy

Even when looking to communicate the benefits of their group insurance or annuity programs more widely, employers face vastly different levels of financial literacy. “It’s really a problem in the ability to understand group plans and choose the best options,” acknowledges Frédéric Thériault, insurance and group annuity advisor at SFL Wealth Management.

According to him, workers find it difficult to distinguish the differences between a defined contribution or defined benefit scheme or other types of scheme such as the group RRSP, the voluntary pension savings or the deferred profit sharing scheme.

Their level of awareness of the importance of preparing for their retirement is often too low, which causes many workers to procrastinate for too long before committing to it more seriously. This creates financial stress that affects workplace productivity.

“Our goal when introducing a collective pension scheme is also to raise awareness and educate participants,” confided Frédéric Thériault. It really is a big problem.”

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Effects of financial stress on workplace productivity

— 14% of workers worry about their finances every day,

— Nearly 70% of these worried workers believe they would be more productive at work if they had no financial worries (22% much more productive and 46% somewhat more productive).

This was particularly the case for those under 51 (29% of those under 36 and 20% of those aged 36-50, compared to 8% of those aged 51 and over).

Source: Manulife Canada Retirement Savings Products and Services Team Study 2021 Edition

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