Benefits October 8, 2009

Canadian Employers to Reassess Retirement Programs

October 8, 2009 (PLANSPONSOR.com) - Over half (59%) of employers that responded to Hewitt Associates' Canadian Retirement Trends 2009 survey indicated they are somewhat or very likely to assess the appropriateness of their retirement program's design this year.

Reported by

Rebecca Moore

A press release said two-thirds of capital accumulation plan (CAP) sponsors are likely to conduct a comprehensive review of their investment fund offerings. Half of respondents with a defined benefit pension plan are very likely to perform funding and accounting projections, and 41% are very likely to assess risks (financial and non-financial) based on current strategies.

“[W]e are seeing renewed interest from some DB plan sponsors in considering a transition to a DC plan,” Andrew Hamilton, a senior retirement consultant with Hewitt in Toronto said in the press release.

The survey found organizations are also stepping up communication efforts so that employees understand the need to save for retirement and how the company plan can help. Over 40% of employers are confident that their programs enable employees to retire with sufficient retirement assets. A high priority for 42% of employers is ensuring that employees understand that they need to be responsible for their own future.

Employers with a CAP use multiple methods to educate and assist their members. The most prevalent forms of education currently utilized are online investment guidance (54%), phone access to investment advisory services (49%) and in-person financial education seminars (47%).

“It’s not surprising that these resources have the highest utilization, as some of these services are available through the plan’s recordkeeper and included in their fees,” said Dianne Tamburro, a senior investment consultant in Hewitt’s Toronto office, in the press release. “Fewer employers offer online (36%) or in-person advisory services (24%), primarily due to the additional fees or potential liability associated with these services.”

Other survey findings include:

45% of employers surveyed provide target-risk funds and 28% offer target-date funds;
The number of employers offering retiree medical and dental coverage is declining. “Sixty per cent of employers currently offer post-retirement health care benefits,” said Hamilton. “However, a third expect to reduce coverage for future retirees and 43% may look to retirees to share more of the cost of these benefits.”

Copies of Hewitt Associates’ Canadian Retirement Trends 2009 survey report are available from Hewitt by calling (416) 225-5001, or by e-mailing infocan@hewitt.com .