Workplace benefits

Wanted: portable benefits for the new world of work

Canada’s economy is doing well, our unemployment rate is at its lowest level in decades, and the average net worth of Canadians is increasing.

Work today looks very different from how it looked 125 years ago, when Labour Day was established. While we celebrate the progress working people have made, we should also be thinking about new ideas to address the economic insecurity many workers feel today.

One such idea is the creation of a system of high-quality portable benefits. As a promising way to strengthen Canadians’ financial security, portable benefits deserve more attention from all political parties.

Most jobs used to come with a bundle of benefits — pensions, health and disability, and training. These benefits helped workers achieve a middle-class life while protecting against risks that could drive them into financial insecurity. Providing these benefits helped employers build loyalty in an era when a worker might spend an entire career with one employer.

Today, this employer-provided safety net is fraying. Non-standard, precarious work is on the rise. Workers rarely remain with a single employer, and so seldom have benefits that follow them throughout their working lives.

Where employers do offer benefits, these benefits increasingly put all the risk on the worker. For instance, whereas the traditional company pension protected workers against the risk of outliving their savings, today’s workplace retirement benefits often leave it up to the worker to choose from a dizzying list of investment funds, putting the risk of market downturns, investment mistakes, and a longer than expected lifespan on the worker’s shoulders. The move from true health insurance to health spending accounts is another example of a risk shift.

It’s well past time we adapted workplace benefits to the 21st century. We should develop a system of high-quality portable benefits that are accessible to different kinds of workers, owned by the worker, and significantly better than many workplace benefits today.

As we found in a recent study we conducted with the Aspen Institute, all three sectors — social, private and governmental — have important roles to play in creating this system.

Labour unions can play a leadership role by building portable benefits for their members. With employer provision of benefits in decline, unions can fill the void by sponsoring high-quality retirement plans, health and disability benefits, and training programs for their members. Such innovation will help make labour more relevant and would provide workers with new reasons to join a union, helping to mitigate the risk of declining union membership.

Stakeholders within a common sector or profession can also create portable benefits. One example that we are involved in is Common Good: an effort to establish a national, portable retirement plan for Canada’s not-for-profit sector that is backed by nearly 100 employers and many of Canada’s leading foundations.

Business has a critical role to play in creating and marketing high-quality portable benefits. Industry-led innovation from both startups and incumbents will be an important force in adapting workplace benefits to the new world of work. Purpose-minded employers can use their clout to demand more worker-friendly solutions.

Perhaps most importantly, governments must help create the market for portable benefits. In the U.K. and several U.S. states, governments have passed laws requiring employers to automatically enrol their workers in a workplace retirement plan. They have also funded the creation of portable retirement options to cover the under-served parts of the market, including smaller employers and modest-income workers. One successful example, the U.K.’s NEST pension, now serves over 6 million people.

Canadian workers face a brave new world of work. Yet Canada lags peer countries in enabling high-quality portable benefits. It is time we caught up. Portable benefits should appeal to all political parties, all of whom are seeking ways to improve job quality, strengthen financial security, and make life more affordable.

As election season approaches, we should be asking our political leaders what they will do to create high-quality, portable benefits for all. It’s a conversation we need to have we, as the “future of work” is happening now.

Alex Mazer, Jonathan Weisstub

This op-ed was first printed in the Toronto Star on August 30

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Common Wealth

Common Wealth is on a mission to make it possible for every Canadian to have a financially secure retirement. We provide a quick and easy retirement planning and saving experience, powered by a turnkey digital platform.

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