Advice and education still a struggle with CAPs

This in-person event was a discussion of the survey, which was entitled “Growth Opportunities” and can be found within the pages of the November issue of Benefits Canada.The survey polled more than 1,000 members across Canada in defined contribution pension plans and group RRSPs, as well as a small segment of non-members.

Some of the survey’s key findings include the following:

• Members’ contributions to their plans have decreased to 4.9% in 2010, down from 7.3% in 2007.
• 69% of members say they support auto-enrollment and 55% of non-participants say they support it.
• Only 21% of respondents recall reading, seeing or hearing anything in the media about pension reform.
• 68% say probably or definitely, they’re going to be on target to meet their retirement goals.
• Only 64% are confident that their plan will provide for their retirement. This is down from 71% in 2006.

Clearly, reaching plan members about the importance of saving for retirement is a continual struggle for the industry and plan sponsors.

Out of touch
“There’s a disconnect between participants’ objectives and the reality,” said Stephen McGregor, business development manager, national accounts, with Desjardins Financial Security.

“There’s a disconnect between participants’ objectives and the reality,” said Stephen McGregor, business development manager, national accounts, with Desjardins Financial Security.

Advice and education
“Employers have a tough job on their hands,” said Brett Marchand, vice-president, corporate accounts, with Manulife Financial. “The majority of plan members want ‘advice.’ They want someone to sit down and hold their hand and say, ‘Everything is going to be okay.’” Marchand still thinks that plan sponsors struggle with the Captial Accumulation Plan Guidelines.

“One-on-one [counselling] produces the most risk,” continued Marchand. “There’s a fine line between education and advice and we can’t allow [plan sponsors] to get into ‘This is what you should be doing.’”

“It’s always a big debate because you don’t have the participant’s full financial picture,” said Anna Pagliuca, national director, client relationship and member education, group savings and retirement, with Standard Life.

Helping the disengaged
But what about those members who just aren’t interested?

“You don’t need to make members investment experts,” said Jennifer Gregory, vice-president, national accounts, group retirement services, with Great-West Life. Plan sponsors, she continued, can simplify choices and implement funds such as a target date fund for the 70% that aren’t engaged.

Plan sponsors should also ensure that the plan is going to help their members and that the default option is suitable, as members aren’t going to enrol unless they’re comfortable with where their money is going, she added. Similarly, Gregory continued, plan sponsors need to engage members to get out of a default fund if it’s not age-appropriate.

Engaging the young
The younger generation needs tools to be personally relevant and the output from the tools has to tell the member’s story, said Marchand. That way, any kind of disagreeable output will get a personal reaction from the member. Sponsors need to consider multimedia presentations and planning tools and social networking.

However, panelists agreed that plan sponsors can’t get away from print. They need a member enrollment kit. But print materials can’t be wordy and unattractive; they need to have pictures, diagrams and white space.

Overall, panelists reminded plan sponsors to keep things easy for members to use and keep things personally relevant. “Baby steps,” said Pagliuca. “And offer various media and make it simple in communication and investing.”

Give employees the tools and products that make the plans easier to use, “don’t make them experts,” McGregor added.

Download the complete survey findings.