Do plan sponsors need to rethink retirement messaging?

IG Wealth’s Management’s latest retirement study paints a stark picture for future retirees while also presenting a fresh set of challenges for plan sponsors. Only 48 per cent of non-retired Canadians have an employer pension. But even those who do, a quarter don't understand what type of plan they have - including whether it’s defined benefit or defined contribution.

The findings notably raise an uncomfortable but important question. If pensions aren't reaching most workers, and the ones that exist are poorly understood, what is the retirement plan for millions of Canadians?

For Aurèle Courcelles, the survey's clearest takeaway is that while pressure points exist for Canadians approaching retirement, those same pressure points signal opportunities for education and intervention, particularly as fewer Canadians have guaranteed pensions than those who go without.

“What's encouraging is the survey shows that when Canadians receive some guidance, whether it's a financial professional or at least have knowledge, they feel more informed, more resilient, maybe a little more in control,” said Courcelles, VP of tax and estate planning at IG Wealth Management.  

“Education seems to be a big theme of this, because the survey says that less than half of non‑retired Canadians have an employer pension. But then it goes on to say that a quarter of pension holders don't even understand what they have. I like to say that knowledge is power. You don't know what you don't know and if you don't know, that's where you can get in trouble. So the more we can educate, the better it's going to be.”

The picture notably extends beyond pensions. According to the same survey, just one-third of non-retired Canadians have both a retirement plan and savings in place. Perhaps more troubling is the lack of basic retirement planning knowledge as only 11 per cent of non-retirees can articulate how much annual income they will need, while nearly half admit they have no idea what that figure should be.

Courcelles believes that many Canadians are still modelling their expectations on their parents’ retirements, even though the underlying system has changed. He notes that while today’s retirees, especially in the public sector, are more likely to have traditional defined benefit (DB) pensions, many private sector employers have shifted to defined contribution (DC) or group RRSP arrangements, effectively moving investment and longevity risk onto workers.

Consequently, people are living longer than previous generations, which means savings need to last for more years. He links this combination - weaker guarantees, greater personal risk, and longer lifespans - to the heightened anxiety about retirement that the survey captures.

To that end, Courcelles believes plan sponsors can make a real difference by delivering clearer, more consistent communication, starting with plain-language explanations of the plan type, the employer's responsibilities, and the employee's responsibilities. He sees a critical gap in how the industry frames retirement savings, arguing that the conversation stays stuck on contributions and balances when it should be about future income.

“Converting the message from accumulation to income, I think, is missing,” he noted. “If I’m an employee who's used to getting a paycheck, I know that one day my paycheck will stop, and I gotta somehow replace that paycheck. But I don't understand how to connect the dots between what government's going to provide, what my employer is going to provide and what I'm going to provide.”

“Plan sponsors are not assuming that part of the responsibility in helping the individuals translate accumulation to income," he added. "I think that's where plan sponsors can take the first step, is having that information available to individuals."

Courcelles also suggests plan sponsors should be supporting members throughout their entire retirement journey, not just during the saving years. While he emphasized accumulation still matters, he argues that plans need to focus far more on whether those savings will generate sustainable, after-tax income.

IG’s additional survey findings also suggest many people lack even basic knowledge of RRIFs, government benefits, longevity risk, and OAS, so he wants sponsors to build education around those fundamentals.

He frames the goal as helping each member construct a “personal pension” or retirement paycheque from multiple sources, even if they don’t have a DB plan. In practice, that means showing people how OAS, CPP, any employer pension, RRIFs, TFSAs, and non-registered savings can be layered together to replace their working income.

Courcelles believes employers and plan sponsors need to accept more responsibility for guiding individuals through that process and giving them the tools to assemble and understand that combined income stream.

To that end, he also sees retirement readiness as a dual problem of access and design. On access, he notes that traditional DB pensions are disappearing as employers move toward DC and group arrangements, so while many workers still have some form of plan, they no longer enjoy the same level of guarantees.

Whereas on design, he points to a serious communication gap, noting a significant share of members in these newer plans do not understand what they have, which undermines confidence. Expanding access would be ideal but ultimately depends on employer decisions, which are outside individual control.

Where sponsors can immediately move the needle, he argues, is in how they educate, guide, and support members over their life stages, using clear, real-world examples. Doing that well can gradually shift people from anxiety to confidence, and even small improvements in that mindset can have an outsized effect on behaviour.

According to Courcelles, government benefits like OAS and CPP remain intact regardless of how someone works, whether they are self-employed, in the gig economy, or moving between jobs. The real vulnerability sits in the middle of his retirement pyramid - employer-sponsored plans. Without a traditional employer relationship, that layer often disappears entirely, and the individual has to compensate.

For Courcelles, that means gig workers and the self-employed need to build knowledge across taxes, income sustainability, investment risk, and rates of return – areas where he believes most people lack confidence.

Courcelles believes the gap is too wide for most individuals to cross alone, and points to the survey's finding that only about a third of Canadians work with a financial advisor, yet those who do report 80 to 90 per cent comfort that their risks are being managed.

“Maybe there’s a role that sponsors can play there to either offer it internally, or certainly encourage their people to find someone,” he said. “We're all busy people. We don't have the knowledge. Somebody's got to take the time to ring it together and rely on the people who do this for a living.”