Employers need to prepare for a new normal in their pension plans as the economy continues to lag and people are living longer, Mercer’s Jean-Philippe Provost told attendees at the firm’s annual Retirement Outlook and Fearless Forecast event today in Toronto.

Provost pointed to new de-risking opportunities, such as the $530-million combined annuity buy-in transaction involving two Canadian pension plan sponsors announced by Sun Life on Tuesday in which Mercer served as advisor. And he hinted at a new de-risking platform Mercer expects to announce in two weeks.

“We feel it’s going to be a game changer,” said Provost.

Read: Sun Life completes combined annuity buy-in

The economic forecast for the near future, presented by Dominion Lending Centres chief economist Sherry Cooper, is definitely not sunny. Still, she remains hopeful and highlighted some bright spots. She expects current volatility in Canada to continue and Canadians to experience a difficult year in comparison to the United States.

The upside is a low Canadian dollar is resulting in an increase in exports. But the low dollar is a double-edged sword as it negatively affects Canadians’ purchasing power.

“Our economy has suffered a substantial blow,” said Cooper.

Read: Dismal start to 2016 signals more challenges ahead

Here are some of Cooper’s predictions for 2016:

  • British Columbia will continue to be a growth leader, followed by Ontario, while Alberta and Newfoundland will continue to suffer as a result of the oil crisis.
  • Toronto and Vancouver enjoy the safe-haven characteristics of foreign investment.
  • The housing market in Vancouver and Toronto will slow down, following the rest of the country, but will remain positive.
  • The price of oil won’t change dramatically with excess supply to continuing to weigh on the economy.
  • Stock markets, down sharply already in 2016, will see an improvement later in the year while the bond market serves as a safe haven.
  • Long-term economic growth of up to 2.5% will return in 2017.

Cooper sees promise in the Liberal government’s promise of stimulus spending, although she said increased tax rates for high earners may result in a drain of talent to other countries.

Provost said changes in the Canadian retirement market in the last two years will continue and he anticipates “the landscape of retirement in Canada is going to change completely.” While Canada’s retirement system ranks seventh out of 25 countries, there’s room to improve by increasing coverage and bringing down costs that are higher here than other countries as well as finding ways to increase household savings.

Read: Three ways to improve Canada’s retirement system

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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