How are different countries tackling decumulation?
Retirement is on employers’ minds. Employers are revisiting how they view their retirement programs and how they view their role when active employees become retirees, said Nigel Branker, partner and leader of Morneau Shepell’s DC pension consulting practice in Ontario, at the firm’s Trends in Human Resources event in Toronto.
How to handle the payout phase is one of the most important issues facing DC plan sponsors today. Benefits Canada’s 2015 DC Plan Summit delved into the decumulation dilemma.
Decumulation is a trending topic in the pension and broader financial services industries. A Google search on decumulation (and variants) and retirement filtered on Canadian domains yields about 65,000 results! Notwithstanding the discourse, recent experiences of my 80-year-old mother with her retirement portfolio demonstrate that the financial services industry currently does a very poor job when it comes to decumulation.
Employees nearing retirement have a big decision to make: what to do with their workplace savings. Do they have an efficient drawdown strategy? Plan sponsors need to prepare their employees for a smooth transition from saving to spending their retirement income. Employees need access to the appropriate tools, education and menu options that will help them reach their retirement goals. And the DC industry has an obligation to ensure that the framework is in place to support the aging workforce.
What DC plan member education can learn from behavioural economics
Plan sponsors may think they have enough worry just getting employees to save for retirement, but, based on results of this year’s CAP Member Survey, it’s likely that many plan members will also need help turning their retirement savings into retirement income.
The overwhelming majority of DC savers in the United Kingdom are uncertain how they intend to use their pension savings.
With about 400,000 Canadians expected to retire each year over the next 17 years, sponsors of DC pension plans should be considering their role in the decumulation phase of retirement savings.
Retiring employees might get a handshake, a gold watch or even a goodbye party. But for DC plan members...is it enough?