Few Canadian employers are tracking the impact of their defined contribution pension plans or measuring their outcomes, according to new research by Willis Towers Watson.
It found only 26 per cent of survey respondents measure the retirement readiness of their employees at least every three years, while 30 per cent monitor it periodically and 40 per cent take no action at all. In addition, 24 per cent of plan members are failing to contribute enough to their employer-sponsored plans to receive a full match, where employer matching contributions are available.
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“This is particularly concerning when we know that employees often do not have realistic expectations about the costs of living in retirement, or the expected returns on their savings,” said Ofelia Isabel, Canadian defined contribution business leader at Willis Towers Watson, in a news release.
“We also know that opportunities exist for organizations to improve employee outcomes and get more impact for the financial contributions they make to their DC plans. But, what is typically happening, is that sponsors are spending a lot of money without any clear measure of what impact those plans are having.”
Among respondents, 18 per cent offer only an automatic contribution, meaning they don’t permit employee contributions. “This may not be encouraging employees to do more on their own,” said Karen Burnett, senior defined contribution consultant at Willis Towers Watson.
She added that 69 per cent of Canadian respondents to the consultancy’s 2017 global benefits attitudes survey believe their generation is likely to be much worse off in retirement than their parents’ generation. “The question for Canadian DC plan sponsors is whether their plans are set up to help their employees make better choices — or require more direction.”