Thursday, November 1, 2012

Shifting sands of retirement and women

Retirement planning is all the more important for women since they live longer than men. And for partnered women, “The average age of widowhood is 56 in Canada,” says Marlena Paspiech, senior manager with the BMO Retirement Institute. And with 40% of marriages not lasting more than 30 years, women must be financially prepared.
Women tend to accumulate smaller retirement funds due to two main factors, adds Paspiech. Studies show women earn 83 cents for every dollar a man earns. Also, “women tend to interrupt their employment to accommodate roles as family caregivers.” This means, on average, women work fewer hours, reducing potential pension benefits.
Another issue is that, “Women have said their opinions on financial matters aren’t taken as seriously as those of men and the industry isn’t doing a good job of serving their investment needs,” says Paspiech
Plan providers have been broadening the scope of the educational tools available to in hopes of encouraging them to be more mindful of the state of their pensions. Those tools range from literature about the funds available to assessment of risk aversion via call centre representatives to one-on-one meetings with licensed advisors.
Sara Hakim, associate partner at human capital consulting and outsourcing company Aon Hewitt, says that while advice services are being made available by plan providers for a set fee, few plan sponsors are opting to make it available to plan members.
Current pension regulations only loosely define the fiduciary responsibilities of plan sponsors with respect to the resources they must provide plan members to help them manage their pension investments.
Non-binding guidelines set out by the Canadian Association of Pension Supervisory Authorities (CAPSA) say employers have to offer plan members investment choices with varying degrees of risk and return so that a reasonable person could create a portfolio that meets their needs. However, employers who offer information that borders on specific investment advice could later be liable if that advice turns out to be poor.
Terra Klinck, partner at law firm Hicks Morley, says some plan sponsors are choosing to offer plan members a stipend to use toward third-party, fee-based advisors to indemnify themselves against potential litigation in the future, but more needs to be done.

No comments:

Post a Comment