Automation in retirement savings represents 'a huge opportunity for Canadian plans', says Dave Jones
A recent Sun Life survey of Canadian workplace plan members has found an average overestimation of $23,000 between what employees think they have saved and what is actually in their accounts.
Sun Life’s Dave Jones emphasized that while the shortfall is clear, the underlying cause is not.
“Truth is, we don't know the cause behind that,” admitted Jones, senior vice-president of group retirement services at Sun Life. “It could be a bias towards positivity. It could be a bias towards where they see their assets going. It could be anything.”
What he finds more revealing, though, is how that gap shifts when broken down by gender. Among men, the overestimation jumps to $29,000, while for women it narrows to $14,000, creating a pattern that suggests men are more prone to overconfidence in their retirement savings while women are closer to reality.
Jones framed the gender retirement gap as starting with income rather than behaviour, arguing that lower earnings cascade into lower contributions and smaller balances over time. He highlighted that “women on average contribute about 21 per cent less than men to their group retirement plans per year,” which adds up to a sizeable shortfall in accumulated savings by the time retirement approaches.
Meanwhile, on average he noted, women end up with about $60,000 less in their group plans, with men at roughly $224,000 and women at about $164,000, a difference he links to “lower lifetime earnings” and structural career interruptions such as parental leave.
Women are far more likely to step out of the workforce around childbirth, with about 94 per cent of mothers who take parental leave compared with just under half of partners. In the same year, earnings for Canadian women drop by 49 per cent, a shock that drags on long-term savings capacity.
Jones also stressed that the problem intensifies later in life because women typically live longer, often with more health issues, which means that they are both saving less and needing more. He believes the retirement gap is not just about smaller contributions during working years but about facing higher expenses over a longer retirement, a double bind that pushes women into a more precarious position even when they participate in the same workplace plans as men.
According to Jones, when plan members are split into those who feel confident about their retirement savings versus those who are not, the confident group saves more, engages more, and uses the tools available to them, while the less confident group, especially women, often pulls back. Meanwhile, those among women who feel less confident, “tend not to seek out financial advice from professional advisors. And as a result… we tend to see them saving less,” noted Jones.
“What this survey really highlighted is that those who are accessing advice, those people who have the confidence in their savings to access advice, and save throughout their employment time and match their contributions with their employers and max, tend to have more on a relative basis than those less confident and aren't maxing out the savings opportunities their group plans provide,” said Jones.
What stands out for Jones among the findings is the size of the gap between simply being more financially literate and actually engaging with advice. Notably, members with higher financial literacy see only about a 12 per cent uplift in their savings by the time they approach retirement, which he contrasts with a roughly 64 per cent better outcome for those who actively seek advice - whether digital or human - because that advice builds confidence and nudges them to save more consistently over time.
According to Jones, automation is one of the biggest untapped levers for improving retirement outcomes, but only if it is paired with strong default settings and real flexibility. In his view, plans work better when contribution and matching are the starting point rather than an optional extra, with members enrolled by default and required to opt out only if the arrangement does not suit their personal circumstances.
“Every plan participant is their own person, with their own goals and objectives, and if they want to opt out, they should be able to opt out,” said Jones.
He ties this directly to member preferences revealed in the survey, noting that 80 per cent of plan members value this option so it makes little sense for plans to cling to manual enrollment and voluntary escalation structures that drag down participation.
After all, plan sponsors sit at the control panel and can materially shift outcomes if they design and communicate their programs with intent. Jones believes the starting point for plan sponsors is match and clarity. Sponsors may differ in how much they can afford to match, but when they do offer it and then back it up with “really simple and clear-cut” communications, employees are far more likely to understand the value and use it.
Consequently, making plan design straightforward, stripping out jargon and clearly highlighting the benefits on offer - including financial planning support through group retirement tools or other advisory options are “tools that build confidence” and, over time, help members grow their savings, said Jones.
Jones argues for a framework where enrollment, employer match and auto-escalation all run automatically in the background, so contributions rise as compensation increases, while still giving members a clear path to opt out if they have other priorities or savings vehicles.
According to Jones, starting from automation, with matching and escalation baked in, represents “a huge opportunity for Canadian plans and for Canada in general,” adding that anything plan sponsors or policymakers do to push this model will ultimately be “a boon for the saver in these plans,” he said.
“I encourage plan sponsors to look at their balances. The fastest thing we can all do to close the gap between our perception and reality is to look at the balances, to seek out the advice - whether it’s self-directed and use of one plan or other digital tools, or whether it's speaking to an advisor. And then take advantage of the plan, maximize contributions, use the advice that's available to me, and watch my retirement savings grow. I'd love to see every employer delivering those messages to their employees,” added Jones.
