Ninety per cent of Canadians would be willing to contribute more to a pension to ensure they have a predictable income at retirement, according to research by the Canadian Public Pension Leadership Council.
The survey, which polled 1,000 Canadians to understand their attitudes toward retirement income, asked participants to specifically quantify the maximum amount they would pay as a percentage of annual income to maintain their standard of living in retirement. Overall, 46 per cent of respondents said they’re willing to contribute 10 per cent or more of their annual income to pension and retirement savings.
Surprisingly, nine per cent said they’re willing to contribute 20 per cent or more of their annual income to achieve this outcome, including younger Canadians. More than half (53 per cent) of respondents aged 18 to 24 said they’re willing to contribute more than 10 per cent of their annual income to maintain their standard of living in retirement.
The willingness to contribute more is also fairly consistent across income levels. About two-thirds (67 per cent) of respondents who highly desire a lifetime pension and also reported an annual income of $25,000 or less said they would be willing to pay more to achieve this outcome. And 71 per cent with annual incomes of $25,000 to $49,000 said they would be willing to contribute more to have a lifetime pension.
The research also shows a gap between the high value respondents place on maintaining their standard of living into retirement and those with high confidence they will achieve this objective. Ninety-six per cent of all participants said this objective has medium to high importance, but only 32 per cent reported they have high confidence they will be able to reach this goal.
High confidence is greatest among respondents aged 55 to 64 (39 per cent) and those in the high income brackets (41 per cent of those earning between $75,000 and $99,000 and 50 per cent of those earning $100,000 or more). In general, the high confidence rate increases as the income of the respondent increases.
However, the survey suggests this confidence may be misplaced, as respondents reported they don’t spend a lot of time planning for retirement. Nearly half (47 per cent) spend less than five hours each month thinking about retirement or managing their retirement investments. And 27 per cent spend no time at all on these activities each month.
Surprisingly, the rates don’t change dramatically for those in the 55 to 64 age cohort, which are nearing retirement. More than a quarter (26 per cent) of that group said they spend no time thinking about retirement savings or managing retirement investments each month and 52 per cent said they spend less than five hours per month on these activities.
Also, nearly half (48 per cent) of survey respondents don’t have a plan for retirement. Some 36 per cent said they have a plan but it’s not written down and just 16 per cent said they have a written plan for their retirement. Within the age group closest to retirement (55 to 64), 43 per cent said they don’t have a plan.
Only 12 per cent of respondents said they have an accurate estimate of how much money they will need to save in order to meet their retirement goals. Nearly half (47 per cent) said they have a rough idea and 40 per cent said they have no idea how much money they will need to save.
Among all respondents, just 46 per cent have a workplace pension. Of this subset, 36 per cent participate in a defined benefit plan, 23 per cent participate in a defined contribution plan, 14 per cent participate in a combination of defined benefit and defined contribution plans, 12 per cent participate in a group registered retirement savings plan, 10 per cent participate in an union-negotiated multi-employer plan, one per cent participate in another type of plan and 18 per cent weren’t sure what type of workplace plan they participate in.
Only 50 per cent of defined benefit plan members said stress about planning for retirement had a medium to high impact on their personal health. And slightly more than half (51 per cent) of the total survey respondents reported stress about retirement planning having a medium to high impact on their work compared to 41 per cent of defined benefit plan members. Group RRSP participants had the highest stress rates, at 69 per cent.
“Canadians are willing to pay more of their earnings into retirement savings and pension plans when clear retirement objectives are articulated, suggesting communications emphasizing security and tangible retirement benefits may help increase stakeholder understanding and value of modern DB plans,” the report notes.
“The results also show that there are opportunities to engage young Canadians on the benefits of modern DB plans and that Canadians with low incomes may be an underserved demographic in the pension industry. Finally, emphasizing the security and simplicity that comes with membership in a modern DB plan may resonate with the general public, employers and policy-makers, given the low rates at which Canadians report participating in formal retirement strategies.”