Lifetime retirement income plans offer a competitive advantage in attracting and retaining top talent
CAAT Pension Plan has released its new whitepaper ‘Better Pensions Needed to Create a Better Canada’, shedding light on demographic trends and the state of retirement readiness in Canada. The paper draws conclusions from the findings of the June 2023 survey by the Canadian Public Pension Leadership Council (CPPLC), ‘The Pensions Canadians Want: Perceptions of Retirement (2016–2022)’, focusing on the opportunities emerging from current perspectives on retirement security, particularly in the workplace.
More than half of Generation X Canadians (53 percent) and Millennials and Generation Z workers aged 25 to 34 (49 percent) are highly stressed about outliving their retirement savings. Furthermore, over half of Canadians under 45 (55 percent) desire an employer contribution match.
Canadians across all age groups express a preference for guaranteed lifetime retirement income (72 percent), inflation-adjusted plans (71 percent), and monthly, predictable payouts (71 percent). This preference intensifies as workers approach retirement age.
“After years of challenging economic conditions, many have been set back in their savings and are more stressed about their financial and retirement futures. The paper highlights the pivotal role employers play in improving retirement income security for Canadians where savings vehicles can have the most positive impact, which is in the workplace,” says Derek Dobson, CEO and plan manager of CAAT Pension Plan.
Workplace pensions
Organizations offering lifetime retirement income plans can contribute to employees' long-term financial wellbeing and gain a competitive advantage in attracting and retaining top talent. The paper highlighted the appeal of defined benefit (DB) pensions, revealing that more than half of Canadians aged 18 to 24 (55 percent) would change employers for any pension plan.
CAAT's surveys of Plan members and employers only affirm the benefits associated with DB plans. 90 percent of respondents consider having a workplace pension as the most influential factor in staying with their employer, while 87 percent rate it as the most influential factor in joining their employer.
Moreover, 86 percent of active members aged 35 to 44 view a workplace pension plan as somewhat or very important to their career decisions.
With over 20 percent of working-age Canadians nearing retirement and an anticipated talent shortage, the demand for improved retirement plans presents an opportunity for employers. 76 percent acknowledge that CAAT's DB plan has contributed to improving employee retention, and 72 percent said that it has aided in recruitment efforts.
“As the actual cost of living in retirement outpaces what government programs were meant to provide, workplace pensions are becoming an even more vital income stream. Employees will need guidance on the value, mechanisms, and long-term outcomes of the suite of workplace retirement plans today. Through retirement education, active engagement, and member-centric innovations, there is viable opportunity – and optimism – to improve the retirement income security for Canadians,” the paper states.
