Target benefit plans, phased retirement and income tools shift how members approach financial security
As traditional retirement models face increasing strain, plan sponsors and asset managers are rethinking how to support members navigating income drawdown, emotional readiness, and financial independence.
A Globe and Mail profile of Terry, a 49-year-old software consultant in Vancouver, offers insight into how some high-income Canadians are reshaping retirement timelines.
With no debt and over $2.7m in savings and investments, Terry and her partner, both tech workers, have rejected homeownership and traditional retirement timelines.
“We just kept saving,” Terry said, after realizing that their savings rate couldn’t keep up with rising real estate prices.
Now, they rent a downtown condo for $3,312 monthly and maintain flexibility in career decisions.
Job switching helped accelerate income growth, and with a current household income exceeding $300,000 annually, they are on track to reach $5m in total assets by their late 50s.
Their financial planning includes RRSPs, a TFSA, taxable accounts, and an FHSA.
Terry also intends to stop working once her current contract ends, possibly transitioning to new pursuits aligned with personal interests.
“Some people save, save, save...but by then maybe they are not in good health,” she said, emphasizing the importance of living in the moment.
For plan sponsors, this type of client underscores the shift away from conventional retirement expectations.
It also reflects a growing need to support non-linear retirement paths, phased work transitions, and members who may never fully stop working.
According to Benefits and Pension Monitor, Oricia Smith of SLGI Asset Management pointed to data from Sun Life Global Investments showing that 40 percent of Canadians worry they’ll outlive their savings.
Half report having no financial advice in retirement. “About 90 per cent of plan members want regular income, but they also don’t want to lock in all their savings,” she said.
Smith called out the industry's shortcomings in supporting decumulation.
“We probably haven’t done the best job of helping people understand how to decumulate optimally,” she said, referencing complexities with RRIFs, LIFs, asset mix, and minimum withdrawals.
Sun Life’s MyRetirement Income product aims to simplify this process by offering automated income aligned with legislative drawdown rules, functioning like a target date fund but for retirement income.
“It also ensures that income remains resilient,” said Smith, citing it as an innovation aimed at improving retirement outcomes for members.
The FSRA’s latest Ontario survey, as reported by Benefits and Pension Monitor, found 76 percent of respondents have no formal retirement plan.
Nearly half haven’t spoken to anyone about retirement savings recently.
Fraser Stark of Purpose Investments believes employers need to take a larger role. “Retirement is really a time with many different elements of uncertainty,” he said, listing lifespan, health, and cost.
FSRA executive vice president Andrew Fung added that 90 percent of surveyed Canadians want better retirement education and plan engagement.
Both Stark and Fung see employer-led financial education and retirement design as essential. Stark noted that 80 percent of Canadians have less than $100,000 saved.
Even for those with savings, emotional confidence remains a major barrier.
“Make me pay for my own lunch, but provide me with a trusted, vetted person,” said Stark, pointing to the higher impact of financial guidance versus lifestyle perks.
He also described retirement not as a one-time event but as a transition beginning in midlife. “The real work at a human level is in figuring out, what does life mean now?”
David Le Roy of the Canada Wide Industrial Pension Plan (CWIPP) highlighted the growing relevance of target benefit plans.
Speaking to Benefits and Pension Monitor, he described CWIPP’s structure as a hybrid between DB and DC: predictable for members, without long-term employer liabilities.
“It’s like a DC plan for employers but a DB for members,” said Le Roy.
With roughly 70 participating employers, many introduced via collective bargaining, CWIPP’s model avoids cross-subsidization and offers pooled assets to hedge against longevity risk.
However, Le Roy acknowledged the possibility of benefit reductions if long-term performance falters. “This isn’t a decision taken lightly,” he said, citing reserve strategies to manage volatility.
He believes target benefit plans deliver better outcomes than DC or group RRSPs by reducing fiduciary risk and improving monthly income stability.
Financial stress remains high among working Canadians.
Benefits and Pension Monitor cited Peter Tzanetakis of the National Payroll Institute, who pointed to Financial Wellness Lab data showing 40 percent of Canadians are financially stressed, with many saving under 5 percent of their income.
The result is an estimated $54bn in lost productivity.
Tzanetakis supports emergency savings as a workplace benefit. “All the data really points to this short-term need for funding emergencies,” he said.
Dimitri Poliak of Normandin Beaudry added that emergency savings should be tailored to employee context and integrated with broader literacy strategies.
While TFSAs are a strong savings tool, Poliak cautioned against treating them as standalone emergency funds. He advocates layered communication and personalization.
“Each employer needs to go through the exercise of assessing what is relevant and important within their own population,” he said.
Scott Plaskett of IronSHIELD Financial Planning suggested that employers avoid adding full-time financial planners to payroll but instead integrate third-party planners through benefits providers. “The challenge right now is... the plan deals in a silo,” he said.
Access to individual financial planning can help members see how group benefits align with personal goals.
He also sees it as a tool for retention. “An employer who reaches out to establish a financial planning relationship...really speaks volumes,” said Plaskett.
Even if not hired full-time, fractional or on-demand planners could be embedded at key employee milestones.
