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Do Ontarians have enough to live on in retirement?

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Neil Craig:

Well it is no doubt a great thing to be in a DB plan where the promise is ultimately back stopped by the taxpayer. Contribution levels to the HOOPP plan in total are significant and oh, the taxpayer is paying the salaries from which those employee contributions come, so in that environment I think DB is absolutely the choice for members and employers alike. Unfortunately private sector employers do not have the luxury of a backstop nor a culture of fairly high income levels which would allow employees to sustain contribution levels well in excess of 10% duly matched by their employer.

Congratulations to HOOPP on their investment success but to suggest that the model that works well in some parts of the public sector is the be all and end all is comparing apples and oranges. The real problem continues to lie in a lack of real action in the arena of financial literacy. Let’s get moving on that, let’s get it into the schools on a mandatory curriculum, otherwise we will just continue the current cycle of lack of participation and low retirement savings levels.

Thursday, August 22 at 2:37 pm | Reply

Joe Nunes:

Neil makes so many good points I will not repeat them. I am a defined benefit plan actuary and have seen some pretty tough times for single-employer plan sponsors over the past 15 years. I do agree that in theory the DB plan is a much better mechanism than DC for ensuring adequate retirement income – but the government has systematically pushed private employers out of DB with insane regulations and funding rules.

I don’t disagree with Neil’s call for better financial literacy but after many years working with DC plan sponsors I am not expecting that to happen any time soon.

Expanding the CPP and PRPPs are both bad ideas intended to fix the problem created by the crater left by employers that have abandoned DB and the commitment to employees to get them through to an affordable retirement.

The real answer is already here but no one wants to admit it. The vast majority of Canadians will need to work much longer than the prior generation. People joke that it is no longer Freedom 55 but now Freedom 75. I am willing to bet that for many private sector workers currently under the age of 55, age 70 retirement isn’t too far fetched. If you don’t want that to be you, stop worrying about financial literacy and start saving about twice as much as you are currently saving.

Sorry to be the actuary that is once again bringing the bad news.

Wednesday, October 23 at 7:50 pm | Reply

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