Retirement plans go boom

It’s been dubbed the “Silver Tsunami.” In truth, though, it’s more like a tidal wave of Grecian Formula and Botox.

Far from going grey, most Baby Boomers are using every tool to look and feel young.

Governments, though, are bracing for the inevitable economic onslaught. Baby boomers — people born in the 18-year post-war baby boom — represent the largest demographic in history.

Boomers are only just starting to retire, but already pensions are under siege.

The downturn in the manufacturing sector has compounded the issue of income adequacy, as large private sector companies such as Nortel, once deemed blue chip, go bust.

“The number one issue that we have been focusing on is retirement security,” says Susan Eng, president of CARP, representing 300,000 people over age 50 across Canada.

“No one wants to outlive their money.

“That issue used to be Pablum. In this economic turmoil, it just rose straight to the front of the line. No one was interested in pension deficiency funding rules and suddenly it’s tripping off everyone’s lips now,” she said.

In Canada, some 11 million people do not have access to pensions. In the public service, 85% have pensions. In the private sector only 25% have pensions. About 75% depend on their own savings in RRSPs or nothing.

“For that group of people we are recommending that there be another savings vehicle that approaches the stability and the accessibility of the CPP, which is available to all working people — including the self-employed,” Eng said.

Her organization has been pushing for the federal and provincial governments to come up with a pension plan that provides greater security.

Both Alberta and B.C. are working on such plans. Ontario has been pressuring the federal government to get on board.

While the Canada Pension Plan (CPP) is more stable than it once was, it alone does not provide enough money for seniors to live on.


CPP provides a maximum of about $10,000 a year. It is calculated to provide retirees with 25% of the average industrial wage — which is currently $46,000. Some people don’t achieve that maximum.

Even when low income seniors are boosted to around $16,000-$18,000 with Old Age Security and Guaranteed Income Security, it is still not enough to survive, Eng said.

CARP is also pushing for a pension summit to talk about the coming pension apocalypse.

“We are attempting to keep the federal government’s feet to the fire, by pressing for wholesale pension reform,” she said.

Queen’s University economics professor Charles Beach says this country has actually done well in planning for the wave of boomer retirements. Until last year’s economic meltdown, our debt was under greater control than those of most other industrial countries. But plunging stock markets mean many boomers have had to delay retirement plans.

What’s more, he said there has been a pension shift, as employers moved away from defined benefit plans to defined contribution plans.

With defined benefits, the employer bore most of the financial risk if stock markets plummeted. Defined contribution plans shift that risk to the contributor.