One-quarter (25 per cent) of employers feel their employees have a poor overall understanding of their defined contribution pension or group registered retirement savings plan, according to Benefits Canada’s 2016 CAP Member Survey.
The finding is a very slight improvement on the 2014 survey, when 27 per cent of respondents felt the same way. However, the percentage of employers that feel their employees have an excellent or very good understanding of their plan has dropped, to 22 per cent in 2016 from 27 per cent in 2014.
But there’s some good news. More employers feel their staff have a somewhat good understanding of their plan than those who said the same two years ago: 53 per cent in 2016, compared to 42 per cent in 2014.
Read: 2016 CAP Member Survey: Deconstructing how different employees view their retirement
The survey also found that while employee understanding of their capital accumulation plans’ payout options, contribution levels and longevity risk has been slowly increasing in the past two years, employers still think half their of their staff don’t have a good grasp of the details. That ties into the fact that employers feel the majority (79 per cent) of employees want to pick an investment option and not have to worry about it again.
“We could do a better job of checking in with plan members over their careers, nudging them and encouraging them to re-evaluate their programs according to changing life circumstances,” said Rod Smith, director of client services for the central region with Great-West Life’s group retirement services and one of the survey’s advisory board members.
Read: CAP members don’t understand retirement plan basics
Nearly seven in 10 (69 per cent) employer respondents to the survey believe their employees are ready financially for retirement based on their stage in life. The finding is an improvement on the 46 per cent that said so in the 2015 survey.
Among employee respondents, just 54 per cent said they feel ready financially for retirement, although 63 per cent consider themselves knowledgeable investors.
“I was quite surprised at the percentage of respondents who thought they had a good handle on how much money they need to save, but it is clear there isn’t a strong understanding because of the number of people who said they are worried about running out of money,” said Oma Sharma, a partner and defined contribution consulting leader at Mercer and a member of the advisory board.
Read more findings from the 2016 CAP Member Survey