![Rethinking DC contributions: An individualized approach](https://www.benefitscanada.com/wp-content/uploads/sites/7/2016/04/Eckler_JaniceHolman.jpg)
During the DC Plan Summit, participants broke off into small groups to discuss the major challenges facing plan sponsors. Here are some highlights of the sessions and key takeaways for participants:
Moderator: Janice Holman, principal, Eckler
Topic: Rethinking DC contributions: An individualized approach
Employers often differentiate their total rewards based on personal factors such as residency, family size and income level. So why do most employers use a uniform contribution rate for their defined contribution pension plans?
Key takeaways:
When defined contribution plans first emerged, they were often an addition to defined benefit plans. They’re now the core benefit in most cases, but there hasn’t been a change to the structure. Should there be individualized contribution schedules to allow for individualized targets? Plan sponsors, however, are hesitant in part because it’s difficult to know what the targets should be.
Plan sponsors are shifting to a more paternalistic approach to their plans, but it’s not an imposed paternalism. Most sponsors want a plan design with a base safety net that allows for flexibility for those looking to save more.
Success stories had the common element of a more hands-on approach to helping members understand what they need to save. Options include an income-replacement statement throughout an employee’s career.