The retirement landscape is changing fast as more employers look at new approaches to combat the evolving employee demands.
Currently, there are more than 5,000 new retires across Canada each week and that is expected to rise by 60 per cent to reach 8,000 retirees per week by 2020. Canada is still one of six countries in the world with defined benefit pension assets making up more than half of the funded pension system, but this will change over the coming years as defined contributions plans continue to be a more popular choice for companies.
According to Jean-Philippe Provost, a senior partner and wealth business leader at Mercer Canada, employers have historically structured communications related to retirement savings around traditional milestones like marriage, starting a family and supporting children – but people may or may not being doing these things in that order or at all. It is time employers rethink how they interact with employees.
In a relatively short period of time, there will be more millennials then boomers in the workforce who in all likelihood will not retirement from their first or even their second employer. Gone are the days of life-long employee/employer loyalty. Therefore, it is imperative employers give employees more impactful default options such as embedding auto-escalation of contributions over time, and an element of individualized auto-enrollment in order to simplify retirement savings.
One thing is certain in this environment: The retirement space is Canada is going through unprecedented challenges which will require employers, employees, regulators and leaders working together to find solutions when it comes to capital accumulation.
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