Future State: Next Generation Members
The Saskatchewan Retirees Association (SRA) has represented public sector retirees since 1975 through its efforts to provide extended benefits, pension enhancement advocacy and provision of relevant information to assist its members in making informed decisions as they journey into their retirement years.
The most recent challenge taken on by the SRA focused the association’s attention on pension reform as it has been heavily involved in efforts to lobby for increased cost of living indexing for members that were participants in the provincial government’s defined benefit pension plan. As that plan was replaced in 1977 by the current defined contribution plan, questions remain as to what the SRA will focus on once the current court challenge is resolved in 2012-2013.
SRA is approaching a crossroads in relation to its mandate as much of its support has been derived from a now, aging membership. As the Board of Directors plans for the future, issues about continued relevancy have emerged.
To consider its options, SRA’s Board of Directors commissioned the development of a discussion paper to scan the environment, consider the needs of the “next generation” of retirees and challenge the association to embark in a direction that retains current members, secures new members and solidifies the need for the association to continue to operate into the future.
Environmental Scan: Profiling the Next Generation
2012 marks the beginning of a whole new phase of entrants leaning towards retirement. It marks the first year that official baby boomers (1947-1964) begin to reach 65 years of age. For the next twenty years, there will be a continuous wave of “boomers” as that generation marches forward in Canada. It is estimated that by 2031, about 25% of Canada’s population will be aged 65 or older, compared to about 15% now. Life expectancy is also increasing with boomers now projected to live up to nineteen years after they reach their 65th birthday. These changes will put pressure on the retirement system as well as health and other social programs available in Canada.
b) Income Security-New Realities
According to 2011 Statistics Canada information, of the 19,463 registered pension plans in Canada, 6,826 are defined contribution plans. This is a decrease of 4.7% from 2007, a reflection of changing employment patterns in the country. With more part-time employment coupled with the challenges of economic recovery, 67% of the Canadian work force does not have any company sponsored pension to rely on for their retirement years.
As employees approach retirement, according to a 2011 survey by TD Waterhouse, up to 67% of boomers are worried they won’t have enough money to retire. In Saskatchewan, 37% of working boomers plan to retire in the next five years. Of these, 70% are worried they won’t have enough money to last through their retirement. With that worry, 30% are suggesting they will continue to work into their retirement years. In addition, 55% responded that they needed a better financial plan to guide their direction and decisions as they approach retirement.
So with the next generation beginning to retire after completing a career where they contributed to a defined contribution plan, worries about financial security continue to create anxiety and uncertainty. From the TD Waterhouse survey, boomers reported that they plan to fund their retirement with a combination of income sources. Income sources reported were:
- RRSP’s 61%
- OAS-CPP 60%
- Employer pension 47%
- Working 30%
Recent announcements about changes to the Old Age Security plan will add to the worry. Even though Canadians older than 54 years will not be affected by the age increase to 67 years, the direction being put forward continues to reinforce the need for individuals to be more self-reliant, have a financial plan for their future, while not solely relying on government safety nets for future financial security. Declining birth rates also point to need for change as it is anticipated that by 2030 for every retiree, there will only be two workers contributing to support Canada’s social safety net.
In the public sector in Saskatchewan, the vast bulk of employees are now in defined contribution plans. Recent updates suggested that the number of public sector employees in Saskatchewan in the defined benefit plan and still employed has now slipped well below 1,000 individuals. With the large number of future retirees now in defined contribution pension plans, a recent Merrill Lynch survey, reported by PEBA in 2011, found that 20% of employees who plan to retire in this decade were “anxious idealists”, meaning they have realized they may not have as much money as they need to retire. A further 18% were “stretched and stressed” as they have done little to plan for retirement.
A 2012 Bank of Montreal survey indicated that 27% of employees between 18-35 years expect to retire early but admit they have not set aside any funds to support their retirement goals. This type of survey should sound alarm bells about the longer term probability of income security for next generation retirees.
c. Economic Conditions
Recent recessionary times have taken their toll on the pension system in Canada. By 2007, Canadian registered retirement savings plans and other retirement programs had assets close to $2 trillion. With the market collapse in 2008, many plans took at least a 20% loss, with the overall estimate across the country of between $300-400 billion. Such a negative shock has placed the Canadian pension system under great pressure. Such losses have caused many employees approaching retirement to reassess their retirement timing, delaying their departure from the work force. It also has resulted in many employees looking to continue working in some capacity after “retiring” to supplement their family income and make up for the unexpected losses.
Retirees must also consider the impacts of inflation and the erosion of their purchasing power over the long haul. Only recently have financial institutions changed their forecasting models to reflect earning projections more in the 2-3% range. In the past, they had routinely suggested a 4-6% rate of return. As reported in the SRA’s own research done for the current court challenge, the longer term effects of inflation have reduced past members’ purchasing power by between 31-52% over a twenty year period. Even with the slowing of inflation in recent years, retirees with defined contribution plans have much greater needs to plan effectively so they are able to retain the standard of living they expected during their working years.
Like most everything else, the boomer generation has not stuck to the path taken by their predecessors, so their needs will not likely be served by organizations that simply stay with a mandate that worked well in past times. Expectations are higher; boomers are used to getting what they want and will demand better and different outcomes that before.
Observations and Recommendations: Future Direction
With the back drop as presented in this discussion paper, the question emerges as to what role SRA will choose to play to continue to be relevant in these changing times. Inevitably, SRA will face the same cultural change facing many organizations and community groups, namely the “what’s in it for me?” question! To respond to this and be seen as an attractive alternative for the needs of the next generation of retirees, SRA will need to embrace change or face a short lived future as it risks becoming part of history as its membership numbers decline
Recommendation # 1: Open Membership Eligibility
In reviewing the current documentation about member eligibility, it remains unclear as to the mandate of SRA. While there is reference to welcoming current and “future” retirees to the association, most of the remaining information published through the SRA website only references participation for retirees.
With many labour force employees being over 50 years, it is recommended that SRA open its membership to anyone approaching retirement. Many surveys have suggested that employees become much more interested in planning for the future as they reach the last 10-15 years of their careers. This change would remove the requirement to be part of the public sector, consistent with the decision to change the organization’s title to SRA several years ago.
In tandem with changing membership eligibility, efforts to include a broader range of employees can be pursued. There have been requests for membership from employees working in all sectors of the economy.
To retain the origins and ideals of SRA, employees joining from sectors outside the public sector would be considered as “associate members”. They could join the benefits plan, receive newsletters and other information about the association, but not have rights to participate in the governance of the association. While this may mean a bylaw change, it would assist in attracting a larger group of new members to sustain the association for an extended period into the future.
Recommendation # 2: Embrace a “Wellness” Benefits Model
It is apparent that the next generation of retirees are much more uncertain about their retirement plans and future income security. They continue to expect a lifestyle that mirrors their working lives, but may not have planned well to ensure it becomes their reality.
SRA currently is a provider of some elements of a wellness model by providing member with group health and dental benefit plans. Using this strength, the model could be expanded with the current insurance provider (GMS) to include elements of employee and family assistance programming, with a focus on financial planning. Access to professional financial planners can be an attractive addition to the service bundle provided by SRA. It would also signal to potential members that SRA is a serious alternative for employees as they begin to consider their longer term retirement needs. While this will increase premium costs, it can also provide an essential service to individuals looking for assistance as part of their pre-retirement planning years.
Recommendation # 3: Initiate an Advocacy Role with Like Minded Partners
SRA has participated with other organizations in the past to further the interests of its members. However, more recently, it appears that little has been done to leverage the offerings of these organizations.
Both the next generation of the labour force, as well as the current membership have needs and wants related to sustaining a reasonable standard of living. SRA’s mandate provides for a role to advocate for these interests. Beyond the court challenge, the question remains as to what type of advocacy the association could play in the future. There are provincial organizations in place that could be tapped into as partners to enhance SRA’s willingness to participate as well as expand the resource base beyond the few key members of SRA’s Board of Directors.
For example, the Public Employees Benefit Agency (PEBA), the Saskatchewan Pension Plan (SPP), the Public Service Commission (PSC) and other seniors’ associations are organizations that offer programs, information and learning opportunities for their audiences. It looks to be a missed opportunity to not take a more active role with these organizations.
There may be opportunities in other similarly constituted organizations for participation in their governance structure so SRA to can broaden its network for information and networking. There are attractive opportunities to simply pass through in formation developed by others to SRA members, providing a low cost, easily accessible information source to assist seniors in building awareness and understanding of issues and challenges facing seniors in Canada.
SRA members have asked for more networking and social opportunities to meet and broaden their own friendships. Seminars and social events could be promoted jointly with SRA for the collective benefit of both organizations.
For PEBA and PSC, it is timely to sort out differences between the organizations. The current court action will be resolved soon, so the question remains as to what comes next. Even if the basic relationship resulted in PEBA ensuring that retiring public servants were made aware of all their choices, including SRA’s benefit options. There are stories where retirees made choices based on limited information, not even aware of the SRA option, only to wish they had all the facts before choosing their extended coverage. Perhaps with re-engagement, at a minimum, SRA would be provided opportunity to participate in the PEBA pre-retirement sessions or could actually become the service provider to take over the sessions on behalf of PEBA and the Public Service Commission.
The SPP looks to be an organization that has not been actively considered as a potential partner for its members. While the mandate of the SPP is broader as its open to all residents of Saskatchewan, it would be an interesting study to learn about how many Saskatchewan residents (using the proposed broader SRA member definition outlined earlier) have deposits with SPP and may be interested in benefits continuation.
While these are examples of how SRA needs to rethink its mandate and target audiences, there may be other like-minded organizations that would be open to partnering with SRA or the creation of an alliance that benefits both memberships. SRA will not be able to continue to raise its member fee structure without demonstrating that they are able to offer a broader array of services to members.
Recommendation # 4: Rebranding and Marketing Strategy
SRA has been an effective association that has served its past and current members well. However, the future is more clouded with changing needs of prospective members. The profiles for the next generation is changing as they are computer literate, more self-centred and have expectations for top quality products and services from all their service providers. Loyalty to the past will be tested regularly as new retirees are used to being able to seek out information and make personal choices aligned with their wants and needs.
So the challenge will be for SRA to modernize its products and services and reach out to prospects and members using all the current and new age communication channels available.
This includes updating the current website so it is more attractive and easy to navigate. In addition, adding links to other like-minded organizations, or re-publishing their information
on the SRA site so it’s available. The idea of creating the SRA site as a “destination” where prospects and members can go for information means ensuring information is current, updated and fresh.
All respected writing on communications, indicate that the message needs to be repeated up to seven times before people actually retain the message. With that in mind, the current newsletter, “The Gazette” needs to be updated, renamed and re-launched. Efforts should be made to distance it from the legislative gazette, published by the Government of Saskatchewan. For example, it could be renamed “SR wAy” and published on a quarterly basis. Finding content is always a challenge, so this is a place where re-publishing some content from SRA partners could help relieve the burden of searching for content all the time. A “reader’s forum” could also be added where members’ letters could be published to better connect with members and their current concerns. By using social media as much as possible, costs can be contained and the value of the association increased, as well as its presence in front of members and prospective members.
If relationships can be rebuilt with organizations like PEBA, then SRA will need more professional materials, both hard copy and electronic to demonstrate an ability to market the organization to people in an effort to encourage them to join as members.
The marketing strategy needs to be broader than just focusing on benefits provision. A more full service approach is suggested, not the current niche approach.
Achieving the Future State
The thoughts and direction put forward in this discussion paper are not intended to be critical of the history and accomplishments of SRA nor any of its past or current officers and leadership. Striving to embrace change will take considerable effort, skill and dedication to achieve, perhaps a daunting order for a volunteer based association. However, the issue of future relevance must be upper most in considering how to transform the Saskatchewan Retirees Association.