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3 simple nudges that can help employees save for retirement

While a majority of Canadian plan sponsors (8 in 10) intend to maintain status quo on their group retirement and savings plans throughout the year, the 2017 Capital Accumulation Plan (CAP) Benchmark Report suggests there are simple adjustments they can make to help enhance employee participation, boost contributions, minimize withdrawals and ease their transition into retirement.

Entitled Context is Everything, the 2017 CAP Benchmark Report shows how implementing simple tactics can help members meet their savings goals.

Great-West Life is proud to be the exclusive sponsor of the 2017 CAP Benchmark Report, providing additional insights into the survey’s results and how those results can help you enhance your plans.

Here are 3 simple nudges to consider:

  1. Make it quick – offer immediate eligibility: Although immediate eligibility is the most popular option among DC plans (39 per cent), group RRSPs (55 per cent) and deferred profit sharing plans (34 per cent), a significant number of CAP plans still require new employees to wait before they can participate. Unfortunately, when the time comes, saving for retirement may no longer be top of mind. Eliminate the wait to enhance employee participation.

  1. Make it easy – offer appropriate default fund options: Investment menus are becoming increasingly complex, causing many to delay or avoid choosing funds. Seven per cent of defined contribution plans and 13 per cent of group RRSPs still continue to use cash, money market funds or GICs as defaults, as these generally can’t provide long-term returns members need to reach their goals. Instead, target date and target risk funds are much better options for boosting long-term savings.

  1. Make it grow – implement auto-escalation of contributions: It’s human nature to see any decrease in take-home pay as a loss, even when it’s in the form of contributions to future retirement income. By automatically increasing member contributions in lock-step with salary increases, it’ll help the employee to grow their contributions, while their take-home pay remains relatively constant.

To find out more ways to make a big impact on the success of a group retirement and savings plan, download a copy of the full report here.