New research from Sun Life Financial shows more people are saving and taking advantage of their employer’s matching contributions in their pension plans, but they add more work needs to be done to increase employee participation.

According to the 2019 Designed for Savings report on capital accumulation plans in Canada, about 50 per cent of global pension plan assets are invested inside of a defined contribution pension plan (DCPP). In Canada, they say DCPP assets account for just five per cent of all pension assets, compared with 87 per cent in Australia and 60 per cent in the United States. They add that DCPP assets have grown at an annual rate of 7.6 per cent during the last 20 years, while defined benefit plan assets grew at a slower pace of 3.2 per cent, annually.

Sun Life says the savings report was written to provide a snapshot of what workplace savings plans Canadian employers are offering and to show what action plan members are taking with their savings.

The report’s authors say slightly more than one-third of the group savings plans with Sun Life have mandatory participation, requiring employees to join when they become eligible. For the majority of plans where employees need to take action to join, there is also a trend towards shorter waiting periods with more employers moving to allow immediate participation when an employee is hired.

Offering automatic enrollment where employees opt out instead of opting in, is one strategy in particular the report says can lead to “staggering” participation numbers. (Only Alberta and British Columbia have passed legislation allowing for automatic enrollment – express consent from the employee for the payroll deduction is not needed for a DCPP in these provinces.) When automatic enrollment is not an option, the company says simply setting a starter savings rate which will attract a full matching employer contribution can increase participation rates by 24 per cent.

The 56-page report examines the different plan types commonly offered, looks at different voluntary plan features, and discusses the amounts employers will typically match when employees make contributions. It also looks at where assets are invested, at contribution rates and at account balances. The report closes with recommendations for companies interested in fostering more digital engagement among their plan members.