Every year, Benefits Canada, with the support of sponsors, conducts a CAP Member Survey to gauge the views and attitudes of plan members toward their capital accumulation plans (CAPs). The 2014 survey was particularly insightful, as we also surveyed plan sponsors so that we could compare and contrast their respective viewpoints.

I don’t want to give away the farm here, since we’ll be publishing a full report in our November issue. But in our advisory board meeting to discuss the results, we had a spirited discussion about the roles and responsibilities of plan sponsors versus members in the retirement planning process. One key area of concern—which some see as a ticking time bomb for the CAP industry—is the decumulation phase.

How do we get CAP members to—and through—retirement? Whose job is it to make sure they’re going to be okay?

CAP sponsors clearly feel some desire or responsibility to support their members in preparing for retirement. In fact, about one-third (32%) of those surveyed said the main reason they offer a plan is that they feel it’s the right thing to do. However, they have their limits on how far they’re willing to go.

We got the message loud and clear from plan sponsors that supporting members into the decumulation phase isn’t on their agenda. Of those surveyed, 79% agreed with the statement We want to help employees to accumulate assets in their DC pension plan/group RRSP, but once they retire or leave the company, they’re on their own.

That means plan members will have to step up and pick up the slack, right? Not likely. We know from both research and anecdotal evidence that trying to make them into investment experts is a non-starter, since most people have neither the time nor the inclination. And CAP members often make poor investment decisions—or don’t make decisions at all—leading to poor outcomes.

For example, two-thirds (66%) of the CAP members surveyed said they trust that the default investment chosen by their employer will provide them with adequate funds for their retirement. And, when asked about what actually happens to the savings they’ve accumulated in their CAP when they retire, 38% don’t have a clue.

As stakeholders in the CAP industry, we all have the same objective: a secure retirement for plan members. But how do we get there, and whose responsibility is it to lead the way?

Right now, it seems, there’s a lot of uncertainty and passing the buck. But we’ll have to grapple with these issues soon and find a solution—or, for some, it will be too late.

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Copyright © 2020 Transcontinental Media G.P. This article first appeared in Benefits Canada.

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