BenefitsCanada • December 2017 / 27 By Jennifer Paterson ISTOCK PHOTO / ESSENTIALIMAGE ❰ 2017 CAP SUPPLIERS REPORT ❱ TAILOR-MADE PLANS Employers are customizing their capital accumulation plans to capture a more holistic financial picture as they seek to address members’ diverse savings priorities he transformation of pension plan design, the presence of five genera- tions in the workforce and an increasing reliance on technology are all hallmarks of an evolving workplace. With each person’s savings journey as bespoke as a tailored suit, how can employers fit capital accumu- lation plans into their overall financial wellness strategies to ensure employees are making the right savings decisions at the right time? In its case, CAA Club Group has created a financial wellness strategy that aligns with em- ployees’ career and life journeys, recognizing savings goals will be different at every stage. Earlier on, for example, their priorities may in- clude paying off debts from post-secondary edu- cation or buying a home. Next, they may look to open a registered education savings plan for their children or prepare a will. And those at or nearing retirement will be the groups most interested in
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BenefitsCanada • December 2017 / 27
By Jennifer Paterson
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❰ 2017 CAP SUPPLIERS REPORT ❱
TAILOR-MADE PLANSEmployers are customizing their capital accumulation plans to capture a more holistic financial picture as they seek to address members’ diverse savings priorities
he transformation of pension plan design, the presence of five genera-
tions in the workforce and an increasing reliance on technology are all hallmarks of an evolving workplace. With each person’s savings journey as bespoke as a
tailored suit, how can employers fit capital accumu-lation plans into their overall financial wellness strategies to ensure employees are making the right savings decisions at the right time?
In its case, CAA Club Group has created a financial wellness strategy that aligns with em- ployees’ career and life journeys, recognizing savings goals will be different at every stage. Earlier on, for example, their priorities may in- clude paying off debts from post-secondary edu-cation or buying a home. Next, they may look to open a registered education savings plan for their children or prepare a will. And those at or nearing retirement will be the groups most interested in
❰ 2017 CAP SUPPLIERS REPORT ❱
learning about the company’s pension offering, as well as the Canada Pension Plan and old- age security benefits.
“For me, the biggest [issue] is the education and understanding what the different types of plans can do for you at your different life cycles or career cycles,” says Mary Duncan, the organization’s chief human resources officer.
CAA offers employees three options: a defined contribution pension with matching employer contributions, a voluntary regis-tered retirement savings plan and a tax-free savings account, which employees can contribute to via payroll deduction. “We want to ensure we provide that adequate level of retirement income but also provide them with education and tools so they can make choices,” says Duncan.
29 / December 2017 • BenefitsCanada
Source: Companies participating in Benefits Canada’s 2017 CAP suppliers survey
TOP 10 | DC PLAN PROVIDERSAS OF JUNE 30, 2017 (MILLIONS)
Company 2017 DC plan assets 1| Sun Life Financial $35,454.0 2| Manulife Financial Corp. $25,357.0 3| Great-West Life Assurance Co. $13,854.0 4| Morneau Shepell Ltd. $6,071.0 5| Conduent Human Resource Services1 $3,063.0 6| Industrial Alliance Insurance & Financial Services Inc. $2,539.5 7| Desjardins Insurance $2,381.5 (Desjardins Financial Security Life Assurance Co.) 8| The Co-operators Life Insurance Company $1,558.5 9| National Bank Trust Inc. $132.5 10| Mackenzie Investments Inc. $97.0
2017 top 10 total $90,508.0 2016 top 10 total $81,127.5 * Variance 11.6%Note: *2016 total reflects restated numbers for some providers1. Xerox HR Outsourcing and Solutions changed its name to Conduent Human Resource Services in January 2017
TOP 10 | CAP PROVIDERS AS OF JUNE 30, 2017 (MILLIONS)
Company 2017 CAP assets 2016 CAP assets Variance 1| Sun Life Financial $70,176.0 $61,637.0 13.9% 2| Manulife Financial Corp. $51,832.0 $47,615.0 8.9% 3| Great-West Life Assurance Co. $33,227.0 $31,170.0 6.6% 4| Morneau Shepell Ltd. $9,757.0 $9,214.0 5.9% 5| Desjardins Insurance1 $7,869.5 $5,930.0 32.7% (Desjardins Financial Security Life Assurance Co.) 6| Conduent Human Resource Services2 $6,036.3 $5,399.4 11.8% 7| Industrial Alliance Insurance & Financial Services Inc. $5,654.0 $4,760.9 18.8% 8| RBC Royal Bank (RBC Group Advantage) $4,614.3 $4,156.0 11.0% 9| The Co-operators Life Insurance Co.* $1,844.9 $1,708.3 8.0% 10| Mackenzie Investments Inc.* $1,008.0 $1,026.0 -1.8%
2017 top 10 total $192,019.0 2016 top 10 total $172,616.6 Variance 11.2%Notes: Totals were compiled by adding administered assets under defined contribution, group registered retirement savings, deferred profit-sharing and employee profit-sharing plans. *2016 numbers restated for DC, RRSP, DPSP or EPSP administered assets . 1. Growth is primarily due to strong sales in 2016, including a single sale valued at almost $1 billion. 2. Xerox HR Outsourcing and Solutions changed its name to Conduent Human Resource Services in January 2017. Figures in this report are based on responses provided by the survey participants. Benefits Canada assumes no responsibility for the accuracy of the data provided. All totals are subject to a +/- variance due to rounding.
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Broadening the savings pictureAs the makeup of the workforce evolves, it’s becoming even more obvious that there isn’t a one-size-fits-all approach to workplace savings plans. So what’s the answer? A con-cept of financial wellness that looks beyond pension plans and retirement adequacy to create a holistic pic-ture of all savings priorities is one possibility.
“If I were an employee, what would my short-term goals, my mid-term goals and then my long-term goals look like?” says Jillian Kennedy, leader of Canadian defined contribu-tion and financial wellness at Mercer. Plan design and education that pro-mote complete financial wellness, she adds, could include topics like paying down debt, managing short-term savings for vacations and possible leaves of absence and then, ultimately, saving for retirement.
“We have more contingent work-ers, we have people coming in at dif-ferent times during their career, and so people are looking at benefits that correspond to the value they bring to their employment,” she says. “And so, can you imagine an employee walking around telling their friends, ‘I worked at this company and they helped me pay down my mortgage?’ So that’s why financial wellness is really important.”
A robust financial wellness stra- tegy can position different savings plans for a variety of goals, according to Kennedy. “If I can’t afford a home, I have an RRSP,” she says, refer-ring to the government’s first-time homebuyer’s plan, which allows people to withdraw up to $25,000 from an RRSP without tax penalties on the condition that they’re putting it towards a down payment.
TOP 10 | GROUP RRSP PROVIDERS
AS OF JUNE 30, 2017 (MILLIONS)
Company 2017 Group RRSP assets 1| Sun Life Financial $26,824.0 2| Manulife Financial Corp. $22,995.0 3| Great-West Life Assurance Co. $17,729.0 4| Desjardins Insurance $5,163.1 (Desjardins Financial Security Life Assurance Co.)
5| RBC Royal Bank (RBC Group Advantage) $4,411.6 6| Morneau Shepell Ltd. $2,753.0 7| Industrial Alliance Insurance & Financial Services Inc. $2,692.8 8| Conduent Human Resource Services1 $1,089.9 9| Mackenzie Investments Inc. $824.0 10| National Bank Trust Inc. $348.2
2017 top 10 total $84,830.6 2016 top 10 total $76,352.3 * Variance 11.1%Note: *2016 total reflects restated numbers for some providers1. Xerox HR Outsourcing and Solutions changed its name to Conduent Human Resource Services in January 2017
Source: Companies participating in Benefits Canada’s 2017 CAP suppliers survey
TOP 10 | DPSP PROVIDERS
AS OF JUNE 30, 2017 (MILLIONS)
Company 2017 DPSP assets 1| Sun Life Financial $5,881.0 2| Manulife Financial Corp. $3,339.0 3| Great-West Life Assurance Co. $1,644.0 4| Conduent Human Resource Services1 $691.9 5| Industrial Alliance Insurance & Financial Services Inc.2 $421.7 6| Desjardins Insurance $324.9 (Desjardins Financial Security Life Assurance Co.)
7| RBC Royal Bank (RBC Group Advantage) $202.7 8| National Bank Trust Inc. $93.0 9| Mackenzie Investments Inc. $87.0 10| The Co-operators Life Insurance Co. $43.3
2017 top 10 total $12,728.5 2016 top 10 total $11,433.9 * Variance 11.3%Note: *2016 total reflects restated numbers for some providers1. Xerox HR Outsourcing and Solutions changed its name to Conduent Human Resource Services in January 2017
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“If I’m looking to have short-term savings or supplement my income or I’m managing debt, a TFSA is perfect because you’re not going to have to worry about how you invest,” she adds. “If I hit my tax limits and I don’t have any way of continuing to accumulate savings, I have a non-registered plan where contribution limits don’t mat-ter. And if you start to put them all together, they actually start to make a lot more sense.”
The growth of TFSAsWhen Statistics Canada published its latest census figures this year, the num-bers showed 40 per cent of households had contributed to a TFSA in 2015. That number was higher than the percent-age that contributed to an RRSP or a registered pension plan. While TFSAs have traditionally been the purview of the retail market, employers are recog-nizing that they also have a role in the workplace.
“I think companies have always been interested in TFSAs; they just didn’t know how it fit within the structure,” says Kennedy.
“You can see, if I have a pension plan, adding a TFSA would be extreme- ly complicated. I wouldn’t know how it fit; I wouldn’t know how to communi-cate it; I might even be worried about money that should have gone into a
pension and instead is being diluted over here in this TFSA. But I think plan sponsors are embracing the concept of financial wellness and helping employ-ees supplement savings.”
Renée Laflamme, executive vice- president of group benefits and retire-ment solutions at Industrial Alliance Insurance and Financial Services Inc., notes that while she has seen growth in group TFSAs, their relevance as savings vehicles for employees will depend on their priorities. “If you are 32 and have two kids, you may not have that money for your TFSA,” she says. “If you’re heading into an older age — 40s, beginning 50s — you may have more awareness of the importance of savings. Employers are looking more and more at TFSAs and saying, ‘We need to make
sure people are aware that it exists and what it does for them.’”
A focus on technology, personalizationIn the absence of a single savings option for all employees, suppliers of capital accumulation plans are providing tech-nology platforms that allow employers to combine all of their offerings in one place, says Christine van Staden, regional vice-president of the Toronto consultant office at Great-West Life Assurance Co.
The insurance company’s product, though predominantly focused on retire-ment planning, also combines elements of education to personalize the savings journey for every employee. It uses data analytics to target each member’s in- dividual circumstances, rather than
CAP CLIENT | TOTALS AS OF JUNE 30, 2017
Line of business Number of clients Number of livesDefined contribution plan 11,595 2,095,057 Group RRSP 45,137 2,946,672 Deferred profit-sharing plan 7,514 773,526 Employee profit-sharing plan 121 216,463
Totals 64,367 6,031,718
Source: Companies participating in Benefits Canada’s 2017 CAP suppliers survey
Source: Archives of Benefits Canada’s CAP suppliers reports
sending out generic questions about whether a portfolio is appropriately balanced, says van Staden.
“We’ll know that with the data now and we’ll be able to say, ‘You might want to revisit the balance of your portfolio.’ It’s getting the right messages to that particular member based on their part- icular experience and where they stand,” she says, noting the approach will help members set realistic goals.
At CAA Club Group, employees don’t yet have a single place to see all of their plans, but it’s a direction the
company would like to head in. “That would be the ideal,” says Duncan. Employees already receive personalized pension communications, she adds. “It actually says, ‘This is what it looks like; here are some options on your flex plan; here’s how you can contribute; here’s the projection.’ And it’s simple material and it’s easy to understand, so the pension part is customized.”
At iA Financial Group, the provider uses its own data to personalize its plat-form for employees, whether they’re in the accumulation or decumulation phase
of retirement savings. In the accumulat- ion phase, for example, it sends mem-bers personalized notifications to prompt them to take action, such as increasing contributions when they’ve received a raise.
“What we call digital strategy seems very wide, but at the end of the day, what it means is getting quicker, faster, easier access to the information so that people can react . . . and provide them action items to actually act on,” says Laflamme.
Indeed, through those types of plat- forms, providers can ensure greater per-sonalization and customization for plan members, which ultimately creates a more interactive experience, says van Staden.
And the simpler and more direct the plan design is, the easier it is for employ-ers to get the right message to the right member, says van Staden. “The more complex anything is in this world, the more you find you’re going to get lost in trying to get any fundamental, well-rounded messaging to support anyone in any capacity. It doesn’t matter what the subject is. Complexity ultimately results in confusion.”
2017 2016 Variance Company CAP assets CAP assets ($)1| Sun Life Financial $70,176.0 $61,637.0 $8,539.02| Manulife Financial Corp. $51,832.0 $47,615.0 $4,217.03| Great-West Life Assurance Co. $33,227.0 $31,170.0 $2,057.04| Desjardins Insurance $7,869.5 $5,930.0 $1,939.5 (Desjardins Financial Security Life Assurance Co.)
5| Industrial Alliance Insurance & Financial Services Inc. $5,654.0 $4,760.9 $893.1Note: Totals were compiled by adding DC, group RRSP, DPSP and EPSP administered assets
TOP 5 | FASTEST GROWING (%)
AS OF JUNE 30, 2017 (MILLIONS)
2017 2016 Variance Company CAP assets CAP assets (%)1| Desjardins Insurance $7,869.5 $5,930.0 32.7% (Desjardins Financial Security Life Assurance Co.) 2| Industrial Alliance Insurance & Financial Services Inc. $5,654.0 $4,760.9 18.8%3| Sun Life Financial $70,176.0 $61,637.0 13.9%4| Conduent Human Resource Services1 $6,036.3 $5,399.4 11.8%5| RBC Royal Bank (RBC Group Advantage) $4,614.3 $4,156.0 11.0%Note: Totals were compiled by adding DC, group RRSP, DPSP and EPSP administered assets 1. Xerox HR Outsourcing and Solutions changed its name to Conduent Human Resource Services in January 2017
Source: Companies participating in Benefits Canada’s 2017 CAP suppliers survey
❰ 2017 CAP SUPPLIERS REPORT ❱
It’s getting the right message to that particular member based on their particular experiences and where they stand.
