Time for pension reform

It looks like 2010 could be the year Canada will move from talk to action on pensions
By Keith Ambachtsheer
|Canadian HR Reporter|Last Updated: 05/16/2010

In Canada over the last five years, there has been an increasingly intense debate about pension reform. Three major themes have emerged:

1. Pension adequacy: Three-quarters of the private sector workforce does not have an employment-based pension plan, and that proportion is rising. At the same time, the need for retirement income is growing as we continue to live longer.

2. Cost-effectiveness: Every percentage point of additional annual costs charged to manage retirement savings (related to investment, administration, advice or distribution) reduces the ultimate pension by some 20 per cent. It is also a fact the total cost of pension/retirement savings management and administration varies greatly — there can be a two-percentage-point differential between the annual cost of managing a large-scale collective pension plan and the fees individuals pay when they place their registered retirement savings plans in actively managed retail mutual funds.