The solutions to Canada’s pension woes could be found by looking at recent reforms in Norway, Sweden, New Zealand, and the United Kingdom, this according to a new study published by the Institute for Research on Public Policy (IRPP).
The report praised Saskatchewan for introducing a voluntary, defined contribution (DC) pension plan in 1986.
“[Saskatchewan] showed that financial incentives and a low cost structure could make this alternative popular with homemakers, workers and employers who can contribute irregularly to a single, pooled fund,” said the IRPP in their statement.
Federal, provincial and territorial governments are currently examining ways to reform Canada’s pension system, including expanding the Canada Pension Plan.
In Improving Canada’s Retirement Saving: Lessons from Abroad, Ideas from Home, author Patrik Marier offers insights that might help Canada tackle challenges associated with its current system.
Canadians won’t be able to maintain their current standard of living upon retirement under the current pension scheme, Marier said.
The report refers to Sweden’s expanded pension coverage, which operates at a low cost to workers by mandating individual accounts. In New Zealand, individual pension accounts provide coverage for 1.5 million workers. Automatic enrolment with opt-out provisions, financial incentives and education play a key role.
“Whatever option Canada chooses, middle- to high-income earners will need better private retirement savings vehicles to supplement the limited replacement rate offered by the Canada Pension Plan and the Quebec Pension Plan,” the report argued.
Improving Canada`s Retirement Saving: Lessons from Abroad, Ideas from Home, by Patrik Marier, can be downloaded free of charge from the Institute’s website.