SOURCE: Aon Hewitt

Aon Hewitt

October 27, 2014 15:03 ET

Conference Board of Canada Study Finds Employers Concerned About Sustainability of Pension Plans and Employees' Retirement Knowledge

A New Study From the Conference Board of Canada, Co-Sponsored by Aon Hewitt and the National Association of Federal Retirees, Suggests That Canadian Employers Recognize Challenges in Financial Literacy, Employee Expectations

TORONTO, ON--(Marketwired - October 27, 2014) - Canadian employers see healthy workplace retirement plans as a key factor in employee retention, but they are concerned about pension plan sustainability and about their employees' level of knowledge of retirement planning, according to a new study from the Conference Board of Canada, co-sponsored by Aon Hewitt, the global talent, retirement and health benefits solutions business of Aon plc (NYSE: AON), and the National Association of Federal Retirees.

Published earlier today, the Conference Board report, An Employer's Perspective: Retirement Savings and Preparedness, examined employers' views on the retirement preparedness of their employees and retirement savings plans and practices, through a survey of 177 Canadian organizations. The employers study was accompanied by another Conference Board report, A Survey of Non-retirees and Retirees in Canada: Retirement Perspectives and Plans, which was based on a survey of nearly 2,000 Canadians on their retirement readiness. The full reports can be found here:

The Survey of Non-retirees and Retirees found that a majority of Canadians feel they can't afford to retire, and the Employer's Perspective study found a similar degree of concern over the state of employee's preparedness for retirement. Those concerns included the sustainability of pension plans, particularly among those employers who offered defined benefit plans. According to the survey, 70 percent of employers offering DB plans said they were concerned that their plans would not prove sustainable. That concern exists despite the fact that plan solvency -- the ability of pension plans to meet their long-term liabilities -- has generally improved through 2014, according to Aon Hewitt's quarterly defined benefit pension plan surveys. (Find more information on Aon Hewitt's latest solvency survey).

The survey found that many organizations are addressing their concerns over pension plan sustainability by taking action using their three key levers -- plan design, funding strategy and investment policy.

"While the financial health of Canadian pension plans has generally been improving, it's clear that plan sponsors remain cautious about the future and are at least aware that risks continue to exist over the long term," said William da Silva, Retirement Practice Leader for Aon Hewitt. "The good news is that they also appear to be doing something about it as our conversations with Canadian organizations have changed over the past couple of years. They understand there is risk inherent in their programs and have begun to make difficult but timely decisions on managing risks inherent with their retirement programs. We continue to advise our clients to take advantage of the options available to them now to optimize their risk management strategies -- something that's best done when the plans are in relatively good health."

Half of the organizations surveyed agree that retirement savings is an equally shared responsibility between employers and employees. A majority said that retirement savings plans were an important part of the total rewards package offered to employees, and that employees are generally satisfied with their workplace retirement plans. However, only about a quarter of employers believe their employees will be able to achieve their retirement goals.

Many employers in the survey question the level of knowledge employees have in preparing for retirement, and recognize the need for better financial education. More than half think they should be doing more to help educate employees on financial planning and retirement preparedness.

"Financial literacy plays an important role in how confident Canadians feel about their retirement plans, yet most rate their levels of financial literacy as average at best," said Judith MacBride-King, project lead for The Conference Board of Canada. "While Canadians recognize that they have the primary responsibility for their own well-being, many people are looking to their employers and governments to provide insights and information to help them adequately prepare for their eventual retirement. This provision of information and education is a first step on that journey. That said, individuals also need to take advantage of those learning opportunities. Over one-third of the employers we surveyed said they were having challenges getting employees to participate in information/education sessions."

Those findings are consistent with Aon Hewitt's experience as a leader in providing retirement solutions and financial education for Canadian organizations and their employees Earlier this year, Aon Hewitt provided specific recommendations to the Financial Consumer Agency of Canada on strengthening Canadians' financial literacy; those included making it easier for employers to provide the kind of assistance they recognize employees need.

"Employers clearly recognize the need to improve their employees' financial literacy, In fact, some have even thought about going one step further and providing advice. However, many of them encounter substantial barriers to doing so in Canada," noted da Silva. "Canadian pension law provides little protection from liability for plan sponsors who want to provide plan members with financial advice. The federal government has rightly recognized the need to improve Canadians' financial literacy, and we believe addressing the hurdle of employer liability on providing advice would be a key next step toward helping Canadians manage this important challenge of preparing financially for retirement."

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Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.

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Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon's global partnership with Manchester United.

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