The global workforce is rapidly changing due to a complex combination of trends, including an aging population, an increased reliance on technology, changes in customer and individual preferences, and flexible work opportunities, to name just a few. These global changes are also impacting Canada, especially related to demographic shifts that continue to define the dynamics of the Canadian workforce. As plan sponsors consider their employee benefits, especially retirement benefits, it is key for them to identify the makeup of their workforce.

2024 Canadian Demographics:

• In 1966, when the Canadian Pension Plan (CPP) began, 8% of the population was over 65.
• According to Statistics Canada, 19% of Canadians are over 65, and that number is projected to grow to 25% by 2045.
• The current birthrate is the lowest in Canada’s history.
• For the 12-month period ending July 1, 2024, 1.2 million new immigrants relocated to Canada.

These and additional demographics affecting financial wellness and retirement planning were discussed during the International Foundation’s recent webcast “Implementing a Practical Financial Wellness Approach.” Dimitri Poliak, principal at Normandin Beaudry in Toronto, Ontario, explained that plan sponsors need to understand these demographic shifts to “meet people where they are in life” and develop a financial wellness approach defined by the organizational goals in a way that helps participants achieve outcomes that are measurable, actionable and realistic.

Addressing Inequities With Financial Wellness

Poliak encouraged plan sponsors to broaden their financial wellness conversations to include other types of financial support, such as paid parental leave, given how programs can potentially affect women more than men. He identified the statistics below, saying plans can address aspects of inequality that may exist in their employee benefits through plan design because:

• Women lose earning potential for up to ten years after childbirth
• Both men and women are expected to outlive their savings— by ten years for men, and by 13 years for women. This statistic will continue to increase over time.

Lifelong Financial Wellness: Three Stages for Participants

Using the above as reference, Poliak urged plan sponsors to view financial wellness as a lifelong process for participants. As such, he explained three different case studies used to help plan sponsors to develop their financial wellness programs based on stages of accumulation, preretirement and during retirement.

Stage 1: Accumulation

Concern: Financial literacy

How to address: Individual coaching

Participant characteristics:

• Growing ex-patriot and immigrant workforce, representative of the global workforce
• Workforce of different socioeconomic backgrounds
• Average age of 35
• Learning healthy money habits

Knowing the above points, plan sponsors found there was a financial literacy knowledge gap that could be addressed by redesigning their communication strategies to include individual coaching and financial literacy guidance. Coaching helps participants determine their short-term, medium-term and long-term financial goals and create an action plan.

Stage 2: Preretirement

Concern: Preparation

How to address: Directly with employer and tools provided by employer

Participant characteristics:

• Employees age 55+
• Variety of savings levels, some with significant asset balances
• Poor understanding of the various retirement plans in Canada, including the Canada Pension Plan (CPP) and Old Age Security (OAS), along with workplace retirement plans including the Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA)

This case study was entirely focused on retirement preparedness and not broad financial literacy. The plan sponsor created an environment to directly engage with an employee population who looked to them as a trusted source of information. In addition, individuals created action steps to develop their decumulation strategy while reviewing their entire financial picture.

Stage 3: During retirement

Concern: Retirement income

How to address: Combined approach

Participant characteristics:

• Retirees age 55+
• Includes both early retirees and those retired for a longer timeframe
• Need for a secure retirement
• No decumulation solution available from the employer
• Large defined contribution balances
• Health care needs in retirement

The plan sponsor consideration for employees in the retirement phase involved how to provide a lifetime pension with stable retirement income that also addresses health care needs and costs. This case study used a combined approach of retirees managing their own withdrawals along with an annuity, paying over time.  

Considerations When Implementing a Financial Wellness Approach

Poliak addressed three key concepts that can help plan sponsors implement and manage their financial wellness program:

• Simplicity—Find a turnkey solution that does not require internal resources and reduces the support required.
• Accessibility—Address the needs of all members, throughout their financial journey, across all plan types. Think broadly and don’t limit the plan design.
• Peace of Mind—Manage governance risk while taking care of your plan members and colleagues.

To learn more specifics about these approaches to financial wellness, International Foundation and ISCEBS members can view the entire webcast recording, “Implementing a Practical Financial Wellness Approach.”

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.