AON Hewitt approves of the Financial Consumer Agency of Canada's blueprint for the advancement of financial literacy among Canadian seniors, but has some recommendations to make.
The human resources consulting firm issued a statement on September 25 saying that it is "fully in support" of the financial literacy goals identified by the Financial Consumer Agency of Canada. The company suggests, however, that one more objective needs to be added to the agency’s blueprint, namely to help more Canadians set personal financial objectives.
"Our experience shows that many people do not know how much income they will need in retirement because they have not defined their retirement goals," reads the statement. "Helping Canadians set goals and quantify their income needs before and after retirement is the very first step. Once that is in place, then we can help them with the planning process and talk about sources of income such as government benefits, employer-sponsored plans and personal savings."
AON Hewitt also notes that many people do not take advantage of employer-sponsored retirement savings programs and often leave money on the table. While Canadian defined contribution (DC) plan sponsors would like to provide more information and education to motivate their employees, they are concerned about the possibility of litigation. The Capital Accumulation Guidelines (CAP Guidelines) which serve as best practices for the governance of DC plans offer sponsors no legal protection.
“In the United States, the law provides protection from liability to those plan sponsors who provide their plan members with appropriate choices and advice. Given that DC arrangements, especially group RRSPs, are used by so many Canadians as a retirement savings vehicle, endorsing the CAP Guidelines as a safe harbor for employers would strengthen the government’s partnership with employers and empower both parties to act in a way that would enhance the financial well-being of many Canadians.” comments Bita Jenab, a partner in Aon Hewitt’s Vancouver office and leader of the firm’s national financial planning practice.
