Employers can offer credibility and scale when providing retirement tools and advice, argues retirement experts
For many Canadian pensioners, retirement remains an abstract concept or an unachievable milestone.
According to a recent FSRA survey, 76 per cent of Ontarians haven’t developed a full retirement plan and nearly half don’t recall the last time they talked to someone about retirement savings. While most believe retirement should happen someday, it’s often pushed to the back of the line behind daily expenses or debt.
That lack of planning is a red flag for Fraser Stark who believes employers have a significant role to play in changing this.
“Retirement is really a time with many different elements of uncertainty,” said Stark, president, longevity retirement platform at Purpose Investments. “Lifespan uncertainty, health uncertainty, and cost uncertainty. All these uncertainties compound and make it a challenging period to navigate.”
Even with that cost, workers tend to prioritize short-term needs. The most common financial concern isn’t retirement, it’s day-to-day living expenses, Stark said, referring to HOOPP’s 2023 retirement survey.
“Life is busy, and retirement planning is often low on the priority list. But the reality is, retirement may be the most expensive event of your life,” said Andrew Fung, executive vice president of pensions at FSRA.
Stark believes that the structure of retirement plans in the workplace has left people behind. Even when workers understand the need to save, the way retirement is talked about often fails to land.
Fung said the interest among retirees is there, employers just don’t necessarily always follow-through.
“Our survey results have shown us that the overwhelming majority of respondents are hungry for more information about retirement,” he said. “Nine in 10 believe more needs to be done to educate people about pensions and encourage them to save.”
“I don't think we've talked about retirement too much. I think we haven't talked about it properly,” emphasized Stark.
The shift from defined benefit (DB) to defined contribution (DC) plans means more risk and more responsibility has been pushed onto individuals, which doesn’t always work. He acknowledged a shift toward a “two-pot solution,” which separates savings and decumulation into distinct components, allowing workers not just to accumulate wealth but also to effectively draw it down in retirement
Stark argues that employers are uniquely positioned to help their retirees. With trust in many institutions declining, “the one highly trusted element in society is one’s employer,” he said, adding that employers can offer credibility and scale when providing retirement tools and advice.
But to do so effectively, they need to embrace the complexity of retirement.
“Employers like speaking to their customers and their employees in clean and simple language and retirement’s emotionally complex,” he said.
Additionally, rather than focus on superficial perks like “free lunches and dry cleaning,” workplaces would deliver more value by offering access to trusted financial advice, noted Stark.
“Make me pay for my own lunch, but provide me with a trusted, vetted person… that would be incredibly beneficial,” he said.
Fung agrees that workplace programs can play a bigger role.
“Employers can support their employees by exploring various options like offering a workplace pension plan, retirement savings plans, financial education and resources, and other retirement initiatives,” he said.
So why aren’t more employers doing this? As Stark is quick to note, there’s both a monetary cost and a time cost.
“If your employees don’t care about it, that cost then becomes wasted,” he said.
Retirement, ‘a dated idea’ that differs
Stark believes there’s not one picture that represents all Canadians. While many Canadians do retire comfortably, a large portion of the population faces real challenges. For the median Canadian, Stark sees three main barriers: a lack of financial resources, an inability to convert savings into income, and a lack of emotional confidence.
“If any one of these goes wrong, you can't really retire,” he said.
The first issue is Canadians just haven’t saved enough. Stark pointed to HOOPP’s data that found approximately 80 per cent of Canadians have less than $100,000 in savings.
Even for those who have saved, the second challenge lies in managing the uncertainty of lifespan. Stark emphasized that without tools to help manage that longevity risk, many hesitate to retire. He believes products like annuities or variable lifetime income solutions can fill this hesitation.
The third and often overlooked issue is an emotional one as many lack the mental confidence to retire.
“This is also a profoundly emotional and existential life change that really evolves where we draw meaning from,” he said, adding the traditional idea of retirement as a hard stop followed by leisure no longer fits. “I think we’re realizing that it’s a dated idea.”
Stark challenged the conventional notion of retirement as a clean break from work. Instead, he views retirement as a gradual evolution because for many, the shift away from full-time work begins in their 40s or 50s and is driven less by financial necessity and more by a desire for purpose. Some never fully retire and instead opt to leave a legacy.
“If you look at what brings people happiness and joy and meaning later in life, it's no longer about the big pay check and the annual bonus because people have [already] accumulated the wealth that cover their needs. It's about wanting to leave a legacy and the psychological impacts they’ll have,” said Stark.
“The real work at a human level is in figuring out, what does life mean now?” he added. “A lot of people struggle in retirement, emotionally, not financially.”
