Comfortable retirement even further away

Market returns mean DC plan members must contribute more or work longer than in the past: Report
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 01/28/2013

Securing a comfortable retirement is going to take Canadian employees longer — more than eight years longer — according to a Towers Watson report looking at the effect of changes in capital market returns and annuity purchase prices.

If a 60-year old member of a defined contribution (DC) pension plan wanted to match the retirement benefits of a benchmark DC member in 2007 who retired at 60, after 20 years of contributing, this plan member would need to work until the age of 68 and a half, according to the Defined Contribution (DC) Retirement Age Index.

“It’s not suggesting everybody’s got to work until 68. It’s just it’s going to take a lot more effort — the equivalent of 8.5 years of contributing contributions and continuing investment returns to do as well as the retiree in ’07,” said Michelle Loder, Canadian DC business leader at Towers Watson in Toronto.