Capital accumulation plan member outcomes continued their march upward in the second quarter of 2023, driven by increasing annuity rates and positive equity market returns, according to a new report by Eckler Ltd.
The consultancy’s latest CAP income tracker found a typical male member retiring at the end of June 2023 achieved a gross income replacement ratio of 62.7 per cent and a female member achieved 61.2 per cent.
The report said Canadians remained concerned about their ability to save for retirement, particularly the risk of not having enough savings to carry them through their retirement years.
It noted that, while annuities — which are increasing in value alongside rising interest rates — are a possible solution to this problem, there’s a lack of knowledge about annuities among CAP members, as well as persistent misconceptions about the product.
“To support employee financial wellness and ensure their workforce has the knowledge — and the income — to retire when they want and how they want, CAP sponsors should help members understand the role of guaranteed income in retirement as well as educate members on the benefits of annuities and other guaranteed sources of income,” said the report. “Reviewing the tools and information provided by your record keeper is a good place to start.”