Pension problem has no one-size-fits-all answer

Canadas pension problem is complicated and there isnt a one-size-fits-all solution, experts heard at a conference in Toronto on Monday.

While most Canadians are saving enough for their golden years, some, including a growing number of single seniors, face poverty.

And in the aftermath of the global financial crisis, government support, employer pension plans, and personal savings ; collectively known as the three pillars of retirement ; are struggling, Murray Gold, partner at Koskie Minsky, said in his opening remarks at the pension summit put on by the Conference Board of Canada.

Fixing it is a challenge, Gold said. We are dealing with retirement income problems but also the financial crisis. The problem is all wrapped up together.

The day-long conference heard from experts in finance, economics, pension plans, and insurance who discussed the problems facing Canadas retirement income system, as well as possible solutions.

Last week, the federal government announced that it will hold public consultations on target benefit pension plans. These would be available for crown corporations and federally regulated industries and would allow workers and employees to share the costs and benefits of the plan.

Only about one-third of Canadians are covered by workplace pension plans.

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Experts worry that Canadians are not saving enough for retirement.

Ottawa has rejected calls for an expanded Canada Pension Plan and Ontario has announced that it will come up with its own pension scheme. Details are expected to be announced in the provincial budget on Thursday.

A grey tsunami is about to wash over the global economy, Glen Hodgson, chief economist at the Conference Board of Canada, told the gathering.

The aging workforce will slow growth rates in economies around the world, including Canadas. The aging population is the critical driver in our slowing forecast, Hodgson said.

That slowdown in economic growth will make it difficult for the government to bear growing health care and pension costs, Hodgson said.

By 2035, nearly 25 per cent of Canadians will be 65 and older.

On average, Canadians are ready for retirement, but that doesnt mean every Canadian is ready, said Fabrice Morin, partner at McKinsey and Company in Montreal.

According to the firms Canadian Retirement Readiness Index, about 23 per cent of Canadians will not have enough money for retirement.

The challenge for policy makers is to develop a solution to help that segment of the population without adversely affecting the other 77 per cent, Morin said.

Some experts have suggested that Canadians plan to work well into their 60s, past the traditional retirement age, and that will ease worries about retirement income.

But many seniors face poor health and discrimination, which push them out of the workforce, said Susan Eng, vice-president of advocacy for CARP.

So many of our members cant afford to retire, Eng said.

Unattached seniors account for about one-third of the elderly population, but they are more than twice as likely to live in poverty as their married counterparts, Jack Mintz, director at the School of Public Policy at the University of Calgary, told the conference.

Rather than expanding CPP, a targeted increase in the Guaranteed Income Supplement for single seniors could cut those poverty rates in half, Mintz said.

Automatic enrolment in a pension plan is one way to encourage people to save more for retirement, the conference also heard.

In an U.S. study, nearly three-quarters of respondents were content with their automatic enrolment in a retirement savings plan, or 401K.

We say, If you want to opt out, you can call HR. Nobody ever wants to call HR so everybody stays in the plan, said Dilip Soman, professor of marketing at the Rotman School of Management at the University of Toronto.

This type of push is not a complete solution, but it can help people take a step in the right direction, Soman added. We can talk about financial literacy until the cows come home but we need to nudge people into action too.

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