Canadian plan sponsors aren’t satisfied with the retirement products available for capital accumulation plans and aren’t especially confident their members will have the income they need in retirement, according to a new survey by Schroders.
“Most people didn’t feel that what was out there was going to allow people to retire with a high enough income,” said Ross Servick, head of Canada, during an event in Toronto on Wednesday.
The survey found only 22 per cent of plan sponsors are satisfied with the current offerings in Canada and more than half (53 per cent) said Canadian products won’t provide the necessary income during retirement.
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A third (29 per cent) of survey respondents said the current retirement products on the market don’t take the particular needs of Canadians sufficiently into account. Indeed, the needs of Canadians are different, noted Servick, as Canadians are outstripping both U.S. and British retirees in terms of longevity. As well, he said the Canadian annuity market is underdeveloped and even so, behaviourally, Canadians are more averse to annuities, typically perceiving the solution as giving up too much control and losing the ability to make a bequest from leftover retirement assets.
The survey also found that half (51 per cent) of plan sponsors identified ages 55 to 65 as the ideal time for participants to begin to de-risk. The average 55-year-old will still have to double the assets they have at that point, which is something retirement products need to urgently address, said Servick.
“The Canadian market needs sensible ways for growth assets to remain, but dynamic ways to de-risk should there be trouble.”
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