In the fourth industrial revolution, technology is changing at a fast pace with a rolling effect on various industries. It’s also changing how people work, spend their money and save, said Jean-Philippe Provost, senior partner and wealth business leader at Mercer Canada.

At the consultancy’s annual retirement outlook event on Thursday, Provost walked through current practices in the Canadian retirement landscape and contrasted myths to reality.

For example, there’s a myth that defined contribution plans are a low-risk alternative to defined benefit arrangements, he said. Yet in reality, DC plans bring with them a new set of risks, such as how plan sponsors can ensure employees are saving enough, how to determine what’s enough and how to support employees making the right investment decisions.

Furthermore, employees may lose purchasing power when shifting from DB to DC, said Provost. “What is the cost of that loss in purchasing power when it comes down to the employee and the value, the outcome, for them at retirement?”

He also highlighted the myth that group annuities are the preferred liability risk management tool. While annuities may be a good tool, he said, there are various other liability management solutions available. “The reality is that innovation is quickly transforming the landscape of liability and risk management in Canada for defined benefit arrangements.”

Some other options for eliminating risk include longevity insurance, synthetic — or do-it-yourself — annuities, commuted value lump sums or merging with a jointly sponsored plan in Ontario.

Provost also pointed to the myth that tinkering with plan design will be sufficient when it comes to retirement offerings, whereas in reality flexible plan design is necessary to support a diverse and evolving workforce.

Referring to Mercer surveys of both DC and DB plan members, Provost noted the variation in what members want. “The market is changing. In the context of this fourth industrial revolution, there’s a fresh approach that needs to be taken.. . . Some of your employees are of five different generations in the marketplace, it’s more diverse than it’s ever been and it’s going to continue to be like that.”

He said plan sponsors must think about various design options beyond just the traditional DB and DC plans. “The right plan for an individual may be different at a different stage of their life.”

Design flexibility isn’t only required, but expected in this new marketplace, he added.

There’s pressure across various industries to change and the retirement industry must change as well, he said. “The one thing that will not change is the fact that every single Canadian will aspire at some moment in their life to retire.”