Almost three-quarters (71 per cent) of Canadian pension plan sponsors believe Canada is experiencing a retirement crisis, according to a Morneau Shepell survey.
"Our perceptions of a crisis are virtually unchanged from three years ago when we conducted a similar survey," said Fred Vettese, chief actuary at Morneau Shepell. "This is in spite of statistics that recent retirees are generally retiring with adequate, or more than adequate, assets. The numerous media reports of a crisis over the past few years have been effective in shaping our perceptions."
However, the 165 respondents are split on what should be done. While slightly more than one-half of those that feel there is a crisis think governments need to take decisive action soon, the rest say it is up to employers and individuals to solve the crisis.
Of the remaining 29 per cent, 21 per cent believe the country is heading toward a crisis in the future. Only eight per cent of all respondents think the retirement system just needs a little fine-tuning.
As for the most effective action governments can take to improve the situation, one-third (36 per cent) of respondents chose either the expansion of the Canada Pension Plan/Quebec Pension Plan (CPP/QPP) or the introduction of pooled registered pension plans (PRPPs).
The most popular solution, chosen by 37 per cent, was the adoption of a national strategy for pensions rather than tackling reform province by province.
"Each province insists on having its own solution and while there is an ongoing, half-hearted attempt at harmonizing pension legislation, there are still many minor and even major variations from province to province that make it difficult for national employers to administer pension plans,” said Vettese. “This problem affects only private sector employers. If public sector employers were also affected, the odds are a solution would have been devised decades ago."
The second most popular solution on how to improve the situation, chosen by 29 per cent of respondents, was better risk-sharing options in occupational pension plans, such as target benefit plans.
Of the 88 respondents that sponsor primarily defined contribution plans or no plans, more than one-half said the most effective action governments can take is to adopt a national strategy for pensions while about one-quarter felt better shared-risk options should be available to plan sponsors.
Only 10 per cent thought an expanded C/QPP was the most effective strategy.
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