Reevaluate plan features to optimize your investments
The 2024 Canadian Defined Contribution (DC) Plan Sponsor Survey reveals a significant shift in the priorities of plan sponsors, with a strong focus on enhancing employees’ financial resilience and retirement readiness. A remarkable 76% of plan sponsors now prioritize these aspects, up from 41% in 2020, reflecting a growing awareness of the importance of financial well-being in the workplace.
To better understand the effectiveness of their plans, 28% of plan sponsors are currently utilizing data analytics to measure retirement outcomes, focusing on key metrics such as participation rates and contribution levels. This trend is expected to expand, with an additional 25% of sponsors planning to implement similar measures in the next two years. These efforts are crucial for ensuring that employees are on track to achieve a secure and comfortable retirement.
In response to the evolving needs of their workforce, Canadian DC plan sponsors are exploring innovative features to modernize their plans. While only 14% currently offer auto-enrollment and decumulation solutions, 35% are considering these options in the near future. These features are designed to provide greater flexibility and security, helping employees navigate the complexities of retirement planning more effectively.
To optimize their investment lineups, plan sponsors are increasingly focusing on Target Date Funds (TDFs), which are the default investment option for 88% of plans. However, only 11% have revisited the underlying investment principles that guided their initial TDF selection. To better support employees, sponsors are encouraged to reevaluate their TDFs, paying close attention to asset allocation and glide paths. Additionally, over half of plan sponsors have recently reviewed their recordkeepers, with 71% achieving improvements, primarily in the form of reduced fees. However, room for improvement remains, with many plan sponsors seeking enhancements in tools, communication materials and customer service to further support their employees.
Our survey results can help guide your organization in improving member outcomes by focusing on establishing clear plan objectives for member outcomes, measuring against these objectives, and identifying areas where employees may need more support or education. By monitoring plan participation rates, assessing employee contribution rates, and evaluating investment efficiency by age bands, you can better understand the effectiveness of our current strategies and identify areas for improvement.
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