Rising number of defined contribution pension plans and group RRSPs drives need for easy-to-understand statements that provide actionable recommendations.
MONTREAL, Jan. 5, 2011 – Nearly half of Canadians (44%) with a group savings and retirement plan do not know what their future retirement income will be, and 41 per cent are unaware if their current rate of retirement saving is on target to meet their future income needs, according to a new Ipsos Reid survey conducted for Standard Life.
The poll found that 87 per cent of Canadians with workplace retirement plans rarely or never make adjustments to their retirement investment portfolio based on information contained in their financial statements. Only 22 per cent of group plan members surveyed gave their statement a high grade for clarity and an appropriate level of detail.
The study also revealed that workplace retirement plan statements are not widely used because they are hard to understand and lack personalized recommendations and specific suggestions to improve retirement income. Most plan members surveyed (72%) also believe their statement contains insufficient information upon which to base a change in their retirement planning.
Survey highlights: the most common complaints about employer retirement statements
- 36 per cent of workplace retirement plan members feel their statement is either difficult to understand or too technical
- Nearly a quarter (24%) believe their statement is boring, and
- 21 per cent of those workplace retirement plan members surveyed find the information irrelevant because they are not yet thinking about retirement
How long and how thoroughly do members review their employer-sponsored retirement statements?
- Majority either “skim over” their statement (49%) or ignore it all together (5%)
- 62 per cent spend 10 minutes or less reviewing their statement
- Only about a third (31%) have arranged to have professional help to read their statement
“What this research is saying is that the status quo is not working, and action is needed to make group savings and retirement statements more relevant and effective for retirement planning purposes,” says Anna del Balso, Assistant Vice-President, Research and Intelligence at Standard Life. “The financial services industry faces a clear communications challenge to fashion easily understood statements that inform, engage and, when necessary, provoke a change in direction.”
Providing clarity and actionable recommendations is particularly important for defined contribution plan members who are responsible for their own retirement income planning. Today 3.3 million Canadians or over 40 per cent of those with group pensions are covered by workplace defined contribution plans or group RRSPs, and that number is expected to rise in the future.
Standard Life recently announced changes to the way it presents information to workplace retirement plan members, and its redesigned statement received the “excellent” designation in DALBAR’s latest Trends and Best Practices in Defined Contribution Pension Plan Statements report. “Our statement provides personalized suggestions so that plan members can answer three fundamental questions: How am I doing? Am I on track? What could I do to reach my retirement goals?,” added Ms. del Balso. “Our objective in making these changes is to help Canadians take a more active role in their retirement planning.”
The Workplace Retirement Plan Reporting survey, conducted by Ipsos Reid for Standard Life, interviewed a national sample of 1,371 adults from Ipsos’ Canadian online panel between November 3 and 9, 2010. Weighting was then employed using census data to balance demographics and ensure that the sample’s composition reflects Canada’s adult population. A survey with a random probability sample of this size and a 100 per cent response rate would be considered accurate to within � 2.6 percentage points, 19 times out of 20.
About Standard Life
Standard Life plc is a leading long-term savings and investments company headquartered in Edinburgh, Scotland. Standard Life has around 10,000 employees; operates in the United Kingdom, Europe, North America and Asia Pacific, and globally with Standard Life Investments; and serves over 6.5 million customers worldwide.
In Canada, Standard Life has been doing business for over 175 years. Standard Life Financial Inc., which wholly owns The Standard Life Assurance Company of Canada and Standard Life Mutual Funds Ltd., is Standard Life plc’s largest operation outside the UK. With over 2,000 employees, it provides long-term saving, investment and insurance solutions to more than 1.3 million Canadians, including group insurance and retirement plan members.
As of September 30, 2010, Standard Life plc had C$311 billion in assets under administration, including C$38.2 billion in Canada through Standard Life Financial. www.standardlife.ca