Canadian Sponsors Confident in Retirement Benefits
The survey, “Canadian Retirement Trends Survey Highlights 2012,” was conducted by Aon Hewitt to assess the views and near-future actions of Canadian employers with regards to the design, management and delivery of capital accumulation (CAP)/defined contribution (DC) plans, defined benefit (DB) plans and retiree medical plans.
Across all plans, the survey found 95% of plan sponsors are “somewhat or very confident” in the competitive position of their plan and see it as a key priority; 59% are likely to assess retirement program design during 2013; 83% will review plan member communication material; and 12% are “very confident” that employees are taking accountability for their retirement future.
Among CAP/DC plan sponsors, 33% now use webcasts/webinars to deliver financial education and an additional 35% intend to do so during 2013; 84% of CAP providers plan to communicate with plan members to provide general education about plans; 75% are likely to communicate general investment education; 50% intend to measure to competitiveness of their plans in 2013; and 54% offer target-date/lifecycle funds.
For DB plans, the survey reveals: 50% of plan sponsors operate plans that are either closed to new members or frozen; 69% are unlikely to evaluate phased retirement alternatives; 69% of plan design changes are motivated by the amount or volatility of costs; and 61% are unlikely to analyze aging workforce issues.
Sixty-two percent of respondents offer retiree medical and dental benefits to current retirees; 41% offer retiree medical and dental benefits to future retirees; 25% will increase contribution rates required for current and future retirees; 25% plan to reduce benefits for future retirees or reduce (or eliminate) benefit eligibility altogether; and 10% are likely to move to a DC medical plan.
Aon Hewitt warns that awareness of Canada’s changing demographic structure “does not seem to have spurred plan sponsors into addressing long-term sustainability strategies as they struggle with short-term financial pressures and regulatory requirements.” To maintain a sustainable and cost-effective private pension structure in Canada, the consultant says, “it is imperative that employers target retirement challenges head on.”
During October and November 2012, a total of 203 Canadian employers were polled for this survey, the results of which can be downloaded from here.