"There was just this sea of grey hair, with two 20-year-olds at the back," he recalls. "We sat there, just trying to figure out where we fit in."

Now, as the group vice-president of financial services at Environics Canada, a research and marketing consultant firm, Macdonald is concerned not much has changed.

"It's only when Canadians are in their 30s and 40s do they get an inkling of what investments to make," he says. And that includes saving towards retirement.

"In a big city like Toronto, there's barely enough off the (Canadian Pension Plan) to go around, especially after property taxes. Many don't have pension coverage at all," says MacDonald.

Dale Powell, an institutional investment consultant for Morningstar Research Inc., agrees. "According to a 2006 StatsCan report, only 38 per cent have a retirement plan where they work. Most are on their own."

Powell specializes in investment research and analysis. This past summer, Morningstar partnered up with Desjardins Financial Security to create a group retirement savings product.

"Foresight is a turnkey solution for small to medium businesses," says Gil McGowan, Desjardins' regional vice-president of group retirement sales and development.

It offers 12 funds - including global equity and EAFs - six life cycle portfolios, and three retirement paths: growth, balanced or prudent. Most of it's age-based, explains McGowan.

The profiles are monitored by Morningstar, who produces quarterly reports to Desjardins at no cost to the employer or employee.

An employee benefit plan of this calibre shows a major shift in group retirement savings not just in Canada but globally, from defined benefit to defined contribution pension.

The first guarantees a certain income upon retirement, but it's up to the company to pay it. A defined contribution plan doesn't guarantee pension but puts a part of paycheques into a retirement account for the employee. The investment can go into a mutual or stock market fund, for example, and the returns, depending on market volatility, would go back to the account.

"The defined benefit plan is easy for calculating pension but something employers are not always willing to sustain," says SunLife Financial's Thomas Reid, the senior vice-president of group retirement services.

He notes 75 to 80 per cent of workers in the public sphere are covered under a defined benefit plan, but those in the private sector have dropped down to 20 to 25 per cent.

A defined contribution pension plan shouldn't be considered second rate, argues Mark Ross, national sales manager at TD Investment Services

The TD Future Builder is a group retirement savings product that also offers life cycle funds monitored by financial planners.

"There's an equal benefit here," he points out. "Say a business owner observes a turnover rate of two years. We'll design it so that after two years, if the employee is still around, they will match their contribution dollars."

The `disciplined savings strategy' is another plus.

"The contribution comes out of your pay before you even see it, and in that way you pay yourself first," says Ross. With such competition behind group retirement savings, life cycle - or target date funds - are fast becoming the market driving force, says Reid.

In October, SunLife launched SunAdvantage, a "plug and play" plan for smaller, entrepreneurial businesses. Its Milestone Fund function operates under target funds, which makes automatic adjustments as the fund's maturity date approaches.

"We haven't seen a slowdown in companies setting up GSPs even during the market downturn," says David Richardson, vice-president of RBC Asset Management. He says in almost every case, the employer chooses to match the employee's contribution, dollar for dollar.

"It's important to have loyal employees in good or bad economies."

Toronto Star, Thurs Nov 12 2009
Byline: Olivia Li