Administration October 27, 2011

Canadians Should Plan for Taxes in Retirement Now

October 27, 2011 (PLANSPONSOR.com) - The BMO Retirement Institute released a report that finds Canada's Baby Boomers need to be more savvy when it comes to how they are taxed.
Reported by

Many could be in jeopardy of having their government benefits and credits clawed back unless they take a long-term approach early in their retirement years to structure their retirement income strategically and minimize the taxes they pay, the report contends, according to a press release.  

The report, Mind Your Taxes in Retirement, shows that only a small percentage of Canadian Boomers know how best to maximize their tax savings, leaving them vulnerable to having benefits and credits such as Old Age Security (OAS) and the Age Credit clawed back. For example: 

Get more!  Sign up for PLANSPONSOR newsletters.

  • Seventy-nine percent of Canadians ages 45+ either answered incorrectly or did not know how dividend income and capital gains are treated from a tax perspective; 
  • More than one-third (34%) either answered incorrectly or did not know how interest income is treated from a tax perspective; and 
  • Forty-one percent did not recognize the correct tax effect of making a withdrawal from a Registered Retirement Income Fund (RRIF). 

“It’s critical that retirees be tax smart and adopt a long-term approach that will allow them to pull their income from the most advantageous sources,” said Tina Di Vito, Head of the BMO Retirement Institute. “Doing so will also ensure that those with a higher retirement income don’t exceed the thresholds that allow them to continue to receive government benefits and credits, which could have a significant impact on their total annual income.”  

The research also found that 47% of the survey respondents who are retired rely on OAS as one of their principal sources of income. OAS, which is provided by the government to Canadians 65 and older, is an income-tested benefit that could be taken away if a recipient exceeds a certain income level. Awareness of one’s income level and tax bracket is therefore crucial to planning to preserve one’s eligibility to the benefit. Yet, only 21% of the retirees knew the exact tax bracket they would be in once retired.  

To view a copy of the full report, visit http://www.bmo.com/retirementinstitute.
Benefits October 27, 2011

More Than Half of Workers Prefer to Enroll Online for Benefits

October 27, 2011 (PLANSPONSOR.com) - The Guardian Life Insurance Company of America released new research showing that 62% of workers now enroll online for their employee benefits, compared to only 29% in 2005. 

Reported by

In the past year alone, the use of online benefits enrollment increased by eight percentage points, which represents a significant shift in how employees learn about, evaluate and interact with their benefits programs.

The study also offers generational insights regarding employee preferences related to benefit platforms. While Millennials are generally perceived as the generation that would overwhelmingly prefer to evaluate benefit offerings through online platforms, in effect, a majority of all workers (54%) indicated that a consolidated Web portal would help employees appreciate the value of available benefits more effectively.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

“Our research indicates a substantial shift in attitudes, needs, and technology behaviors among all generations of workers. As such, employers are beginning to adapt to these changing dynamics by offering benefit packages through online interfaces that streamline the learning and evaluation process for all of their workers,” said Elena Wu, Vice President, Group Insurance for Guardian, in a press release.

Given the complexity of benefits evaluation and the identification of the most appropriate offerings, employees have expressed a strong need for simplification. A majority of workers (56%), irrespective of age or educational level, believe a single, consolidated Web-based platform that integrates all of their benefits allows them to better comprehend and consider their insurance options, make selections and appreciate the value of benefits available to them.

Additional key findings include:

•  In general, workers prefer online enrollment over an offline or a paper process. Nine out of 10 workers surveyed (91%) rate their online enrollment experience as “very easy” compared to 78% of those using paper.

•  Employees cite the following top reasons for preferring online benefits enrollment:

            – Convenience (89%)

            –  Time savings (85%)

            –  Good for the environment (78%)

•  Sixty percent of both Millennial and Gen X respondents indicated that a consolidated benefits web portal would improve employees’ ability to better appreciate the value of available benefits.

 

The Benefits & Behavior 2011: Spotlight on Enrollment Trends presents the findings of a telephone survey conducted from August 25-27, 2011, among a national probability sample of 2,000 adults. 

The full research study can be viewed in its entirety at www.aboutemployeebenefits.com/enrollmentreport/. 

«