As HR professionals prepare their organizations for the departure of baby boomers, and an influx of millennials and Gen Z, it’s important they’re also ensuring staff are prepared for retirement.
Many employees are ill-prepared for life after work – especially when it comes to saving. A Canadian Payroll Association survey earlier this month revealing that 47 percent of workers aged 50 and over are less than a quarter of the way to their retirement savings goal.
’s new wealth team principal Dominique Savard is an expert in this area, with more than 13 years of experience in group savings and retirement across major national insurance carriers.
He spoke to HRD Canada about what organizations need to do to prepare their workers for retirement.
Where should employers be focusing their energies, or what do they need to start doing differently, in the next two, five and 10 years?
Increasing employee engagement in planning for their retirement should be a key priority as DB (defined benefits) plans are increasingly being replaced with DC (defined contributions) plans. Many employers could benefit from being supported with their communication strategies regarding their pension plan. In many cases, employees simply don’t understand the value of their rewards. It’s not that unusual to see a low employee participation rate even in an employer contributory plan. In fact, even the enrolled employees can end up being ill-prepared for retirement if they are not engaged in the plan and properly explained what steps they should go through to achieve their retirement goals.
A well-developed communication approach targeting some known issues: (ex.: not being properly invested, not knowing how much money they will need) is one of the best ways to help member take action and reduce the number of older employees who cannot afford to retire (which would create workforce management challenges). Plan design will also be an important area of focus in order to adapt to the changing needs of the new generation (more on this below).
As 65 is increasingly seen as an arbitrary age for retirement, what can employers do to plan for an older workforce – or a workforce that retires earlier to begin their second career?
The fact is that we are living longer and healthier lives but the switch from DB to DC means more employees feel less prepared for retirement. Employers have to consider adjusting their retention and recruitment practices to respond to this new and challenging demographic reality.
Employers generally understand the benefits of retaining their more experienced workers in order to keep leadership and valuable knowledge but also have to deal with the potential glut this can create in terms of promoting the younger generations (and the accompanying frustrations/turnover) and the potential impact on productivity. Flexible work arrangements, financial incentives or phased retirement programs are part of the solution.
Throughout your career, what’s changed in the group savings and retirement space, and what do you predict will be key areas in future?
Clients are now more than ever aware of their fiduciary responsibilities and are increasingly looking to reduce their governance burden. But they are often limited in terms of resources they can dedicate to meeting their obligations and overseeing their plan. As a result, we are now seeing more and more sponsors choosing to outsource some of their operational responsibilities using turnkey DB and DC delegated solutions. These solutions free up their time so they can focus on the more important strategic issues. This fairly new approach in Canada, especially on the DC side, should represent a much larger part of the market in the near future vs the traditional consulting approach.
Another important thing that employers will need to adapt to is the changing needs and desires of their workforce in terms of benefits. Younger employees want more flexibility in terms of benefits and they want to be able to better customize their coverage. Increasingly, employers will need to adapt to this reality and get creative with their benefits to attract and retain employees.
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