capital accumulation plan benchmark report highlights...

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A member of the Power Financial Corporation group of companies.

Capital Accumulation Plan Benchmark Report highlights strategies to help employers create successful group retirement programs

• Video: Jeff Aarssen highlights strategies for group retirement success • Infographic: Keys to creating retirement program success

Winnipeg, March 6, 2013… Research unique to the Canadian Capital Accumulation Plan (CAP) market is now available through Looking Forward

, the 2012 CAP Benchmark Report sponsored exclusively by The Great-West Life Assurance Company.

“The CAP Benchmark Report allows sponsors to benchmark their plans in order to create and maintain a successful group retirement program that is competitive and helps better position each member to reach their retirement income needs,” says Jeff Aarssen, Vice-President Group Retirement Services Sales & Marketing for Great-West Life. The report also highlights strategies employers can use to dramatically improve their group plan participation, enable better-suited investment choices and ultimately assist more plan members in reaching their retirement goals. These strategies include: encouraging early enrolment, promoting meaningful contributions, lessening the impact of withdrawals and providing investment choice including age-adjusted mix options. “Plan sponsors are making efforts to help their plan members reach their retirement income goals but there is still opportunity for improvement,” Aarssen says. “Advisors can also use this research to provide their clients with further insight into survey results and recommend plan design enhancements.” Now in its eighth year, the benchmark report is based on a survey by Benefits Canada / Canadian Institutional Investment Network of 380 organizations offering a defined contribution (DC) plan. The full report follows below

.

An educational video with commentary by Jeff Aarssen can be viewed at

http://youtu.be/tJctjrsZo-0

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Strategies and survey findings

• Encouraging early enrolment: Many plan sponsors of CAP plans are taking steps to ensure members are enrolled as early as possible so that members can benefit from tax-effective growth of compound interest, investment returns and low investment management fees. Most DC plans (71 per cent) have mandatory participation and over half (57 per cent) of Group RRSPs and 32 per cent of DC plans offer immediate eligibility. These strategies help ensure members take advantage of the savings vehicles their employer has offered them and better position members to meet their retirement income needs.

• Promoting meaningful contributions: Plan sponsors can help promote meaningful

contributions by making attractive matching contributions, as the majority of plan members continue to make contributions that attract the maximum employer match. In 2012, the average employer match was 5.6 per cent for DC plans and 3.8 per cent for Group RRSPs.

• Providing investment choice and addressing age-adjusted investment risk:

Increasingly, plan sponsors are making age-adjusted investments available, such as target date funds as the default option so that plan members’ savings are more inclined to grow even if the member never makes an investment decision. In 2012, 34 per cent of DC plans made target date funds their default option, up from 16 per cent in 2011. For group RRSPs, 28 per cent were target date funds, compared to 15 per cent in 2011.

• Lessening the impact of withdrawals: Effective retirement saving requires that plan

members keep their contributions in the plan so they benefit from tax-effective compound growth on their investment returns. As such, plans sponsors should structure plans to discourage withdrawals.

Survey methodology

Managed by Rogers Publishing Ltd., the 2012 CAP Benchmark Report summarizes the results of updating plan sponsor profiles in the Canadian Institutional Investment Network, as well as the findings from an online survey. The report represents an unbiased view of Canadian group retirement market trends.

Data was collected between February 1 and August 8, 2012 from 380 organizations offering a Defined Contribution (DC) plan (308 plan sponsors) or a group RRSP (180 plan sponsors) to their employees. In total, 308 respondents have a DC plan and 180 have a group RRSP. Results depend on the specific organizations that complete the survey, which vary from year to year.

About Great-West Life

Great-West Life administers over 17,000 group retirement plans and over 1.3 million member accounts, representing over 30 per cent of capital accumulation plans (CAPs) offered by insurers in Canada. In the United States, Great-West is the fourth-largest group retirement plan recordkeeper based on total participants and Putnam Investments adds to the organization’s North American presence in this market.

- end - For more information contact: Marlene Klassen, APR Assistant Vice-President, Communication Services 204.946.7705

2 0 1 2 C A P B E N C H M A R K R E P O R T

SPONSORED BY

Creating group retirement program success

Looking forward

Great-West Life

Working in partnership with Great-West Life, your organization can help build

a more secure financial future for your employees. Our easy plan administration

and account management, superior services and customized plan features

combine to create a plan that’s right for you and your plan members.

Great-West administers nearly one in three defined contribution retirement

and savings plans, offering clients the support of Canada’s largest network

of group retirement specialists. Our clients benefit from first-class service and

products, supported by a strong and stable organization that focuses on

accuracy and dependability.

Serving the financial security needs of more than 12 million people across

Canada, Great-West Life and its subsidiaries, London Life and Canada Life,

have more than $204 billion* in assets under administration. The companies’

assets under investment management in the pension and group savings

marketplace exceed $34 billion.*

Great-West and its subsidiaries are members of the Power Financial Corporation

group of companies. In the U.S., our sister company, Great-West Life & Annuity

Insurance Company, is the fourth-largest group retirement recordkeeper, with

US $151 billion* in assets under administration.

Together with our subsidiaries, we offer:

• Registered retirement savings plans

• Registered pension plans (defined contribution)

• Deferred profit sharing plans

• Simplified pension plans (available in Quebec and Manitoba)

• Non-registered savings plans

• Tax-free savings accounts

• Investment-only plans

Every business situation is unique. We look forward to working with you to

develop a plan as distinctive as your organization.

*as of Dec 31, 2011

ABOUT

A message from Great-West LifeFOREWORD

The 2012 Capital Accumulation Plan (CAP) Benchmark Report provides insight into trends that help shape

the industry. These results can help plan sponsors and advisors benchmark plans against industry results

and make strategic decisions that will benefit members and help them save for retirement. We’re pleased

to be offered an opportunity to support research that enhances the industry for all.

In this report, you’ll see the following major trends our research uncovered in 2012:

• The default investment for members continues to shift toward target date and target risk asset

allocation funds

• Employer contributions to defined contribution (DC) plans and employee contributions to Group

RRSPs are increasing

• Members approaching retirement need to prepare financially and emotionally; there is an

opportunity for plan sponsors to provide tailored support for this group

• Many plan sponsors are providing information, education and advice, but members still

need help creating a personalized, formal financial plan

• Many plan sponsors are struggling to meet plan goals

Results of the survey show positive developments and opportunities for improvement. To help plan

sponsors create group retirement program success, we’ve included concrete solutions outlined by

Jeff Aarssen, our Vice-President of Group Retirement Services Sales and Marketing.

To assist you in making meaningful comparisons between your plan and others, we’ve split this

year’s results into two categories: smaller employers with one to 499 employees and larger

employers with 500 or more employees. In our experience, organizations that fall into these

two categories face distinct challenges and opportunities.

Each year, Great-West Life is proud to support this research. It’s one of the many ways we are

contributing to improvement and growth across the Canadian CAP industry. I’d like to thank

everyone who helped us by participating in this year’s survey.

Finally, I’d like to wish all of our industry friends and colleagues all the best in the year ahead.

Bill Kyle

Executive Vice-President, Wealth Management

An overview of the CAP landscape The 2012 CAP Benchmark Report summarizes the results of updated plan

sponsor profiles in the Canadian Institutional Investment Network (CIIN),

in addition to an online survey fielded by Rogers Connect Market Research

Group. Data was collected between February 1 and August 8, 2012, from

380 organizations offering a DC plan and/or Group RRSP to their employees.

In total, 308 have a DC plan and 180 have a Group RRSP. Note that each

year’s results depend on the specific organizations that complete the survey,

and that these organizations vary from year to year. Please note that due to

rounding, some tables do not add up to 100%.

We surveyed a similar mix of business types, sizes and industries as in previous

editions. About half—52%—have 500 or more employees.

4 2012 CAP BenChmArk rePort Looking forward Canadian Institutional Investment Network

BASE: All respondents answering n=380

Who we surveyedEXHIB IT 1

ORgANIzATIONAl DETAIlS

PRIMARY BUSINESS

NUMBER OF EMPlOYEES

● CORPORATION/PRIVATE ENTERPRISE

● MULTI-EMPLOyER

● PUBLIC

● UNIVERSITy (EDUCATION) 4%

● UNION 3%

● OThER 4%

● PUBLIC SECTOR/GREATER PUBLIC SECTOR/NON PROFIT

● MANUFACTURING SECTOR

● FINANCIAL/BUSINESS SERVICES

● SERVICES SECTOR

● NATURAL RESOURCES

● TRANSPORTATION/COMMUNICATIONS/UTILITIES

● 1-99

● 100-199

● 200-499

● 500-999

● 1,000+

75%

22% 19%

8%

15%

10%

42%

21%

20%

12%

11%

10%

8%

7%

The percentage of organizations with a DC plan versus a Group RRSP has

not changed significantly, with 53% offering a DC plan only, 19% offering a

Group RRSP only and 28% offering both types of CAP.

Just more than one in five DC plans (22%) and one in 10 Group RRSPs (10%)

are governed by a collective agreement.

The investment menu: employers are re-examining default options

One of the trends found in the 2012 CAP Benchmark Report is the significant

shift in default investment options for plan members. historically, money

market funds were the most popular default option. They were intended

to be a short-term holding place for member contributions, while members

decided which funds were a good fit for them. however, the industry has

noticed that a significant proportion of members never make an investment

decision. As a result, they end up leaving their funds in a default option.

The drawback to low-risk default options, such as money market funds, is

that they are also low return. This means that members who default to these

funds are likely to find inflation outpacing their retirement savings growth,

leading to a shortfall in retirement income. Plan sponsors may find themselves

facing fiduciary risk if they have not taken action to help members make

appropriate investment choices. What are plan sponsors doing? They are

making their default an effective mix of risk and return for their members.

Canadian Institutional Investment Network Looking forward 2012 CAP BenChmArk rePort 5

BASE: All respondents answering n=380

Type of planEXHIB IT 2

● DC RPP ONLy

● GROUP RRSP ONLy

● DC RPP AND GROUP RRSP

2010 2011 2012

46%

20%26%

19%

28%30%34%

46% 53%


Over the years, this report has monitored this trend and watched as money

market funds were replaced by balanced funds. Now we’re seeing target date

and target risk asset allocation funds overtaking balanced funds as the most

popular defaults in both DC plans and Group RRSPs.

With many members remaining in the default, it’s critical to provide options

with the best potential to help meet their retirement income requirements.

By replacing traditional default options (money market and balanced funds)

with asset allocation funds, the industry appears to be embracing dynamic

investments that adjust over time to meet members’ needs. This strategy can

also help plan sponsors reduce their fiduciary risks by ensuring members are

still positioned to reach their retirement income needs even if they never make

an investment decision.

This year’s survey sample shows more plans offer conservative investment

options. For Group RRSPs, in particular, money market funds (78% in 2012

compared to 67% in 2011), GICs (64% in 2012 compared to 50% in 2011) and

Canadian bonds (81% in 2012 compared to 70% in 2011) are more prevalent.

Investment default optionsEXHIB IT 3

0% 5% 10% 15% 20% 25% 30%

TARGET DATE ASSET ALLOCATION

TARGET RISK ASSET ALLOCATION

MONEY MARKET

CASH/DAILY INTEREST

COMBINATION TARGET DATE/TARGET RISK ASSET ALLOCATION

BALANCED

GIC

OTHER

34%28%

19%20%

20%

8%11%

6%

6%6%

10%

5%

5%

2%

2%

17%

DC GROUP RRSP● DC ● GROUP RRSP

BASE: Total answering DC: n=256; GROUP RRSP: n=150


As baby boomers approach retirement, it is good to see conservative options

in investment menus. But as younger demographics enter the workforce,

investment menus should be re-evaluated to ensure they continue to meet the

needs of all members. Plan sponsors need to ensure their investment menus

evolve with changing workforce demographics, and members should complete

an investment personality questionnaire so they can select funds that align

with their unique goals.

Over the past several years, consultants have watched many organizations

trim the number of funds on their CAP investment shelf, providing a more

streamlined list for members to choose from. yet the 2012 CAP Benchmark

Report found that the average number of investments held by members hasn’t

changed significantly: 3.2 for DC plans and 3.9 for Group RRSPs in 2012.

Investment options available in 2012EXHIB IT 4

DC gROUP RRSP

CANADIAN EQUITy, ACTIVE 68% 76%

BALANCED 67% 73%

CANADIAN BONDS 67% 81%

MONEy MARKET 66% 78%

U.S. EQUITy 64% 69%

GLOBAL EQUITy 63% 68%

GIC 52% 64%

CANADIAN EQUITy, INDEx 36% 43%

EAFE EQUITy 30% 36%

CASh/DAILy INTEREST 28% 37%

TARGET DATE ASSET ALLOCATION 25% 29%

TARGET RISK ASSET ALLOCATION 19% 27%

REAL ESTATE 16% 20%

COMBINATION TARGET DATE/ TARGET RISK ASSET ALLOCATION 12% 12%

MORTGAGES 10% 14%

FOREIGN BONDS 8% 11%

OThER 7% 6%

hIGh-yIELD BONDS 5% 4%

ALTERNATIVE INVESTMENTS 4% 3%

REAL RETURN BONDS 3% 3%

EMPLOyER STOCK 2% 7%

BASE: DC: n=308; GROUP RRSP: n=180


We expect the move toward target date and target risk funds will begin

to lower those averages over time, since both products provide all-in-one

solutions for members.

Participation and contributions: employees and employers step up to the plate

Most DC plans (71%) have mandatory participation, while most Group RRSPs

(85%) have voluntary participation—proportions that haven’t changed

significantly in the last three years. For DC plans, the participation rate is

54.7% for voluntary plans. For Group RRSPs, the participation rate is 43.6%

for voluntary plans. Few organizations with voluntary plans (4% with voluntary

DC plans and 2% with voluntary Group RRSPs) are considering implementing a

mandatory plan in the next 12 months.

BASE: All respondents answering; 2010, n=136; 2011, n=157; 2012, n=180

2010 2011 2012

0%

10%

20%

30%

40%

50%

60%

70%

80%84% 85% 85%

16% 15% 15%


29% 29%33%

2010 2011 2012

71% 71%67%

0%

10%

20%

30%

40%

50%

60%

70%

DC PlANS

Mandatory versus voluntary plansEXHIB IT 5

● MANDATORy ● VOLUNTARy

gROUP RRSP


When it comes to getting employees to start saving for their retirement,

Group RRSPs (57% versus 32% for DC plans), larger versus smaller

organizations (DC 41% versus 20%; Group RRSP 63% versus 48%) and

mandatory DC plans (41% versus voluntary DC plans 19%) are more likely

to offer immediate eligibility. Organizations seeking to take advantage

of member inertia have probably discovered that it’s easier to catch and

enrol new employees on day one. As more jurisdictions legislate 100%

immediate vesting for DC plans, as they have in Ontario, we will keep an

eye on this participation trend. For Group RRSPs, although members might

be permitted to participate as soon as they join the company, the employer

often enforces eligibility requirements around employer contributions.

A larger proportion of DC plans are including employee contributions than in

previous years—84% in 2012, compared to 76% five years earlier, with no

difference between mandatory (80%) and voluntary (79%) plans and slightly

higher numbers for smaller organizations (86%) versus larger organizations (82%).

Adding to members’ retirement savings, 52% of smaller employers

contribute to their employees’ Group RRSPs. Larger employers lag behind,

with just 35% contributing to Group RRSPs—but the largest organizations

Eligibility for participationEXHIB IT 6

● DC ● GROUP RRSP

BASE: All respondents answering; DC Plans: 2012, n=308; Group RRSP: 2012, n=180

0%

10%

20%

30%

40%

50%

32%

57%

15%12%

18%

9%

4%

20%

9%6% 6%

3%

IMMEDIATELY 3 MONTHS 6 MONTHS 12 MONTHS 24 MONTHS OTHER


are more likely to have both plan types and they may be contributing to

the DC plan while offering the Group RRSP as a place for employees to

accumulate additional tax-deferred savings without employer contributions.

All of that being said, the overall percentage of employers of all sizes

contributing to Group RRSPs in this year’s sample is 44% in 2012, compared

to 56% in 2011 and 52% in 2010.

Another measure of a plan’s success is the percentage of an employee’s salary

that goes into the plan from members and from sponsors. Survey results seem

to indicate an increase in contributions in recent years, across most industries.

DC contribution levels by industry (mean % of employee salary)

EXHIB IT 7

● EMPLOyEE CONTRIBUTION ● COMPANy CONTRIBUTION

BASE: Those whose employees contribute to plan. NOTE: Small base sizes.

0 1 2 3 4 5 6 7

5.0

7.3

4.7

5.6

4.1

4.5

4.2

5.8

4.3

5.5

4.2

3.8

PUBLIC SECTOR/GREATER PUBLICSECTOR/NON PROFIT

(n=65/72)

NATURAL RESOURCES(n=22/37)

TRANSPORTATION/COMMUNICATIONS/UTILITIES

(n=17/31)

FINANCIAL/BUSINESS SERVICES(n=44/57)

MANUFACTURING SECTOR(n=51/61)

SERVICES SECTOR(n=32/36)


In 2012, for DC plans, the average employee contribution was 4.5% and

the average employer contribution was 5.6%. For Group RRSPs, the average

employee contribution was 4.3% and the average employer contribution

was 3.8%.

Larger employers appear to contribute more to DC plans than smaller orga-

nizations. In 2012, organizations with 500 or more employees contributed

an average of 6.2% to DC plans (versus 5.1% for organizations with 1-499

employees). having a competitive employer-matching program could play

an important role in attracting and retaining key talent.

group RRSP contribution levels by industry (mean % of employee salary)

EXHIB IT 8

● EMPLOyEE CONTRIBUTION ● COMPANy CONTRIBUTION

BASE: Those whose employees contribute to plan. NOTE: Small base sizes.

0 1 2 3 4 5 6 7

5.5

4.0

5.1

5.3

4.5

4.0

3.2

2.6

4.2

4.2

3.6

4.2

NATURAL RESOURCES(n=4/3)

TRANSPORTATION/COMMUNICATIONS/UTILITIES

(n=7/4)

FINANCIAL/BUSINESS SERVICES(n=14/13)

MANUFACTURING SECTOR(n=12/12)

PUBLIC SECTOR/GREATERPUBLIC SECTOR/NON PROFIT

(n=7/7)

SERVICES SECTOR(n=8/7)


Another healthy sign: a majority of members (80% for DC plans and

74.2% for Group RRSPs) continue to make contributions that attract the

maximum employer match. Those numbers appear to be steady over the

past five years for both types of CAP. Interestingly, employees at smaller

organizations are more likely to maximize their match than employees

at larger organizations—an average of 85% for smaller-organization

DC plans (versus 74.8% for larger plans) and 79.1% for smaller-

organization Group RRSPs (versus 77.1% for larger organizations).

On the other hand, few organizations are taking advantage of one of the

most effective ways to make sure employee and employer contributions

rise over time. An automatic escalation strategy increases contributions

according to a specific timetable unless employees opt out. Only 15% of

DC plans and 8% of Group RRSPs made use of this strategy in 2012, the

trend is down rather than up over the past few years, and almost none

(DC 1%; Group RRSP 0%) plan to implement automatic escalation strategies

in the next 12 months. Keep in mind that the 2011 Benefits Canada Survey of

CAP Members found that 60% of members support the automatic escalation

of contributions.

Automatic increase EXHIB IT 9

0%

5%

10%

15%

20%

25%

30%

32%

25%

15%

2008 2010 2012

9%

6%8%

BASE: All respondents answering; DC Plans: 2008, n=189; 2010, n=146; 2012, n=217 Group RRSP: 2008, n=97; 2010, n=108; 2012, n=109

● DC PLANS ● GROUP RRSP


There has been no significant shift in the criteria used to calculate

employer contributions in both types of CAPs. The one exception is

that more Group RRSPs appear to be basing employer contributions

on employee contributions—55% in 2012, compared to 43% in 2011

and 37% in 2010.

What we know: talking to members and striving to meet plan goals

Well-informed plan members are better equipped to make the most

of their CAP and achieve their retirement saving goals. Just half (51%)

of respondents to the 2012 Benefits Canada Survey of CAP Members

described themselves as very knowledgeable when it came to their

employee retirement plan, asset allocation, their own investment risk

tolerance, the amount they need to contribute to their plan to retire

and their plan statement—leaving half requiring additional support.

As a result of this ongoing trend, many sponsors offer a mix of

information, education and advice.

In our 2012 sample, it appears that larger organizations are less likely

to offer advice (31% for DC plans and 4% for Group RRSPs) than

smaller organizations (62% for DC plans and 27% for Group RRSPs).

This is most likely because smaller organizations often rely on external

group retirement plan advisors to take on this role.

Basis for company’s plan contributionEXHIB IT 10

DC gROUP RRSP

EMPLOyEE’S EARNINGS 71% 52%

EMPLOyEE’S CONTRIBUTIONS 31% 55%

yEARS OF SERVICE 15% 12%

COMPANy’S EARNINGS 2% 7%

OThER 4% 6%

BASE: Those whose companies contribute to plan; DC, n=308; Group RRSP, n=108


Information, education and advice to plan members

EXHIB IT 11

87%

95%91%

73%

84%80%

INFORMATION EDUCATION ADVICE

0%

20%

40%

60%

80%

100%

38%

45% 43%

● 2010 ● 2011 ● 2012

DC PlANS

81%

92%

72%68%

80%

47%

INFORMATION EDUCATION ADVICE

0%

20%

40%

60%

80%

100%

38%

51%

13%

gROUP RRSP



What do members need?

Members need a formal, written financial plan that includes:

• The age at which they will retire

• The approximate amount of money they need

in retirement to reach their goals

• Their rate of return

however, the 2012 Benefits Canada Survey of CAP Members reports that

80% of members don’t have a financial plan. Furthermore, only 24% of

members surveyed rate their understanding of the amount of money they

need to contribute to retire as excellent or very good.

By providing advice and sharing interactive tools from service providers that

help members create a personalized financial plan, plan sponsors can better

equip members to reach their personal retirement goals.

What advice do employees want to help them with the transition to retirement?58% how much they can withdraw annually and still have funds left over

51% The types of products in which to put their retirement funds

50% What decisions they need to make at transition

45% The types of assets in which to put retirement funds

43% Retirement lifestyle planning

28% Whether they should consolidate funds with one institution

19% Which financial institution to use

Source: 2012 Benefits Canada Survey of CAP Members. Base: CAP members 45 years of age or older. n=583



Reponses to this year’s new questions

We introduced three new questions in this year’s survey. For the first time,

we asked about tools and services geared specifically toward members who

are approaching retirement. It turns out that many organizations don’t offer

dedicated services for this group of members.

The 2012 Benefits Canada Survey of CAP Members showed there is a need for

support through the transition into retirement. With 50% of members aged 55

to 64 and 69% of those 65 or older feeling financially prepared for retirement,

there are a significant number of pre-retirees who don’t. Furthermore, 34% of

those aged 55 to 64 feel they are not emotionally prepared for retirement and

23% of that group think their biggest challenge in retirement will be making

sure they have enough money on which to live. One in three (33%) of those

aged 55 to 64 are concerned about how they will keep themselves from being

bored and staying busy—a number that rises to 53% among those over 64.

Clearly, some members approaching retirement need tailored services to help

them plan financially and emotionally for their retirement lifestyle.

There is a real opportunity for plan sponsors to play an important role

here. From a business perspective, engaging pre-retirees may help retain

experienced employees longer if they choose to phase in retirement or work

part time. It also demonstrates the company’s commitment to employees,

which can aid in retention of the next generation of workers. And, as more

baby boomers approach retirement, we may see higher demand for services

tailored to them. Keep in mind the 2012 Benefits Canada Survey of CAP

Members found that retirement savings ranks among the top three reasons

members signed on (32%) and stayed with (38%) their current employer.

It’s also a key reason members might leave for another employer (30%).

Tools and servicesEXHIB IT 12

DC gROUP RRSP

DEDICATED CALL CENTRE SUPPORT 66 66

PRE-RETIREMENT PACKAGES 39 29

SEMINARS FOR MEMBERS 31 53

SEMINARS FOR MEMBERS AND ThEIR SPOUSES 39 38

ADVICE 41 35

OThER 10 3

BASE: All respondents answering; DC, n= 159; Group RRSP, n=86

The answers to the second new question reveal that 70% of DC plan

sponsors and 75% of Group RRSP sponsors don’t believe their plans are

achieving their original planned objectives. But answers to the third new

question show that many sponsors (47% for DC plans and 48% for Group

RRSPs) can’t define which aspects of their plans they’d like to improve.

What we know is that member education and engagement continue to be

top of mind among sponsors: 63% of DC plan sponsors and 73% of Group

RRSP sponsors want to address member engagement, while 61% of DC

plan sponsors and 52% of Group RRSP sponsors want to address member

education. It turns out those two issues are closely intertwined. After all,

one in four unengaged members in the 2011 Benefits Canada Survey of

CAP Members said they would be more engaged in their plan if their

employers provided more information or better explained the program.



Solutions to help create group retirement program successHow can CAP sponsors best ensure that their plans are successful

and their members can retire with confidence? Here are some critical

elements identified by Jeff Aarssen, great-West life’s Vice-President of

group Retirement Services Sales and Marketing.

1. Encourage early enrollment Get members enrolled as early as possible. Consider mandatory participation.

Think about auto-enrollment, if it’s allowed. Offer immediate eligibility.

Also, make a special effort to educate members about the benefits of early

enrollment. The longer members have to build savings in a CAP, the more likely

it is that they will accumulate the source of income they need in retirement.

2. Promote meaningful contributions Promote contributions from employees by providing education and attractive

matching contributions from the employer. With time on their side (thanks

to early enrollment) and regular deposits into their CAP, employees have the

most opportunity to benefit from investment growth.

3. Lessen the impact of withdrawals Structure plans to discourage withdrawals, which will have a negative effect

on retirement income. It’s important for members to leave their money in the

CAP, appropriately invested to realize its full potential.

4. Investment choice and age-adjusted investment risk Provide the investment choices members need to build their retirement savings,

whatever their time horizon and risk tolerance. That means setting appropriate

defaults. It also means offering a streamlined investment menu that doesn’t

overwhelm members, hampering their ability to choose products that work

best for them.


ConclusionOverall, the 2012 CAP Benchmark Report is a good-news story. Its two

biggest findings—that the default investment for members continues to

shift toward age-adjusted investment funds (see point 4, page 18) and

that employer contributions to DC plans and employee contributions to

Group RRSPs are increasing—bode well for the future health of CAPs.

What’s the next step?

Since the report also reveals that plan sponsors are struggling to meet

plan goals, we recommend that organizations work with their advisors

or service providers to clarify plan goals and success measures, as well

as structure plans so they help prepare members for a more financially

secure retirement.

This supplement is published by Rogers Publishing Ltd.,One Mount Pleasant Road, 7th Floor, Toronto, Ontario M4y 2y5.Telephone: (416) 764-2000; Fax: (416) 764-3943.No part of this publication may be reproduced, in whole or in part, without the written permission of the publisher. Copyright © 2012

Retirement solutions that never stop working

Your Group Is Like No Other.

So Are Our Group Retirement Services.

Whatever kind of group you have, they expect a lot of you.

Fortunately, Great-West Life is completely committed to

accountability and providing superior, reliable group retirement

services. What’s more, our regional experts work with you to

provide strong local support. So we’re truly the ideal partner.

After all, you’d never want to disappoint a group as unique as yours.

Contact your group retirement team.

Western region

Dan Carpick

204-926-8331

[email protected]

Central region

John Stevenson

416-359-3304

[email protected]

Eastern region

Anthony Cardone

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