Canadian Forest Products Ltd.’s new financial wellness program may have originated as the brainchild of its defined contribution pension plan committee, but it’s just as applicable to its defined benefit plan members — and the organization chose to roll it out for all employees.
When you have broad financial wellness topics, it’s fine, but when you have retirement income-focused presentations, there are huge sensitivities. The lumber, pulp and paper company has 1,100 salaried staff in both a closed DB plan and an open DC plan, as well as hourly, unionized workers, such as millwrights, in DB plans.
In 2020, the program was launched for salaried employees, with sessions on how to take control of their money, reduce debt and save for financial goals. In 2021, Canadian Forest Products, known as Canfor, built on those learnings with sessions on sources of retirement income, preparing for a retirement lifestyle and investing wisely. This year, it will cover managing unexpected life events, finances and childrearing, insurance needs and how to find a financial advisor. Following the program’s initial success, the company plans to extend it to its 3,100 hourly employees.
“It was rolled out for everyone and designed for everyone,” says Frederic Bessette, the company’s director of total rewards. “Life goes beyond your membership to a plan and there are other [financial wellness needs]. Those things are common and shared.”
When building a holistic financial wellness program, employers with members in both DB and DC plans, like Canfor, will have more ground to cover than most. The good news, say financial education and wellness experts, is that even an incredibly diverse employee base has far more similarities in their financial education needs than they do differences.
“There’s tons of overlap,” says Janice Holman, a principal at Eckler Ltd. who leads the firm’s financial wellness consulting group. “People, [regardless] of retirement plans, struggle in so many ways with their finances and that’s ubiquitous, that’s everywhere.”
Together or separate?
When it comes to offering retirement education sessions, the first major decision facing pension plan sponsors is whether to bring their DB and DC plan members together.
The outcomes largely depend on an employer’s culture around its retirement benefits, says Nichola Peterson, a partner in retirement and financial solutions at Lifeworks Inc. “Some organizations are just very open with it: ‘Hey, if you’ve been here before 2000, you have a defined benefit plan, and if you’ve joined us since then, you have a defined contribution [plan].’ Some employers have a straight-up communications philosophy and others are much more sensitive to having employees sit next to each other who might have different pension plans.”
Holman says it’s uncommon to see both groups of plan members in the same session. “When you have broad financial wellness topics, it’s fine, but when you have retirement income-focused presentations, there are huge sensitivities. You never generally see a session or materials that would combine both benefits together.”
At Rogers Communications Inc., which has about 9,000 employees across four closed DB plans and roughly 6,000 in four DC plans, employees are separated out on sessions related to the mechanics of their plan, but everyone is invited to attend the same retirement planning and education sessions.
Mureth Rhone, the company’s senior manager of benefits and wealth programs, says it just makes sense. Beyond talking about its two types of pensions, the sessions also touch on the other three pillars of retirement savings offered by Rogers — a share accumulation plan, group registered retirement savings plan and tax-free savings account — in which all employees are eligible to participate.
However, bringing everyone together can make creating those sessions a bit more challenging. “When we have our standard webinar and we’re speaking about retirement, we always have to step back at the beginning to say, ‘When you think of retirement, you also have to think about the plan in which you’re saving for your retirement,’” says Rhone, adding that the company is looking at other options for delivering retirement education in the future to address this challenge.
What’s in a plan education session?
Education sessions for DB plan members tend to focus on explaining the mechanics of the plan, says Holman, noting there are many provisions employees may struggle to understand, including calculating their annual pension, provisions around early retirement, buying back years of service during a leave and the death benefits for their spouses.
On the other hand, education sessions for DC plan members tend to highlight investment basics, determining risk tolerances and how they might change as people age, as well as managing pensions in retirement and ensuring members have enough funds to retire comfortably.
When Michelle Hung, founder of the Sassy Investor, works with plan sponsors, she uses these education sessions to make sure members aren’t leaving money on the table, either by investing in an overly conservative portfolio or not taking full advantage of their employer’s matching contribution.
In recent years, Rogers has put most of its efforts toward educating employees about its DC plans. This is partly because the plans are newer and partly because the company wants to ensure employees are on track with saving, says Rhone, since they won’t fully know what their pension amount looks like until closer to retirement. The company offers retirement planning tools that allow members to plug in their targeted retirement income and their savings pattern to see if they’re on track and, if they’re not, how to get there.
Another major focus area is teaching employees about the DC plans’ default target-date fund and suite of other investments funds, she says. “All our plans are voluntary, so employees have to enroll to get the match from Rogers. We have been working on making that easier . . . because we want them to enroll.”
While some DB and DC plan members’ education needs may be different, the line between them isn’t as clear cut as it seems, says Eric Monteiro, senior vice-president of group retirement services at Sun Life Financial Inc.
Many DB plan members will have some form of capital accumulation plan in their retirement income mix, whether that’s a personal savings plan or a spouse’s DC plan or group RRSP, he notes. “The idea of retirement that you join a company for 40 years and retire with a DB or DC plan — that just doesn’t happen anymore. Most people have different components of both. Any household that is fundamentally DB-supported is not very common in the private world.”
Canfor’s Bessette is one of those plan members. While he’s a participant in the company’s DC plan, he has funds in DB plans from two previous employers and his spouse also has a DB plan. “When I retire, that reality will be there. Even if we are talking at one point about a DB or DC [plan], chances are both situations are relevant [to employees].”
At Canfor, investment education sessions are just as beneficial for DB plan members as those in DC plans because of the way the plan is designed. The DB pension has a flexible option that functions like a DC account. Members can choose to contribute funds to that account to purchase pension enhancements, such as indexation benefits, bridging, improved survivor benefits or increasing their final average earnings.
Both groups of employees will need to think about the other two major sources of retirement income — personal savings and government pensions — and learn how to pull them all together, says Peterson, noting the focus on the Canada Pension Plan and old-age security is particularly important because people don’t often hear about them anywhere else.
And all employees will need to think about the psychological aspect of retiring, adds Hung. “We’re human beings, we need purpose even after we stop working. People [experience] depression because they spent a couple decades working every single day, now all of a sudden they’re not working. Addressing what you envision yourself doing is [an important part of retirement education].”
The middle of the Venn diagram
Outside of their retirement plans and regardless of age or life stage, employees have a lot of the same concerns that can be addressed by financial wellness programs, says Monteiro.
A Sun Life survey, released in September 2021, found 36 per cent of Canadians rated cost of living as their top concern, followed by having enough money for the future or retirement (23 per cent), paying off debt (17 per cent) and buying a house (13 per cent). “From our perspective, a holistic financial plan is important regardless.”
According to Eckler’s internal polling of its plan sponsor clients, employees on both sides of the DB/DC divide are most commonly interested in learning about investing, the differences between and the benefits of RRSPs and TFSAs, estate planning and insurance, taxes and budgeting.
There’s a misperception that financial wellness programs are mostly for DC plan members, says Holman, but in reality, she sees huge uptake of financial wellness sessions by DB plan members. She attributes this partially to the wide variety of DB plan designs. “Just because you have [a DB plan], doesn’t mean your retirement is going to be everything you hoped it would be. “They’re all worth a different amount and provide different amounts of income. A lot of employers want employees to understand how much the DB plan is providing and what they need to do in addition to that, to make sure they do have the retirement they want.”
Canfor decided to stretch its program out over three years because it knew there was a lot of ground to cover and wanted to be thorough.
“We believe so strongly in the importance of the wellness approach and not just disclosing a program,” says Bessette, noting it also facilitated changes in sessions based on employees’ feedback.
While the team was confident in teaching the basics of money management, saving and debt reduction in the first year, it surveyed employees ahead of the second year of programming to determine what themes they valued and whether they had unanswered questions.
“People wanted more on retirement, the strategy and the psychological aspect of it and that was kind of expected,” says Bessette. “We’re trying to be relevant and that is possible because we have a multi-year program.”
Holman, whose firm worked with Canfor to develop the program, says spacing education out over years gives employers a roadmap to follow and signals to employees they aren’t just attending a one-off session, making them more invested.
Education is a great first step, but employees need to be able to act on what they’ve learned. She encourages employers to make digital tools available to plan members, such as online planners that allow the user to input their finances, age and savings goals to see how they can improve their position.
Creating engaging programs helps to boost attendance, says Peterson, but she notes she normally sees employees engaging regardless, because the appetite for education is there. “Just wait and watch, your employees will be asking questions like crazy because it’s all about them, it’s for them. They know what their questions are.”
Kelsey Rolfe is a Toronto-based freelance writer.