Retirement is a notion fraught with paradox. For some, it resonates with the possibility of finally having more time to do, well, just about anything. For others, it triggers concern about whether they’ll have enough saved to retire comfortably and securely. And still, for others, it induces a kind of investment-anxiety paralysis filled with self-doubt.
As government policies have shifted to align with changing demographics and economic realities, there has also been a move towards individuals taking greater responsibility for funding their own retirement. And yet, while most plan members have access to different financial literacy programs, they continually encounter competing financial priorities and temptations that disengage them from approaching retirement readiness with a long-term vision.
So it’s not surprising employees rank concerns about their personal finances as a key source of stress. Many studies have reached similar conclusions. A 2015 study by the U.S. Consumer Financial Protection Bureau found 45 per cent of employees cited finances as their main stressor.
Read: 2016 CAP Member Survey: Deconstructing how different employees view their retirement
All of this anxiety can affect the bottom line for plan sponsors, as less productive employees who are struggling with the pressures of financial issues while at work can lead to an increase in sick days or extended stress-related absences.
To ease employees’ concern and ensure employers are getting a reliable return on investment from their benefits programs, there needs to be a paradigm shift. The pension industry needs to adjust the long-held focus from retirement saving and passive financial literacy towards building financial wellness into the lifetime journey.
It’s time to switch out the cookie-cutter approach and replace it with solutions that address the evolving reality of each plan member. Just as a personalized exercise routine developed with expertise and ongoing support can lead someone towards optimal, long-term health, extending a personalized financial wellness program to employees can help them budget, save and manage debt. It’s about learning good habits.
Read: DC Plan Summit: Holistic retirement planning
The evidence for building that type of approach is convincing for both employers and employees. A number of recent surveys have pointed to the link between financial stress and productivity, as well as the role that benefits plans play in securing employee loyalty.
Furthermore, Benefits Canada‘s most recent CAP Member Survey highlighted the fact that half of employees who have a defined contribution plan or a registered retirement savings plan felt it was their employer’s responsibility to ensure they had adequate retirement income. Or, to look at it from a different perspective, the results suggest that employers that provide more robust and personalized financial wellness programs to their employees should see a stronger return on investment by attracting and retaining less stressed and more productive workers.
As an industry and in support of group workplace retirement and savings plans, it’s possible to make the journey a truly personal one, ensuring financial wellness is a more integral part of every stage of life and financial reality.
Read: 2016 CAP Member Survey: Deconstructing how different employees view their retirement
To accomplish this, here are a few recommended actions to encourage a more comprehensive approach to financial wellness:
- Be present. Educate plan members when and where it makes sense for them: in person at the workplace, online and one on one.
- Be intuitive. Leverage data and knowledge to create and disseminate information that pinpoints and addresses a range of financial habits.
- Be accessible. Integrate cutting-edge technology to access tools and materials that speak directly to plan members so they can make informed decisions and ask good questions.
- Be adaptable. Maintain dialogue with industry stakeholders to better understand and address the evolving environment and be flexible to make adjustments.
Each of us has unique demands and circumstances in our lives. But as an industry, it’s important to empower plan members in ways that resonate and are meaningful to them if it’s going to succeed in creating financial peace of mind for employers and employees.
Nadia Darwish is vice-president of development, marketing and investment strategy at Desjardins Insurance. Karrina Dusablon is vice-president of business development, client relationship and member experience at Desjardins.