CONSUMER STAPLES FIRMS 2017 - Sunlife
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20 1 7 CONSU M E R STAP LE S FI R MS R E p o rt
Introduction
The phrase “knowledge is power” goes back centuries – and
yet it’s every bit as relevant today as it was 400 years ago. As
an employer offering a workplace retirement and savings plan,
knowledge of emerging trends in the workplace retirement
market is as critical as ever, with new, innovative products and
services emerging and a new generation of employees poised
to become the dominant force in the workplace.
Retirement savings programs often play a key role in an
organization’s total rewards strategy, but elements of
employee compensation and benefits can vary greatly from
industry to industry.
With the competition for talent always a high priority,
understanding how your retirement savings program compares
to industry norms can help you position your program for
maximum effectiveness.
In working closely with plan sponsors, we’ve seen how plan
Industry reports in this series design can play a key role in boosting retirement savings, and
ultimately retirement outcomes. We’ve also seen firsthand
Academic Institutions how differences in industries and workplace demographics can
require a different approach to engaging employees – to help
ssociations & Affiliations
A
them enroll in the plan, take advantage of employer matching
(Incl. First Nations)
contributions and stay invested for the long term.
Consumer Discretionary Firms
With this reason we are delighted to provide you with a
> Consumer Staples Firms refreshed, expanded series of industry-specific Designed for
Savings 2017 reports. This is the most comprehensive, accurate
Energy Firms reflection of the state of capital accumulation plans in each of
twelve broad Canadian industries today.
Financial Firms
We hope you’re able to use this information to gain additional
Healthcare Services Firms insights into your retirement savings program – and identify
opportunities to maximize its value for your employees.
Industrial Firms
We appreciate the opportunity to be of service, and hope you
Materials Firms find the information in this report to be both helpful and of
interest.
Professional Services Firms
Sincerely,
Small Business
Technology Firms
Thomas G. Reid
Senior Vice-President, Group Retirement Services
2 Sun Life Financial Group Retirement ServicesTable of contents
Section 1 – Demographic data: setting the stage.............................................................................4
Section 2 – Plan design.............................................................................................................. 5
Section 3 – Employee eligibility and participation............................................................... 6
Section 4 – Contribution rates and account balances.......................................................... 9
Section 5 – Investments........................................................................................................... 14
A. Investment Options ........................................................................................... 14
B. Investment Allocation..................................................................................... 17
C. Single Fund Solutions ...................................................................................20
Section 6 – Planning and support ......................................................................................... 23
Section 7 – Taking action......................................................................................................... 25
Checklist – Five easy steps to building plan member engagement.................................26
Plan abbreviations used in this report: X X X
CAP Capital accumulation plan
DBPP Defined benefit pension plan
DCPP Defined contribution pension plan
LIRA Locked-in retirement account
RRSP Registered retirement savings plan
TFSA Tax-free savings account
DESIGNED for SAVINGS | 2017 – CONSUMER STAPLES FIRMS report 3Section 1
Demographic data: setting the stage
The data included in this report is drawn from Sun Life Here is a snapshot of key demographics and
Financial’s proprietary capital accumulation plan (CAP) asset breakdowns from our Universe:
universe of more than 5,000 plans, supplemented,
where necessary, by the results of survey information
from plan sponsors. In this report, we provide results
CAP Universe snapshot
from our universe that are specific to employers in the
Consumer Staples sector. Number of clients :4,755
The Consumer Staples sector Number of plans : 5,555
includes industries covering food Number of members : 844,515
products, household products, Assets under management :
personal products, beverages,
food and staples retail. $56,200,000,000
These industry results reflect 325 plans with CAP Consumer Staples
approximately 60,770 plan members. We also highlight
areas in which the results for the Consumer Staples sector snapshot
sector differ noticeably from our overall CAP universe.
This can provide an important snapshot of both Number of clients :265
Number of plans : 325
industry and Canada-wide norms for different aspects
of these plans.
Number of members : 60,770
Assets under management :
FIG. 1.1 Plan Breakdown
$2,700,000,000
Plans withSection 2
Plan design
When it comes to the Consumer Staples sector, often both hourly and salaried employees. Creating a
employers must offer plans that support the unique competitive plan design that meets the needs of an
characteristics of their employee base and the goals organization’s workforce both today and tomorrow,
of their business. Many employers have a very diverse balanced with the company’s objectives, can be a
workforce - including roles focused on production, challenge for an organization with significant diversity
distribution, warehouse, head office or customer in its employee population.
facing, often with multiple locations, shifts and
FIG. 2.1 Plan types most common with CONSUMER STAPLES sector businesses, by percentage
of plans
Plans Plans with Plans with Plans with
All plans in All Sun Life
withSection 3
Employee eligibility and participation
Across the Consumer Staples business sector, Almost 97% of plans in the Consumer sectors include
employees are typically eligible for their employer’s some amount of employer-matching contribution –
CAP within their first year of employment. either full or partial. Twenty-five percent of the plans
in the Consumer Staples sector also include a basic
Approximately 56% of the plans have mandatory
employer contribution that requires no contribution by
participation for at least their full-time employees.
the employee. A basic contribution equal to 3% is the
The remainder leave it up to the employees to
most common rate for these plans, followed by 28%
choose to join once they become eligible. Although
providing a 5% basic contribution and 14% providing a
the weighting between mandatory and voluntary
2% basic contribution. Plan member surveys and related
participation varies based on the size of the employer
research confirm that plan members believe employer-
in this sector, employers of all size segments, ranging
matching contributions to be the primary advantage of
from small to large, tend to leave it up to the
saving at work and place a high value on the benefit.
employee to make an active decision to participate.
Roughly half the plans with Sun Life Financial have FIG. 3.3 Employer-matching contributions
mandatory participation and require new employees to
join when they become eligible. Maximum employer Percentage
contribution of plans
FIG. 3.1 Plan participation eligibility 1% 2%
3 2% %
13%
3% 20%
Vo
4% % 14%
Immediate
lun
44% 33 29
tary
% 1 month of service
5% 24%service
After 3 months
ry
56% 6% 7%service
After 6 months
ndato
7% 8 %
After 1 year service
4%
Ma
10% 178%%
After 2 years service
2%
Other % 1%
FIG. 3.2 Eligibility waiting period
Scale based on total 4%
points (age + service)
3% Scale based on years of
service with employer
9%
Immediate
%
33 % 29 1 month of service
33%
Base
After 3 months service
34% Base + Overtime
Base + Commission
After 6 months service
+ Bonus + Overtime
8% After 1 year service
10% 17%
After 2 years service
33%
6 Sun Life Financial Group Retirement ServicesSEction 3 | Employee eligibility and participation
FIG. 3.4 Employee contributions plans where participation rate information is available,
participation when weighted as the average across
Employee contribution %
all of these plans is 57%. The enrolment decision for
required to receive maximum Percentage
voluntary plans is framed as a positive election: “Join
employer-matching of plans
contribution the plan if you’d like – take these steps to enrol.”
1% 0% Research in the field of behavioural finance provides a
2% 12% number of explanations for why employees fail to take
advantage of their workplace plan:
3% 25%
• Some employees find it challenging to make
4% 23% decisions in the present for something that will
5% 23% happen many years in the future.
6% 13% • Faced with many (and sometimes complex) choices
7% 0% and unsure of what to do, many employees take the
38%
%
2% “no decision” default choice.
• When faced with difficult decisions, many individuals
9% 2%
Immediate
defer the decision to another day, which means that
%
33
Of the% 29
businesses providing an employer-matching
1 month of service they don’t get around to joining the plan.
contribution, 70% provide a dollar-for-dollar match.
After 3 months service
When it comes to an automatic enrolment environment
Thirty-one percent provide a match in excess of 100%
After 6 months service
(with opt out), which exists in many other countries, the
8
or an employer contribution%with no expectation of
After 1 year service
decision to save is framed negatively: “Quit the plan if
10
an employee %contribution. Only 20% of businesses in
After 2 years service
you like – take these steps to opt out.” With this type
17 %
the Consumer Staples sector provide a match of 50% of design, “doing nothing” leads to participation in the
or less. plan, the improved participation results are staggering,
and the administration is considerably simpler.
FIG. 3.5 Earnings used for contribution
purposes
For many plan sponsors, a
comparison of their plan’s
Base
33 %
34% Base + Overtime
participation rate compared to
Base + Commission
+ Bonus + Overtime
others in their industry is the
broadest – and most pressing
– concern when assessing the
33% health and competitiveness of
their plan.
Employee Participation
Participation is voluntary in about half of our CAPs –
meaning that employees must make an active choice
to join the plan. In the Sun Life Financial universe of
DESIGNED for SAVINGS | 2017 – CONSUMER STAPLES FIRMS report 7SEction 3 | Employee eligibility and participation
With automatic enrolment, Fidelity Investments’ In the figure below, plan-weighted participation is
U.S. operation has experienced an overall average calculated by taking the average of participation rates
participation rate of 89%1, with little difference to among all plans. Plan member-weighted participation
opt out rates regardless of the default contribution considers all employees in all plans as if they were in a
percentage (81% participation at a 1% default single plan. Sufficient sample size data is not available
contribution rate and 91% participation at a 6% default at this time to calculate the participation rate for
contribution rate). each industry sector. Instead, aggregate results where
1 Fidelity Points of View Presentation 2012 – “The status of automatic relevant information is known has been used.
enrollment and annual increase programs in America’s DC plans”
FIG. 3.6 Employee participation rate
59%
60%
56% 57% 57%
51% 52% 51% 50% 49%
50% 48%
Plan members’ participation
40%
Plan-weighted
Plan member-weighted
30%
20%
10%
Note: includes a mixture of
mandatory and voluntary
plans.
0%
Plans withSection 4
Contribution rates and account balances
While a number of factors can influence a plan For this reason, plan design features – such as the
member’s success in saving for the future, none is as level of required contributions and the degree of
critical as the rate of contributions. “Money in” is still company matching – are considerations that can
the greatest determinant of “money out” in retirement. have a significant impact on a plan member’s ultimate
retirement income.
FIG. 4.1 CONTRIBUTION RATE AS A PERCENTAGE OF ANNUAL SALARY
Plans with Plans with Plans with Plans with
All plans in All Sun LifeSEction 4 | Contribution rates and account balances
FIG. 4.2 ANNUAL CONTRIBUTIONS
Average Median
annual contributions annual contributions
Plan Member Plan Sponsor Total Plan Member Plan Sponsor Total
Plans withSEction 4 | Contribution rates and account balances
Account balances Today, just 5% of all pension assets in Canada are held
in DCPPs – compared to 18% in the U.K., 60% in the
Account balances vary considerably based on plan
U.S. and 87% in Australia.2
member demographics. Factors such as household
income, age and job tenure influence account balances As a result, average account balances are modest and
– and these factors are intertwined. should be thought of as only a partial measure of
retirement preparedness for many plan members -
Not only does income tend to rise somewhat with age
reflecting the early stage of DC plan development in
(making saving more affordable), older plan members
this country. It also reflects the fact that:
also tend to save at higher rates. In addition, the longer
an employee stays with an organization, the more • With job changes – and the ability to transfer
likely they are to earn a higher salary, participate in the balances to personal RRSPs and locked-in accounts
plan and contribute at higher levels. Long service plan – CAP members may be holding locked-in balances
members also have higher balances because they have from previous employer pension/savings plans.
typically been contributing to their workplace plan for
• Many workers with access to a DCPP today may also
a longer period.
have or have had access to a DBPP in the past —
It’s important to note that these are still early days either through their current or previous employer(s).
for DC plans in Canada. Canada is taking longer than The DCPP was often seen as a supplement to
other countries to convert to the DC plan trend. the DBPP. As a result, many boomers in particular
are likely to draw a significant portion of their
retirement income from their accumulated benefits
FIG. 4.3 ACCOUNT BALANCES
in these legacy DBPPs.
$80,000
$76,490
$72,940
$70,000
$60,000
Plan members’ account balances
$53,885 $53,020
$52,245
$50,000 $49,395
$40,000
$33,930
$30,210
$30,000
$24,855 $23,250 $23,995
$21,900
$20,000
$10,000
$0
Plans withSEction 4 | Contribution rates and account balances
Did you know? • We are seeing double digit growth each year in
the number of businesses adding a TFSA to their
workplace plan. It’s another convenient and easy
The average account balance for plan way for employees to save at work.
members in workplace plans for the Retail 2 Willis Towers Watson Global Pension Assets Study – January 2017
sector in the U.S. is $89,401 for plans with
Retirement income – the real meaning of
less than 1000 members and $42,718 for saving for retirement
plans with more than 1000 members.
Successful retirement planning isn’t just about hitting
On the other hand, the median account
a magic number at age 65. Instead, planning should be
balance is $23,025 for plans with less than more focused on helping plan members frame their
1000 members and $7,004, for plans with savings efforts around generating an appropriate level
more than 1000 members. of income throughout retirement and how maximizing
their workplace plan can help them get there.
Source: Vanguard, 2017
Figure 4.4 shows the impact on retirement income
at different saving levels. A small increase in a plan
member’s saving rate (perhaps coupled with an
increased plan sponsor matching contribution) can have
a noticeable impact on the potential retirement income.
Encourage higher plan balances – allow transfers in
One of the top questions asked by plan members when calling our Customer Care Centre
is whether they can transfer their personal savings into their workplace plan. Many see it as
convenience – and want to take greater advantage of their
TFS Wor
kpla
workplace plan’s institutional funds and fees. LIRA A ce Savi
RRSP ngs
It’s a very common and valuable plan feature that lets plan
members consolidate their personal savings from a LIRA, RRSP,
or TFSA with their workplace savings – and take advantage of
lower fees and investment options they can’t find elsewhere.
If your plan doesn’t permit this feature today, it’s very easy to
update your plan to enable consolidation.
12 Sun Life Financial Group Retirement ServicesSEction 4 | Contribution rates and account balances
Assumptions Based on 10,000 scenarios representing 40 year net returns,
the numbers in green represent the income replacement at the
Illustrated Replacement Ratio at age 65, starting at age 25, 2.5% 95th percentile, while the numbers in red represent income
salary growth scale, contributions invested in SLGI Granite Target replacements at the 5th percentile. For example, a person with
Date Fund. a total savings rate (employee and employer contributions
Average annual median net (after fee) return of 5.2%. Savings combined) of 10% could potentially achieve an income
assumed to convert into single life annuity with a 10-year guarantee replacement rate of 20% if average net returns over 40 years are
at retirement. 1.6%, and 82% if average net returns over 40 years are 8.6%. The
average annual median net return of 5.2% would result in a median
Annuity pricing as of April 2017 assumed for retirement date. income replacement rate of 38% as illustrated in the figure below
Average replacement ratio assuming 50%/50% weighting for males by the gold diamond.
and females.
FIG. 4.4 INCOME Replacement ratio at various saving rates
120%
100% 99%
91%
82%
80% 74%
Replacement Ratio
66%
60% 58%
46%
41%
49% 38% 42%
40% 31% 35%
33% 27%
19% 23%
15%
20%
20% 22% 24%
14% 16% 18%
8% 10% 12%
0%
4% 5% 6% 7% 8% 9% 10% 11% 12%
Total Savings Rate
Replacement Ratio range Median Replacement Ratio
at 5th and 95th percentile
DESIGNED for SAVINGS | 2017 – CONSUMER STAPLES FIRMS report 13Section 5
Investments
A. Investment Options Did you know?
Plan member investment decisions are made from a
menu of choices offered by the plan sponsor – an The average number of funds used
increasing number of fund lineup changes involve in workplace plans for the Retail
a reduction to the number of funds offered – this sector in the U.S. is similar to Canada
makes it easier for plan sponsors to manage from a
– 2.6 for plans with less than 1000
governance perspective and easier for plan members to
choose their investments. members and 1.9 for those with more
than 1000 members.
In the following charts, a series of target-risk or
target-date funds are counted as one fund. Similarly, Source: Vanguard, 2017
Guaranteed Interest Account options, where varying
terms are offered i.e. 1, 3, 5 year, are counted as one
option.
FIG. 5.1 Number of funds offered within a plan
Number of funds
80% 78%
1-2
3-5
70%
6-10
11-15
60% 60%
Percentage of plan member investment
16-20
20+
50%
44%
40% 40%
35%
33%
231%
30% 28%
25%
23%
20% 20%19% 20%
19%
17% 16%
16%
12% 13% 13%
10% 10% 10%
7%
5%
2% 1% 1% 1%
1%
0
Plans withSEction 5 | Investments
FIG. 5.2 Funds offered in a plan and funds used by plan members
20
Average number of funds offered
Average number of funds used by members
16.4 16 Median number of funds offered
15.6
15 14
Median number of funds used by members
13.2
12
Number of funds
11.7
11 11
10.5
10 10
8
5
2.7 2.8 2.6 2.5 2.5
2.4 2 2 2 2 2 2
0
Plans withSEction 5 | Investments
FIG. 5.3 FUNDS BY ASSET CLASS OFFERED IN A PLAN
Plans with Plans with Plans with Plans with
(Percentage of plans All plans in All Sun Life
< 200 200-499 500-999 1000+ plan
offering) the industry plans
members members members members
Money Market/Guaranteed
• Money Market 60% 92% 100% 100% 69% 60%
• Guaranteed 63% 87% 88% 100% 70% 61%
Fixed Income 61% 97% 100% 100% 70% 61%
• Active 49% 67% 63% 36% 73% 77%
• Passive 33% 72% 75% 93% 63% 63%
Balanced 74% 72% 50% 43% 71% 70%
• Active 74% 72% 50% 29% 99% 99%
• Passive 11% 5% 0% 14% 14% 15%
Asset Allocation/Target
Risk
36% 36% 50% 21% 35% 39%
• Active 34% 31% 38% 7% 89% 94%
• Passive 3% 5% 13% 14% 13% 10%
Target Date 44% 72% 75% 86% 52% 56%
• Active 33% 31% 13% 7% 58% 79%
• Passive 12% 41% 63% 79% 43% 24%
Equity Funds
Canadian Equity 71% 100% 88% 100% 78% 74%
• Active 70% 100% 88% 93% 98% 99%
• Passive 23% 41% 50% 57% 37% 33%
US Equity 55% 90% 88% 100% 65% 60%
• Active 44% 49% 50% 29% 69% 78%
• Passive 35% 79% 88% 100% 75% 65%
Global Equity 48% 77% 50% 57% 54% 52%
• Active 48% 77% 50% 43% 98% 96%
• Passive 3% 13% 13% 14% 10% 15%
International Equity 49% 90% 88% 93% 59% 50%
• Active 39% 74% 75% 93% 83% 82%
• Passive 26% 46% 38% 64% 54% 55%
Company Stock 1% 10% 38% 14% 4% 2%
Real Estate/Alternative 0% 3% 0% 0% 0% 1%
Note: The percentage of plans ‘offering’ a fund is determined provided there is at least $1.00 in a particular fund.
16 Sun Life Financial Group Retirement ServicesSEction 5 | Investments
B. Investment Allocation At the other extreme, 8% of plan members across all
of our CAP plan sponsors had their entire plan account
With a long-term goal like retirement, a plan member’s invested in equities, compared to:
asset allocation can play a key role in achieving
• 2% of plan members in plans with fewer than 200
their retirement savings goals. Equity investments in
members,
particular are an essential component due to their
potential to provide the highest returns of any asset • 2% of plan members in plans with 200 - 499 members,
class over the long term. • 3% of plan members in plans with 500 - 999 members,
While the average asset allocation to equities of about • 4% of plan members in plans with 1000+ members.
60% may appear appropriate in light of the long-term
These results underscore a tendency of at least
retirement objectives of most CAP members, the allocation
some CAP members to adopt extreme investment
to equities varies considerably among plan members.
allocations. About 20% of plan members in 2016 within
At one extreme, across all of our CAP plan sponsors, the Consumer-focused business sectors overall held
12% of plan members had no allocation to equities at extreme allocations – either with zero equity holdings
the end of 2016 whereas in the Consumer industry the or with 100% equity exposure. Some plan members may
following percentages of members had no allocation be making clear choices based on their objectives, time
to equities: horizon, risk tolerance, investments held outside their
workplace plan or other personal factors; but others
• 17% in plans with fewer than 200 members,
may not. An increasingly popular solution is the use of
• 18% in plans with 200 - 499 members, automatic investment options – such as target date
• 6% in plans with 500 - 999 members, funds – which eliminate such extremes and structure
plan member portfolios along more balanced lines.
• 18% in plans with 1000+ members.
FIG. 5.4 Distribution of equity exposure by percentage
25%
24%
20% 20%
19%
Percentage of plan members
19%
18% 18% 18% 18%
17% 17% 17%
16% 16% 16% 16% 16%
15% 15%
13% 13%
12%
11% 11% 11%
10% 10% 10% 10% 10%10%
10% 9%
9%
8% 8%8% 8%
7% 7% 7%
6% 6% 6% 6% 6% 6% 6%
5% 5% 5%
5% 4% 4% 4%
4% 4% 4% 4%
3% 3% 3%
2% 2%
0%
Plans withSEction 5 | Investments
FIG. 5.5 AVERAGE AND MEDIAN EQUITY PERCENTAGE
Plans Plans with Plans with Plans with All plans
All Sun Life
withSEction 5 | Investments
FIG. 5.7 Asset allocation of ongoing contributions
100% 2% 1% 1%
2% 4% 4% 4% 12%
90% 4% 6%
3%
10%
80% 12% 12% 12%
14%
70%
12%
60%
28% 35% 50% 42%
45%
50% 26%
40% 15%
8% 9%
30% 8%
13% 5%
8% 9%
6% 10%
20%
6% 9% 5% 7% 6%
10% 5% 5% 9% 7% 8%
4%
9% 7% 5% 5%
0%
4%
Plans withSEction 5 | Investments
C. Single Fund Solutions
In recent years, professionally managed asset allocation This ease is one of the key drivers of the dramatic
funds – whether target date or traditional target risk growth in target date funds, which emerged in the
or lifestyle funds – have contributed to significant institutional CAP market in Canada in 2007. Although
improvements in the overall asset allocation within the decision has been made much easier for plan
plan member accounts. For many, they have made one members, plan sponsors still need to monitor these
of the most daunting plan member decisions – how to funds, just as they would any other investment option
invest one’s retirement savings – much easier. in their plan’s line up.
FIG. 5.8 TARGET DATE FUND (TDF) USAGE
Plans with Plans with Plans with Plans with All plans All
Plan use of target date fundsSEction 5 | Investments
This ‘newer’ style of investment product – and its Target date funds have now become the default fund
growth as a default investment option – has prompted of choice for most plan sponsors, and the growth
many plan sponsors to ask questions about the role in assets to this professionally managed solution is
of this product in retirement plans. This section is evident when we look at existing plan members in the
designed to address those questions. illustration below.
For the small percentage of plan members using more When it comes to new plan members who joined their
than one target date fund, more than two-thirds workplace plan in 2016, the professionally managed
are using sequential funds at either five or ten year allocation trend is even more pronounced – something
intervals i.e. 2020 and 2025 funds, or 2020 and 2030 we are seeing regardless of plan size.
funds. The “laddering” of target date funds could be
a reasonable approach for a plan member with varied
savings or income goals.
Plan members using professionally managed pre-built solutions
FIG. 5.9 FULL YEAR MEMBERS (those who joined their workplace plan before January 1, 2016)
100%
80%
31% 60%
Percentage of members
60%
41%
41% 53% 48%
40%
30%
24%
19% 14%
20% 17%
20% 13%
16% 16% 8% 12% 14%
0%
Plans withSEction 5 | Investments
FIG. 5.10 NEW PLAN MEMBERS IN 2016 (those who joined their workplace plan on, or after January 1, 2016)
100%
80%
55%
54%
Percentage of members
60%
63%
66%
40%
11% 73%
20% 38%
20% 7%
30% 11%
23% 6%
19% 12% 9%
0% 2%
Plans withSection 6
Planning and support
Canadians are increasingly embracing mobile and Fig. 6.1 CANADIANS ARE INCREASINGLY
digital technologies. In 2017, we reached the mark of EMBRACING MOBILE AND DIGITAL SOLUTIONS
30 million Canadians using digital technologies and
18 million using a mobile device. Over the last few
years, the commercial landscape has changed with
Did you know?
the arrival of Uber, Amazon, Netflix, Spotify and other
digital players who have become mainstream for most 90.9% of Canadians
Canadians. The question no longer is whether people are registered online users
(from either a desktop computer,
buy online, but what they buy and how often. With tablet or mobile device)
e-commerce accessibility threatening the established ................................................
standards of doing business, the financial services
industry is adapting to Canadians’ expectations. 3 out of 4
Canadians own a smartphone
In 2017, we saw two major trends developing;
AGES 18-24 – 13% use mobile
• Multi-platform usage i.e. where Canadians regularly solutions exclusively
(versus 7% for users of all ages)
use more than one device, has steadily increased.
Sixty-two percent of Canadians now access digital AGES 25-54 – 79% use multi-platforms
media from a desktop computer and mobile device (versus 64% for users of all ages)
vs. 58% of Canadians in 2016.
AGES 55+ – 26% use desktop only
• A
lmost two-thirds of digital time is now spent (versus 17% for users aged 18-54)
on a mobile device. Over the last year, desktop
computer usage declined 20%, while on the other
................................................
hand, mobile usage increased 29%. In addition, pic ally acce
ss t
app, ans tyincrease from he 30% a year earlier. Trends in the
10% of Millennials are becoming more and more
n
3rd highest
banking industry, for example, show that more users
int
ia
ad
ern
exclusive with mobile. are accessing their account vianumber of pages viewed
Can
a mobile device instead
et
monthly by users = 3,238.
While most mobile usage is focused on social and 3 times a day
of a desktop computer – 65%Only vs. 50%.
Italy and Russia have users
viewing more pages online than
leisure applications, others categories like retail and While change can sometimes Canadians be viewed asmonth
each difficult, it
– highest globally
................................................
banking are increasingly becoming commonplace. also can mark progress. For evidence, just look at the
world of CAPs, where plan members have access to a
Historically, adoption of mobile solutions in the
financial services industry has been slower than with 1.5 million
multitude of tools and benefits – from mobile apps to
automatic de-risking solutions like target date funds
other industries primarily due to security concerns. Canadians
– to help keep their retirement planning on track.
With security hurdles behind us, Canadians are
will use
Change, theircase,
in this Mobile device
has been (tablet
good.
embracing their mobile devices for all types of or smartphone) only in a given month
financial transactions ranging from bill payments to We now have five generations of Canadians in the
transferring money to purchasing select insurance workplace – and a one-size-fits-all approach to engage
products on-line. Forty percent of Canadians now these employees doesn’t work given their very diverse
actively manage their bank account through a mobile needs. The boomers (early and late) are planning more
DESIGNED for SAVINGS | 2017 – CONSUMER STAPLES FIRMS report 23SEction 6 | Planning and support
seriously for retirement with some beginning to leave site. Approximately 13% of this activity was generated
the workplace. The other two significant generations via a tablet or smartphone. With rapid adoption of
include: digital technologies across Canadians of all ages,
engagement strategies that include consumer-centered
• G
en X (born 1965-1980) who can be described
digital applications are quickly becoming much more
as cynical, entrepreneurial, realists and guarded.
common.
So, communication must prove value, provide
transparency and include scenario planning to Interestingly, the three most common areas of the
resonate with this generation. website explored by plan members of all industries
continues to be:
• G
en Y (born 1981-1997) who can be described as
confident, smart, optimistic and collaborative.
Communication with this generation requires
Top 3 web pages visited for
customization, authenticity and multiple resources. members of all industries
• Gen Z (born mid 1990s – early 2000) also known as • my financial centre where they can see beyond
the iGeneration are the cohort of people born after their overall account balance
the millennials. There are no precise dates for when
this cohort starts or ends, experts typically use the • Balance summary where they can see information
mid 1990’s to early 2000’s as starting birth years for by plan and product
Generation Z. They can be best described as digital
• Transaction history where they can see all activity
natives who are educated, industrious, collaborative
on their account
and eager to build a better planet. When
communicating with this generation, aim for 140 Regardless of the industry, making an investment
characters or less, using #soundbites. Despite the change falls into one of the bottom three activities.
focus on paperless, digital only solutions, they do This serves plan members well during times of market
value frequent contact and in-person experiences. volatility and reflects the growing number of plan
members using automatic de-risking solutions such as
The pace of change is growing ever more rapid with
target date funds.
people increasingly managing their lives through
technology and appreciating the convenience of All plan members saving in the workplace must balance
having information at their fingertips. competing priorities and busy schedules, and those in
many of the industries we examined are no exception.
Retirement planning is no exception to this trend.
The diverse workforce of many employers – including
In 2017, mobile traffic at Sun Life Financial increased
roles focused on production, distribution, warehouse,
by 45% with the number of plan member lumpsum
head office or customer facing, often with multiple
contributions made via the mobile app alone
locations, shifts and often both hourly and salaried
increasing 99% from 2016.
employees – sometimes all with the same employer –
2017 saw a 5% increase in online traffic at Sun Life often means a variety of tactics need to be considered.
Financial compared to the prior year, with 24.4 million It’s important to be sensitive to the diverse workforce
visits from plan members saving at work and almost needs and provide approaches that will resonate with
half of the visits going beyond simply checking their the various employee groups.
account balance. Almost a third, (30%) of these web Sources: Comscore - Canadian MultiPlatform Landscape 2017,
sessions included access to more detailed areas of Comscore - The Global Mobile Report,
Comscore - Future 2016 Global Digital Future in Focus Report.
the Group Retirement Services portion of the secure
24 Sun Life Financial Group Retirement ServicesSection 7
Taking action
Plan sponsors are working hard to help plan members and how maximizing their workplace plan and access
save and invest wisely for retirement. Our experience to a financial advisor can help them get there.
working with plan sponsors shows that plan design
Finding ways to effectively engage plan members
can play a key role in boosting retirement savings, and
so they understand the valuable benefits of their
ultimately retirement outcomes, by helping employees
workplace retirement savings plan is a common
to enroll in the plan, take full advantage of any
challenge for many plan sponsors. See our suggested
employer-matching contributions and stay invested
checklist on the following page for some actions to
for the long term. Employee engagement plays a
consider when working to drive better outcomes for
critical part in helping them achieve the best possible
plan members.
outcomes.
It is important to find a way to Fig. 7.1 Five easy steps to building plan
member engagement
get a plan member’s attention and
emphasize the benefits of saving
more, investing appropriately and 1 Establish plan goals
and benchmarks
making mid-course corrections –
all focused on an ultimate goal.
2 Understand the various
demographics
Plan member engagement is one of four critical drivers
that contribute to a successful retirement plan, along
with plan design, plan management and investment
solutions. A plan sponsor has direct control over these 3 Communicate via different
channels
last three drivers, but without an effective employee
engagement strategy, their impact will likely be reduced.
As our industry begins to shift the focus from
accumulation to decumulation (or retirement income),
4 Offer investment advice
and guidance
there is recognition that this will take time and is
much harder than flipping a switch. Addressing income
issues isn’t simply about finding the right product. We
need to find ways to reframe the conversation – and
educate plan members about the real meaning of
5 Monitor the strategy
as needed
retirement savings. Successful retirement planning isn’t
just about hitting a magic number at age 65. Instead, $
planning should be more focused on helping plan
members frame their savings efforts around generating
$
e
Re
om
re
m e nt inc
ti
an appropriate level of income throughout retirement,
DESIGNED for SAVINGS | 2017 – CONSUMER STAPLES FIRMS report 25Checklist
Five easy steps to building plan member
engagement
Segmentation, technology and multi-channel communications, and guidance and advice – are all ways that can
help drive better outcomes for plan members. Here are a few ways that Sun Life is working with plan sponsors and
their advisors to increase plan member engagement.
1
E stablish plan goals and 3 Identify groups of plan members that are not
meeting the plan’s goals and benchmarks and the
benchmarks behaviours that are affecting their retirement
Clearly defined metrics can help set the objectives readiness (e.g., low contribution rates or
for a plan member employee engagement strategy. inappropriate asset allocation).
se stories, tools and seminars that help them
U
3 Define the plan’s strategic goals – for instance 3 understand the consequences of their savings
based on your plan demographics, determine the
percentage of income your workforce needs to behaviours.
replace in retirement. Determine the tactical goals
You can play an important
3
that will help you reach those objectives such
as: the percentage of plan members taking full
advantage of the employer match, participation
role in facilitating an advisor
rate for the plan and contribution amounts. It also or plan provider’s access to
may include other goals such as the adoption of plan members via different
new investment options, or the percentage of plan channels
members taking advantage of advisory services.
Communicate with plan members based on
enchmark the performance of comparable
B
3 plans for a sense of how your plan compares and
their technology and channel preferences where
possible.
where improvements can be made.
enefit portals, intranet sites, internal benefit
B
3 newsletters and employee education seminars
Understand the
2 demographic segments
can help plan members understand and
appreciate the value of their workplace plan.
among plan members nderstand the percentage of your workforce
U
3 with on-the-job and off-the-job internet access
This approach can help target the unique needs of
groups such as women and Gen Y. to understand the effectiveness of e-mail and
e-bulletin communications.
P roviding relevant data such as salary and
3 contribution percentage information can help to
build effective targeted strategies and help an
advisor provide more informed support when
working directly with plan members.
26 Sun Life Financial Group Retirement ServicesChecklist | Five easy steps to building plan member engagement
Offer access to investment
4 advice as well as guidance
This can give plan members’ retirement readiness a
significant boost.
nderstand how in-plan and holistic advice is
U
3 defined, how it can benefit plan members and
the different forms it can take.
onsult with your plan’s advisor, provider or both
C
3 to identify best practices related to offering
guidance and advice.
3 Work with a provider that offers guidance and
advice services and makes them easily available in
the manner plan members want to access them.
Monitor the effectiveness
5 of the engagement strategy
and adjust as needed
Effective employee engagement is an ongoing
process.
ndertake regular reviews of your plan goals
U
3 – at least once every two to three years – and
determine whether you’ve met your targets.
E valuate each of the specific tactics in your
3 plan and consider whether they have met your
objectives.
djust your plan goals and tactics – with the
A
3 help of your provider and advisor – based upon
your plan’s experience and the success of your
current engagement strategies.
DESIGNED for SAVINGS | 2017 – CONSUMER STAPLES FIRMS report 27About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing a diverse range of
insurance, wealth and asset management solutions to individuals and corporate clients. Sun Life Financial
has operations in a number of markets worldwide, including Canada, the United States, the United
Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam,
Malaysia and Bermuda. As of June 30, 2017, Sun Life Financial had total assets under management of $944
billion. For more information please visit www.sunlife.com.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges
under the ticker symbol SLF.
Sun Life Group Retirement Services has been ranked as the leading provider of Capital Accumulation Plans
in Canada since 20021 with:
• More than $82 billion in assets under management
• More than 10,500 group retirement policies in force
• Over 1.2 million participants
• Plans ranging in size from one to 60,000 members
For more information, please speak with your Sun Life Financial Group
Retirement Services representative.
These materials are intended for general information only. Sun Life Assurance Company of Canada
disclaims all liability for the use of these materials and for any claims or suits arising from such use.
To request additional copies of this Report and/or reproduction rights, please contact grsmatters@sunlife.com.
sunlife.ca
Life’s brighter under the sun
GROUP BENEFITS | GROUP RETIREMENT SERVICES | INDIVIDUAL INSURANCE AND WEALTH
1
S ource: Benefits Canada, December 2016 – Sun Life Financial Group Retirement Services’ share of assets under management in Canada
as of June 30, 2016.
Group Retirement Services are provided by Sun Life Assurance Company of Canada,
a member of the Sun Life Financial group of companies.
©2017, Sun Life Assurance Company of Canada. All rights reserved.
Printed in Canada
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