With defined contribution pension plans at various stages of evolution around the world, how are plan members faring in different countries?
At Benefits Canada’s Defined Contribution Plan Summit in February, Shawn Cohen, director of relationship management at MFS Investment Management Canada Ltd., and Peter Delaney, director of investment solutions at MFS Investment Management, shared the results of a global retirement survey that offered insight into plan members’ perspectives on a range of retirement issues.
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“We’re stepping back and looking at the issues participants face, not only in employment but through retirement,” said Cohen.
The survey, which compared the Canadian landscape to some of the more developed markets for defined contribution plans, such as Australia, Britain and the United States, looked at retirement issues in a number of areas. On the issue of knowledge levels, only a third (31 per cent) of Canadians regard themselves as somewhat or very knowledgeable about developing a retirement plan. The number compared favourably to Britain and Australia but was lower than the findings for the United States. Only a quarter of Canadians feel they’re somewhat or very knowledgeable about the decumulation process.
When it comes to some of their financial projections, only 52 per cent of Canadian baby boomers who have defined contribution plans expect to have their mortgages paid off by the time they retire.
Interestingly, many plan members regard their investment advisors as a more trustworthy source of investment advice than their employers.
One major difference in attitudes relates to health care. Americans expressed more concern about the challenges of financing unexpected health issues during retirement than those in the other three countries.
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Delaney also cited a number of issues to take away from the survey data. They included a clear opportunity for employers and plan sponsors to increase the trust participants and retirees place in their advice. In addition, better education can help plan participants overcome misconceptions about their personal accounts when compared to their defined contribution assets. Educational efforts can also fill a need identified in the survey for more information about retirement income products, particularly when it comes to issues related to tax efficiency.
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