Last week, the Pension Investment Association of Canada was the latest group to lend its voice to the growing concern over the decumulation of Canadian’s retirement assets.
Kevin Fahey, chair of the association, sent a letter to the minister of finance asking the government to update pension and tax regulations to address the lack of decumulation options for the growing number of Canadians nearing retirement.
Have your say: Is it time to allow for deferred annuities?
The number of retirees continues to grow and will likely climb to 8,000 workers retiring each week by 2020 from the current 5,000, according to Jean-Philippe Provost, senior partner and wealth business leader at Mercer. Speaking at an event in Toronto last week, he noted retirees could expect to live, on average, seven years longer than those who retired 30 years ago.
With longevity risk in mind, PIAC proposed two options for members who have capital accumulation plans: longevity-adjusted and deferred annuities.
Read: Variable annuities touted as a ‘good third option’ for DC decumulation
Canadians who buy deferred annuities earlier in life will receive a discounted price in comparison to purchasing them later, noted Fahey, adding that deferred options have been available for 401(k) plan members in the United States since last year.
With PIAC’s call on the federal government to take action on decumulation, is it time to change the regulations to allow for deferred annuities? Have your say in this week’s poll.
Read: PIAC proposes regulatory changes to address decumulation concerns
As for last week’s poll, which asked whether Manulife’s move to boost mental-health coverage to $10,000 would spark a general trend, 22 per cent agreed, suggesting it’s time for employers to offer more realistic benefits for mental health. Another 40 per cent of respondents said employers might improve coverage but not to such high levels.
On the flip side, 19.5 per cent of poll respondents said employers couldn’t afford such a high level of coverage, while the same number suggested that with drug costs on the rise, employers would be looking to scale back their plans in regards to other types of benefits.
*Correction: Story updated to reflect Kevin Fahey’s current role at the Pension Investment Association of Canada. He became chair of the association as of Jan. 1, 2017.