In 2014, participation rates among eligible employees in Canadian defined contribution plans rose by 3 percent, but declined by 12 percent among those participating in 401(k)-like registered retirement savings plans (RRSPs), according to new research.
Great-West Life unveils this finding in its 2014 CAP Benchmark Report, “Staying the course, with an eye on the future.” The report summarizes the results of updated plan sponsor profiles in the Canadian Institutional Investment Network, plus findings from an online survey.
The report shows participation rates among eligible employees in DC plans rose during the past, but declined for group RRSPs to 53 per cent from 65 per cent. Group RRSPs are more likely to be voluntary, and voluntary plans have significantly lower participation rates than mandatory plans. However, many organizations with voluntary plans use a variety of tactics to promote participation.
The report adds that 97 percent of defined contribution (DC) plan sponsors and 90 per cent of registered retirement savings plan (RRSP) sponsors say their plans are meeting their original capital accumulation plan (CAP) objectives.
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“The report shows plan sponsors understand the four characteristics of successful CAPs,” says Jeff Aarssen, senior vice-president, group retirement services for Great-West Life. “Successful plans encourage early enrolment, promote meaningful contributions, lessen the impact of withdrawals and provide appropriate investment choices.”
“We encourage plan sponsors to continue their successful efforts to educate members so they’re motivated to participate in a group retirement and savings plan,” says Ken Millard, Vice-President, National Accounts for Great-West Life. “Tactics such as education sessions, one-on-one meetings and providing reading material in print and online are all working, and should indeed continue. The more ways we present information to members, the more likely we are to make an impact on their decisions.”