Fixing Our Pension Crisis: Toward retirement security for everyone

1. Fixing Our Pension Crisis:Toward retirement security for everyone Remarks for a Community Pension Forum May 19, 2010 Michael J. Prince Lansdowne Professor of Social Policy

2. What is the question? • Are Canadians saving enough for retirement? • What do people of different incomes and different age groups need to save to enjoy what most consider to be a comfortable retirement? • What is the best way to enable Canadians to save, invest and prepare for retirement?

3. Is there a crisis? • Three basic viewpoints: • No real crisis the overall system is strong and elderly poverty rate is low, only minor refinements needed • A temporary crisis due to economic and financial market downturns in 2008-09, and some “under-saving” • A systemic crisis inadequate and declining private sector coverage, solvency problems of some benefit plans, longer life expectancies, and high debt loads among Canadian families

4. What are Canadians doing? • September 2009 TD Canada Trust survey found that 80% of Canadians found saving money “too hard” • November 2009 Royal Bank of Canada poll indicated: • fully one-third of all Canadians had no retirement savings • Only about half of Canadians 55 years or older have made retirement plans • April 2010 Investors Group survey found that 62% of Canadians plan to carry debt such as mortgages into retirement years • Delaying planned retirements and working longer • Some recently retired returning to work

5. Recent public policy actions • Increased age limit for maturing RRSPs and pensions from age 69 to 71 • Increased pension surplus threshold for defined benefit Registered Pension Plans (RPPs) from 10% to 25% • Pension income splitting for seniors • Tax-Free Savings Account (TFSA) • Registered Disability Savings Plan (RDSP) • Modest changes to Canada Pension Plan

6. Trends in private pensions • Shift away from Defined Benefit (DB) plans • Increase in Defined Contribution (DC) plans • Growth in Group RRSPs • Increase in Deferred Profit Sharing Plans (DPSP)

7. Possible public solutions • Public programs • Increase GIS benefits • Review OAS/GIS system • Provincial elderly benefits • Canada/Quebec Pension Plans • Raise the benefit rate and/or the yearly maximum pensionable earnings • Improve access to CPP Disability benefits • A new national (or provincial or regional) supplementary pension plan • Government-sponsored, automatic enrolment like a second tier to the C/QPP with a defined contribution and individual accounts, locked-in for retirement

8. Possible ‘private’ solutions • Increase contribution limits on RRSPs and TFSA's • Extend Pension Credit to apply to everyone • Raise the age people must switch RPPs and RRSPs to Registered Retirement Income Funds (RRIFS) from 71 to 73 • Extend spousal income-splitting to RRSP holders as exists for RPP members • Allow employers to deduct from payroll tax base their contributions to groups RRSPs • Permit insurance companies and other providers to offer multi-employer pension plans • Allow physicians to contribute to group pension plans

9. Next steps • What issuesface you, your family, your neighbours, your co-workers in saving and planning for retirement? • What do you think of the proposals being presented by various groups? • What policychanges would like to see in order to move toward all Canadians having a secure retirement income?