Over two-thirds of Canadian employers with Defined Contribution retirement plans allow employees to make all their investment decisions. This is according to Watson Wyatt’s COMPARISON Canada, a benchmarking database with data on benefit plan provisions for over 600 employers across Canada.

According to the study, 77% of DC plan sponsors allow employees to change their investment choices at any time.

“Over the past decade, many employers implemented Defined Contribution pension plans in response to the needs of a more mobile workforce,” says Patrick Longhurst, national director, Benefit Practice, Watson Wyatt. “DC plans allow employees to take responsibility for their own retirement at all stages of their career. But success in providing retirement income depends on the wisdom of their investment decisions.”

Longhurst said that employers need to make sure they are not open to future liabilities when plans don’t perform as well as expected. He said that recent stock market turbulence has brought this issue of fiduciary and educational responsibility to the forefront.

The study found that in spite of continuing cuts to government health care programs for seniors, it appears that fewer employers now provide post-retirement health benefits for future retirees than they did five years ago.

In a 1996 survey conducted by Watson Wyatt, retiree health care coverage was offered by over 50% of participating companies. Only 31% of organizations that participated in the recent study provide similar coverage today.

“This decrease may be due, in part, to cost cutting by employers,” says Jane Petruniak, senior consultant, Benefits, Watson Wyatt. “We find that those organizations that continue to offer post-retirement health benefits have adopted creative plan designs to help control costs and stabilize the expenses as reported on financial statements.”

Petruniak said that planning for post-retirement health needs will become an increasingly important part of retirement planning as baby boomers reach retirement. Ironically, she said there is no tax incentive for employers to provide post-retirement benefits, and no tax-effective funding vehicles for employers or employees to set aside money today for tomorrow’s health care crisis.