Employers are concerned about employees’ financial wellness | Mercer

Canadian employers are concerned about employees’ financial wellness

Our Thinking / Employee Financial Wellness

Canadian Employers Are Concerned About Employees’ Financial Wellness
Calendar02 May 2018

Feedback from Mercer Canada’s 26th Annual Retirement Outlook & Fearless Forecast

Over the past few years, Canadian employers have been aware that financial wellness is a growing concern across all their employee segments.  Regardless of which industry they are in, employers are hearing that employees’ have concerns about maximizing their investments and minimizing the retirement gap.

“The majority of retirement plans were developed based on 1950’s life expectancy average of 74-79 years but today this number is closer to 88-92 years”
– Statistics Canada

In January, Mercer Canada hosted our 26th annual Retirement Outlook and Fearless Forecast. During this multi-city event series, we had the opportunity to have some great discussions with almost 600 plan sponsors and business leaders from across the country. The Canadian employers we spoke with had similar feedback regarding financial wellness including:

  • 59% Canadian employers feel it’s critical to help their employees better understand and appreciate benefit programs
  • 52% Canadian employers believe understanding and managing the risk of their defined benefit pension plans is a key area of focus
  • 51% Canadian employers identify higher returns as the biggest priority in  their retirement plans

It is understandable that Canadian organizations and plan sponsors are looking for ways to improve. The outlook for retirement and pension plans has changed significantly over last few years, putting pressure on employers. The majority of retirement plans were developed based on 1950’s life expectancy average of 74-79 years but today this number is closer to 88-92 years.

The good news is that, having quantified what the savings gap actually is, Canadian employers and pension managers can help develop and implement programs to mend this gap. Here are some tips to help get your organization started:

How Can Canadian Businesses Work to Mend the Retirement Savings Gap?

1.  Better understanding and management of defined benefit plan risks
Over the years, the landscape and the challenges have become increasingly complex, but there are strategies that we’ve successfully used with our clients to help create better outcomes for all stakeholders. Better understanding of defined benefit plan risks will lead to better management of these risks.

2.  Get excited about Financial Wellness
Employees and plan members shouldn’t view financial wellness as a chore. Instead employers need to build trust and excitement so that it is seen as a simple but meaningful exercise that can help employees and plan members achieve their goals. A great place to start is with a financial education program to boost employees’ financial confidence and financial acumen with which to make the decisions before them.

3.  Work with experts to increase returns through efficiencies
Employers and plan sponsors told us that getting the highest returns on their plan investments would provide the biggest positive impact to their business. However, when asked about how they intended to do this, they struggled with how they would achieve this. Thankfully, Mercer has numerous innovative solutions that can help on this front.

What’s Next?

Having worked with a wide range of plan sponsors in Canada, Mercer knows the importance of creating financial security in retirement for individuals. We have seen the ongoing value our clients have achieved by ensuring their plan members understand the importance of starting retirement savings early and contributing on a regular basis.

Contact us to learn more about how we can help improve financial outcomes for your employees and business overall!

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