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Canadians’ retirement perceptions and behaviours examined by new studies

The Canadian Institute of Actuaries (CIA) and the Ontario Securities Commission (OSC) recently released studies regarding perceptions and behaviours of Canadians when it comes to the financial aspects of planning for retirement. The key findings of the CIA study indicate that many Canadians misunderstand certain aspects of retirement planning, potentially leading to a damaging impact on their financial wellbeing for the later parts of their lives. The OSC study applies behavioural insights to offer many potentially useful initiatives and tactics that plan sponsors could use to encourage employees to take charge of their retirement planning.

CIA study discovers common misperceptions among current and nearly retired Canadians

A CIA study titled Report on Retirement Consumption, Risk Perception, and Planning Objectives presents the results of a survey by Canadians, aged 50 to 80, who are either close to retirement or already retired, examining their anticipated concerns and risk preferences with respect to retirement.

Key findings presented in the report include:

  • Pre-retirees expect to retire at a later age than retirees have experienced. The expected median retirement age is 65 for pre-retirees versus the actual median retirement age of 60 experienced by current retirees who responded to the survey.
  • Sixty-one percent of survey respondents have or expect to have relatively low liquid retirement assets. Ten percent have or expect to have less than $25,000 of liquid retirement assets and do not own their home or other properties.
  • Ninety-two percent of survey respondents think they will die sooner than the most recent life expectancy tables suggest.
  • Respondents profoundly undervalue life annuities. Eighty-four percent of respondents estimated the price of an annuity at less than half of the actual market price. Furthermore, respondents showed low interest in purchasing annuities at any price due primarily to their views of the associated credit risk and the loss of flexibility, control and financial security.
  • In general, respondents lack the understanding of the long-term cumulative impact of inflation on the cost of living. However, there is a dramatic change in their preferences when cumulative inflation impact is depicted, and they become willing to “pay” more in exchange for inflation protection.
  • Bequest (i.e., providing an inheritance) is generally viewed as fairly unimportant.
  • The overall attitude towards seeking professional financial advice is positive. Behaviour, however, is found to be strongly related to liquid retirement assets: respondents with low liquid assets show little interest in seeking advice, mainly due to affordability. In general, respondents show high concerns over potential issues such as accessing quality service, conflicts of interest, and fraud.

The findings of the CIA study suggest that Canadians would benefit from plan sponsors implementing interventions or behavioural “nudges” to encourage plan members to engage in retirement education and planning. The study also demonstrates that there are a number of prevalent misperceptions that can lead to damaging results for imminent retirees.

OSC study presents four key challenges and thirty implementable tactics

On July 27, 2018, the OSC published a research study entitled Encouraging Retirement Planning through Behavioural Insights. The study was prepared by the Behavioural Insights Team (BIT) in collaboration with the OSC. The BIT is a private organization that conducts research in using behavioural insights to influence behaviour, sometimes called “nudges”.

The study identifies and presents thirty different initiatives and tactics in which pension and savings plan sponsors can apply behavioural insights to promote retirement planning and help their plan members overcome challenges people experience in creating personal financial plans for their retirement. The initiatives presented are organized around four primary challenges people face in their retirement planning:

  • Difficulty in starting.
  • Procrastination.
  • People can feel overwhelmed and quit the process.
  • Difficulty in obtaining good advice.

Some examples of the thirty initiatives recommended to deal with these challenges include:

  • Integrating retirement planning into the onboarding process for new employees.
  • Prompting people to make a retirement plan at times when they are likely to feel positive about their financial situation (e.g. after a raise, bonus or tax refund).
  • Capitalizing on moments that people tend to think about the future (e.g. birthdays, when drawing from children’s registered education savings plans).
  • Emphasizing the short-term benefits of retirement planning by creating a near-term incentive.
  • Combating optimism bias by providing relevant benchmarks.
  • Helping people build confidence and comfort talking about their finances by providing a structure for conversations.

Three of the thirty recommended initiatives were tested using a randomized control trial experiment, in which over 70,000 Ontario Public Service employees were provided with different newsletter messages prompting them to use an employer-sponsored online retirement income calculator. The experiment found that messages that help people to imagine their social selves in retirement by evoking thoughts of time spent with friends and family can be highly effective in getting people to engage in retirement planning. The experiment also found that messages expressing that retirement planning can be a simple and easy process can be quite effective in moving people from an initial spark of interest into a more concrete action.


For employers and organizations who sponsor pension and savings plans for their employees, it is crucial to stay abreast of current trends in employee perceptions and behaviours when it comes to planning and saving for retirement. Doing so can allow plan sponsors to provide more effective plans and communication strategies that maximize employee perceived value and financial wellbeing.

Although the information and insights presented in the CIA and OSC reports should be of interest to most employers and organizations in general, they will be of particular value for employers and organizations who are reviewing the following:

  • Pension and savings plan design;
  • Employee communications strategies with respect to pension and savings plans; and
  • Retirement planning and education programs for employees.

News & Views - September 2018 (PDF)