checkmate! workplace savings plans help

MARCH 2014
CHECKMATE!
WORKPLACE SAVINGS PLANS HELP
CANADIANS WIN IN RETIREMENT
Our sixth annual Canadian Unretirement™ Index shows, those Canadians who don’t participate in a workplace
savings plan are missing out. Participation in a plan continues to provide significant emotional and financial
benefits for members compared to non-members.
L
isten in on the discussion about retirement savings in
Canada, and you’ll hear a common theme: “we need to
find a way to help people save more.”
The reason is a simple one: the Canada Pension Plan, the Quebec
Pension Plan and Old Age Security aren’t designed to be a sole
source of retirement income, and a staggering number of
Canadians don’t have a savings plan at work.
And that’s a shame – because employer-based savings plans work.
As our research shows, the “well-being” gap between those who
have a plan and those who don’t is significant. Plan members
report being better off in multiple categories – from worrying
less about their retirement to saving more for their future.
2014 CANADIAN UNRETIREMENT TM INDEX
W
orkplace savings plans are a long-term
investment, and it’s easy for employers and plan
members to take their plans for granted day-today. But the results of our 6th annual Canadian
Unretirement™ Index remind us just how beneficial these plans can
be for employees.
As our 2013 Canadian Unretirement™ Index shows, those
Canadians who don’t participate in a plan are missing out.
Here is an overview of the findings of the Index as they relate to
workplace savings plans – and some insights into the positive
influence that these plans have on the outlook of Canadians
about their futures.
And because of this, employers who offer such plans enjoy a
competitive advantage over those who don’t. And there are many
employers who don’t. According to Statistics Canada, more than
500,000 Canadian businesses currently do not offer any kind
of employee workplace savings plan. As a result, three to five
million Canadians do not have access to a simple, affordable
workplace pension plan.
The more financially
secure an employee feels,
the more likely the
expectation for retirement at an earlier age.
CONNECTING THE DOTS:
WHY HELPING MEMBERS “WIN” IN RETIREMENT MATTERS
TO EMPLOYERS
Our survey results show that workplace savings plans have a direct, positive impact on employee financial security. This
increases the likelihood of “on time” retirement – where employees have the financial security they need to retire when they
want to enabling employers to effectively succession plan and stay competitive.
Retirement insecurity is not just a plan member problem – it’s also an employer problem. That’s because delayed retirement and
the associated uncertainty can negatively impact an employers’ human resources and finance objectives. These potential
impacts range from succession planning and skills renewal issues, to higher wage and benefit costs, to lower productivity,
engagement and morale as a result of mature employees continuing to work because of financial need alone.
For these reasons, employers should understand the key role that their workplace savings plans can play in the health of their
organizations – and take steps to maximize these benefits whenever possible.
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2014 CANADIAN UNRETIREMENT TM INDEX
EARLY RETIREMENT: not a trivial pursuit
One of the most significant measures of actual and
psychological well being is the age at which employees say they
expect to retire. Simply put, the more financially secure an
employee feels, the more likely the expectation for retirement at
an earlier age.
In terms of actual retirement age, the age at which plan members
say they will retire – age 65 – is lower than the age 67
expectations of non-members. In fact, in each of the five years of
our research, plan members have had earlier retirement age
expectations than non-members.
While just 18% of Canadians without a workplace savings plan
say they will be retired by age 66, 35% of workplace savings plan
members say the same. And of those who say they will be
working at age 66, 40% of plan members say it will be because
they want to (not because of financial need) versus just 29% of
non-members.
Expected retirement age over the year
Members
Non-members
73
70
71
70
69
67
66
66
65
63
2009
2010
2011
2012
2013
Statistics Canada, Canadian Business Patterns Database, December 2010.
http://www.sunlife.ca/Canada/sunlifeCA/vrsp/enrol?vgnLocale=en_CA
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40% of plan members say they will
continue working past 65 because they
want to (not because of financial need)
versus just 29% of non-members.
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2014 CANADIAN UNRETIREMENT TM INDEX
THE GAME OF LIFE – taking action
Workplace savings plan members are also more likely to be taking positive action on their finances than non-members, with these
actions taking place on a number of fronts.
Compared to before the 2008 financial crisis, a significantly higher percentage of members versus non-members are now paying down
more debt, planning their financial future more, saving more and investing more.
Plan members taking action
Members
Investing more
24%
Non-members
12%
30%
Saving more
18%
34%
Planning my financial future more
21%
35%
Paying down debt more
25%
Workplace savings plan members are also more likely to have a written financial plan than non-members (24% versus 14%) and work
with a financial advisor (36% versus 22%). Having a financial plan can help employees set their financial goals and help them track their
progress towards achieving their goals. A financial plan can also help employees:
•
•
•
•
protect what is most important to them,
plan for retirement,
leave something for their family, and
manage their taxes.
Both, working with a financial advisor and establishing a written plan
can provide an edge in terms of ensuring long-term financial security.
24% of plan members have
a financial plan vs. just 14%
of non-members.
Unretirement [un-ree-tiyr-mint] – noun: The growing trend away from early
retirement – by choice or economic necessity – and towards continued work past
the traditional retirement age of 65.
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2014 CANADIAN UNRETIREMENT TM INDEX
THINKING THREE MOVES AHEAD
Whether it’s through the financial education that workplace
savings plans provide – or the knowledge that their plans provide
continuous savings – plan members are more confident about
both planning for the future and their outlook for retirement.
Workplace savings plans
translate into measurable
financial benefits –
actual and psychological.
In terms of planning, 76% of plan members say they have the
financial knowledge to be able to make a plan for their
retirement, versus 63% for non-members. Looking down the road
at retirement, plan members also have a more positive outlook in
all areas that we surveyed.
Eighty-eight per cent of plan members say they are confident or
somewhat confident that they will have the income in retirement
to take care of basic living expenses, compared to 70% of
non-members. And in terms of their confidence about other
retirement expenses:
•
•
•
76% of plan members say
they have the financial
knowledge to be able
to make a plan for their
retirement, versus 63% for
non-members.
79% of members say they will have enough money to
cover their medical expenses, versus 58% of non-members
72% of members say they will have enough money to
pursue their hobbies and interests, versus 49% of
non-members
69% of members say they will have enough money to enjoy
the lifestyle they want, versus 46% of non-members.
Confidence in covering retirement expenses
Members
Non-members
46%
Lifestyle
69%
49%
Hobbies and interests
72%
58%
Medical expenses
79%
70%
Living expenses
88%
0
23
45
68
5
90
2014 CANADIAN UNRETIREMENT TM INDEX
PASS GO; collect retirement savings
The most compelling measurement of how a workplace savings plan can benefit employees is money – specifically, the amount of
retirement savings that members have accumulated versus non-members.
The benefit of workplace savings plan membership is significant. Excluding their home or other property, plan members had
accumulated an average of $491,000 in retirement savings, versus $313,000 for non-members.
This greater nest egg translates into a satisfaction rate for members that is double that for non-members, with 49% of plan members
saying they are very or somewhat satisfied with how much they are saving for retirement versus 24% of non-members.
Average amount of retirement savings
And when we examine the
Unretirement Index as a whole,
the higher optimism of plan
members is significant. The
index runs on a scale of 0 to
100, where 100 represents
extreme optimism and the
expectation of a perfect
retirement. The lower the
index number, the more
negative or pessimistic the
outlook is on issues that
influence retirement.
The overall Sun Life Canadian
Unretirement™ Index score –
measuring the confidence of
working Canadians – is 48 for
members of workplace savings
plans, versus just 35 for those
who are not members.
Non-members
$375,000
$313,000
$250,000
$125,000
0
Average amount of retirement savings
Satisfaction with amount of savings
Members
49%
50
When it comes
to retirement
savings, plan
members have a
satisfaction rate
double that of
non-members.
Members
$491,000
$500,000
Non-members
38
24%
25
13
0
Satisfaction with amount of savings
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2014 CANADIAN UNRETIREMENT TM INDEX
GAME, SET, MATCH!
By providing a workplace savings plan, sponsoring employers are providing their employees with measureable financial benefits – both
actual and psychological. This not only improves the financial health of individual employees but promotes the achievement of an
organization’s human resources and financial goals by increasing “on time” retirement rates.
These rates can increase even further through proactive measures that employers can take to maximize the impact of their plans, and
help plan members save for a worry-free retirement. These can include:
•
•
•
•
•
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delivering ongoing plan member education – Sun Life Financials’ my money @ work program helps plan members secure a
financially fit future by giving them the tools and information they need, at the right time and in the right place! Tools like
money UP! - our game-inspired approach to financial literacy for employees who have their workplace retirement and savings plan
with Sun Life - or our face-to-face learning sessions, can help increase plan member education and engagement;
promoting the use of planning tools – the Sun Life Financial Retirement planner and other tools are always available on
mysunlife.ca to help members plan for a brighter retirement;
introducing additional savings plan options such as Tax-Free Savings Accounts;
offering innovative investment options which meet the needs of plan members and help simplify the investment process;
developing campaigns to grab plan members’ attention and increase their contribution rates - something that Sun Life Financial
has the experience and expertise to seamlessly deliver;
providing access to advice – holistic or in-plan advice – to develop a financial plan.
While all workplace savings plans provide measurable benefits to plan members and employers, organizations that take a proactive
approach to improving plan participation and the plan member experience stand the most to gain.
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2014 CANADIAN UNRETIREMENT TM INDEX
ABOUT THE SUN LIFE CANADIAN UNRETIREMENT™ INDEX
The Sun Life Canadian Unretirement™ Index tracks how workers’ attitudes and expectations about retirement are evolving in response
to economic, health and personal forces affecting their lives.
The term “unretirement” refers to the growing trend away from early retirement – by choice or economic necessity – and towards
continued work past the traditional retirement age of 65.
ABOUT THE SURVEY
The sixth Sun Life Canadian Unretirement™ Index is based on
the findings of an Ipsos Reid poll, conducted between
November 12 and 20, 2013, on behalf of Sun Life Financial.
The precision of Ipsos online surveys is measured using a
credibility interval. In this case, the survey is accurate to
within +/- 2 percentage points had all Canadian adults been
polled. All sample surveys and polls may be subject to other
sources of error, including, but not limited to methodological
change, coverage error and measurement error.
For this survey, Ipsos Reid conducted online interviews with
a sample of 3,005 working Canadians from 30 to 65 years of
age from Ipsos’ online panel. Weighting was then employed
to balance demographics to ensure that the sample’s
composition reflects that of the adult population according
to Census data and to provide results intended to
approximate the sample universe.
Life’s brighter under the sun
Group Retirement Services are provided by Sun Life Assurance Company
of Canada, a member of the Sun Life Financial group of companies.
02/14-SI-RB
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