A resurgence of defined benefit pension plans in Canada could be on the horizon, according to a report from the Colleges of Applied Arts and Technology pension plan.
It found most Canadian workers are looking for retirement features that are most prominent in a DB plan, including monthly and predictable retirement income that’s guaranteed for a lifetime and adjusted for inflation.
Canadian workers are currently facing uncertainty surrounding their retirement plans or even finding an employer-sponsored retirement plan, says Lilach Frenkel, director of product innovation at the CAAT, adding there’s a stronger demand for lifetime pensions as the average lifespan continues to increase.
Read: Survey finds 47% of Canadian workers worry about running out of money in retirement
“The number one priority for Canadians at retirement is to maintain their standard of living but only one in three are confident that they can maintain their standard of living at retirement. . . . I see a lot of conditions that are right for a resurgence [of DB plans].”
The report was based on the findings of a June survey by the Canadian Public Pension Leadership Council, which found nearly half (47 per cent) of Canadian employees are worried about running out of money in retirement.
The inefficiencies in retirement opportunities for Canadian workers is also leading to diminished productivity and high stress, which is costing about $40 billion in lost productivity, according to a November 2022 report by the National Payroll Institute.
Pension opportunities are already playing a key role in job hunting and retention numbers for Canadian workers, Frenkel adds, citing recent surveys by the CAAT. “It is absolutely something that employees [are] going to be looking at. . . . The other thing is that we’re seeing a lot of large collective pension plans [that] can leverage scale . . . pool risk and . . . are an efficient way to provide adequate income to Canadians. We’re seeing a lot of innovation.”
Read: Survey finds employees’ financial stress costing employers $40BN in 2022