Pensions and saving for retirement seem to be everywhere in the news today. Yet many Canadians don’t place a high priority on employer-sponsored pension plans. That’s the conclusion from BMO’s recent report, Perfecting the workplace pension: The quest continues, which found that Canadian employees are not taking pension plans into consideration when evaluating new job opportunities.
Of those surveyed, only 7% said they consider a good retirement pension to be the most important factor when evaluating a potential employer. Instead, top ranks were given to salary (47%) and flexible work arrangements (22%). As well, only 9% said it was very likely they would leave their current position for another one if the new employer offered a better workplace pension/savings plan.
Tina Di Vito, head of the BMO Retirement Institute, points to two factors that are contributing to Canadians’ lax views toward employer-sponsored plans: the shift from DB to DC and our increasingly mobile workforce.
The DB to DC shift has put the onus on plan members to maximize their investments, but, unfortunately, most Canadians find their plans too confusing and instead leave the investment decisions up to the plan sponsor. Of those surveyed, 51% said they could not identify the “must-have” features they would include if given the opportunity to design their own workplace pension plan.
Di Vito says that while auto-enrollment and default investment options are good because they result in more people enrolling in plans, these features don’t necessarily help employees to understand their plans or to make the right investment decisions, adding to the sense of general disinterest in workplace pensions.
Di Vito also references the mobile workforce—the growing tendency for Canadians to change jobs frequently—as a reason why we’re less concerned about employer-sponsored plans. The report found that half of Canadian workers have already had five or more employers since they started working, and 20% expect to work for 10 or more employers over their careers. And because we’re jumping jobs so frequently, we’re often not with an employer long enough to reap the benefits of a pension plan.
“The employer pension used to be a lot simpler because, in the past, Canadians would generally stay with one employer throughout their working career,” said Di Vito. “Now, because employees switch jobs so often, many have to deal with multiple pension plans. They find themselves in the unfortunate situation of not working for a particular employer long enough to be eligible to join a pension plan even if it’s offered, or not vesting…they’re in a position where, because they’ve had multiple employers over their lifetime, they continually have to learn and adapt to the new pension plan that they may be part of at that new workplace.”