Canadian HR Reporter

CanaDian hr reporter november 17, 2014 News 3 Employees still not saving enough for their retirement: survey Education, financial literacy crucial in preparing employees to retire By Liz Bernier tHE Good nEws is most of your employees are building at least some savings for retirement — on average, six in 10 Canadians are putting money away, most of- ten in registered retirement sav- ings plans (RRSPs) and tax-free savings accounts (TFSAs). e bad news? Sixty per cent aren't saving enough. at's according to one of two retirement-readiness surveys by the Conference Board of Canada — one examining employee and retiree perspectives, the other tak- ing a look at the employer side. "Our aim was to really drill down further on some of the is- sues facing organizations and in- dividuals," said Judith MacBride- King, director of age, work and society at the Conference Board in Ottawa. A key objective was to take a closer look at financial literacy — how widespread are employees' knowledge gaps, and what can employers to do address them? "It's an incredibly important is- sue for us as individuals and for organizations to help individu- als to ramp up their knowledge in terms of financial literacy," she said. Retirement readiness e average age employees plan to retire at is 63.2 years, accord- ing to Retirement Perspectives and Plans: A Survey of Non-reitrees and Retirees in Canada, which surveyed 1,656 individuals. But that number is rising, said MacBride-King, and employers are reporting employees are leav- ing later and later. "ere were differences by de- mographic... for example, the self- employed were planning to retire a little bit later, at 65.5 years of age, versus those who were employed at 62.4 years of age. (In) the pub- lic sector, people are going to exit about 2.5 (years) earlier than those at the private sector and about 3.5 years earlier than those in the not- for-profit sector," she said. "Young people, under age 25, were the most optimistic… the average age of (expected) retire- ment was 60.1 for them." But we'll likely continue to see older workers staying in the labour force for longer, said MacBride-King. "Some have postponed their retirement — in fact, about 32 per cent of those we surveyed said they shifted out their retire- ment past the plan. And most of these — two-thirds — plan to retire later as opposed to earlier. And the chief reason for that is affordability." A critical piece of retirement affordability is increasing life ex- pectancy, said James Koo, partner at Aon Hewitt in Toronto. "If people are going to live to age 88 or 90, then it becomes very expensive to retire at 65," he said. Up to 19 per cent of survey re- spondents said they never expect to be able to retire. Only four in 10 respondents said planning for retirement is a priority, said MacBride-King, and 42 per cent of employers feel employees are overly optimistic about their retirement prospects, according to the employer survey of 177 respondents. Most employers (64 per cent) have more than one retirement savings plan or pension plan for their workforce, according to An Employer's Perspective: Retire- ment Savings and Preparedness. Thirty-four per cent have one plan in place while just two per cent have no plan in place. Group RRSPs (63 per cent), de- fined benefit plans (56 per cent) and defined contribution plans (50 per cent) are the most com- mon offerings among employers. But Adwoa Buahene, managing partner at n-gen Performance in Toronto, said even when such em- ployer plans are offered, younger generations may be hesitant about making contributions. "For a lot of gen X-ers, there would be a fear that (a defined benefit plan) is going to get drained by the baby boomers. So, do I really want to contribute to a defined benefit plan?" she asked. "(ere are) evidence and signs to us that we will have to save for ourselves and we will have to take care of ourselves." But, at the same time, it's dif- ficult to convince employees to tuck away a large portion of their salaries for the distant future, said eMPLOYees > pg. 8

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