Moderators: Mazen Shakeel, vice-president of market development, group retirement services; and Jean-François Pelletier, regional vice-president for group retirement services, Quebec, at Sun Life Financial
The defined contribution pension plan industry is operating in a shifting economic environment. Expectations related to future returns are falling, and plan members are living longer. Focusing exclusively on improving net returns likely won’t close the retirement gap. Understanding the gap and then taking action using a variety of levers will become increasingly important to get plan members to a sustainable, financially secure retirement. Plan sponsors often cite member inertia as a key barrier to improving outcomes. But what steps can they take themselves?
❱ Participants all said they had reviewed their plans during the past year. Key elements of their reviews generally included investment performance fees and the investment lineup. Relatively fewer participants reviewed participation and savings rates, leakage and the degree to which members were on track to meet income replacement goals.
❱ Companies that have well-defined plan objectives for their plans are more likely to create meaningful measurement frameworks and take action to improve outcomes. Participants cited a range of objectives in their existing plans, including a desire for low costs, flexible programs and support for members to achieved dignified retirements. Participants generally agreed that reviewing and clearly articulating their plan objectives would likely lead to more focused actions and better outcomes.
❱ Participants have been relying on member education to address the changing environment with mixed success. Some plan sponsors have started to use plan design to influence outcomes, but very few have introduced automatic enrolment for newly hired workers. While plan sponsors aren’t currently using all of the tools at their disposal to drive better outcomes, there appears to be a willingness to try something different.
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