As a result of required savings, British Columbia public sector pension plan members accumulate about $2.2 billion more in savings every year than RRSP savers in similar financial situations, according to a Conference Board of Canada report.
“Our analysis compared the average person saving for retirement in the province with a typical member of a B.C. public sector pension plan,” says Michael Bloom, the board’s vice-president, organizational effectiveness and learning.
According to data from the BC Pension Corp., the total contribution of employers and members ranged between 16% and 27.5% of an employee’s total compensation. Only one-quarter of B.C. employees who do not have a trusteed pension plan contribute to RRSPs, and their average savings rate is 14.1%.
A typical public pension plan member can expect to have an annual retirement income that is $35,000 (in inflation-adjusted or real dollars) higher than an individual using RRSPs to save for retirement.
The estimate is based on the assumption that investment management at the B.C. public sector pension plans was no better or worse than retail mutual funds. More than 60% of this amount is due to the higher level of saving through the public sector pension program; lower managerial fees account for the remainder of the additional retirement income.
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