More than half (56%) of Canadian employers with defined contribution pension plans think their employees are saving enough for retirement, while just 24% of employees feel the same way, according to new research.
BlackRock Canada’s latest DC Pulse survey found that 53% of employer respondents think their employees understand how much money to set aside for retirement, compared to just 32% of employees who say they do.
Another 55% think their employees understand their investment options and other retirement savings information, but just 40% say they do. More concerning, only 33% of employee respondents say they are confident that they are on track to retire when expected, compared with 56% of employer respondents that believe more than half of their employees are.
Read: DC plans need better design and raised contribution rates: report
“Canadians are becoming increasingly aware of the looming retirement crisis,” said Chip Castille, BlackRock’s chief retirement strategist. “When they take stock of their investment and saving plans, they’re realizing that as it stands, the dollars won’t add up.
“The result is that their expectations are increasing when it comes to the support they receive from their employers around their savings plans. Employers would be wise to recognize this as an opportunity to connect with and educate their employees to ensure they feel confident about their financial future in retirement.”
The survey also found nearly half (47%) of employer respondents think most employees have appropriate investment options, compared to 27% of employee respondents who report feeling confident with their investment option.
Read: The impact of plan design on investment decisions
Millennials are taking the most action when it comes to their savings, according to the survey. Some 63% of millennials surveyed said they feel on track for retirement, while just 47% of Generation X and 46% of baby boomers said the same.
More (70%) millennials contributed to a DC plan in the past year than Gen Xers (61%) or boomers (63%).
Read: How to support Generation Z employees
The survey also found that 50% of baby boomers polled said they are counting heavily on workplace savings to ensure a secure retirement, with 29% calling it their biggest source of retirement income. When asked what they will do with workplace savings when they retire, 18% said they’re not sure, while other answers included: invest in an account I can manage (26%), keep it in the plan (24%), invest with a financial advisor (23%), and move it to a savings account (8%).
More than half (52%) of employer respondents recognize that employees don’t want to have to think a lot about retirement savings. Even more (59%) agree that employees would value more help from their employer.
In the paste eight months, 28% of employers have made catch-up contributions automatic, 24% changed the default contribution rate, 23% began auto-enrolling employees, 21% made auto-escalation automatic, and 20% added a company match to their DC plan.
Read: What will Ontario’s 2016 Budget say about pensions?
“[Employers] are realizing they have the ability to improve retirement outcomes for people across generations and circumstances,” said Kin Chin, director of DC solutions at BlackRock Canada.
“By using tools and insights they can close the gap between workers’ current savings and the retirement income they may really need. Proactive engagement and communication between employers and employees will be essential to changing the outcome and preventing future generations from having to bear the burden of poor planning.”