EI reserve of $2 billion not enough to weather a possible recession
Canada's next government will have a lot of work to do around pensions, employment insurance (EI) and health care, according to the Canadian Institute of Actuaries.
The proportion of Canadians covered by a defined benefit pension plan dropped from 29 per cent in 1992 to 21 per cent in 2003 and a 2007 study by the University of Waterloo found two-thirds of Canadians planning to retire in 2030 aren't saving enough for retirement.
"Without appropriate remedies, the financial future of Canadians is in serious jeopardy," said Mike Hale, president of the Canadian Institute of Actuaries (CIA).
Within 90 days of the new federal government being formed, a national pension reform summit should be convened with all federal and provincial ministers responsible for pensions, said Hale.
The event should focus on implementing changes that will promote retirement savings, pension plan coverage and harmonization of pension legislation and regulation in Canada.
While the federal government recently changed the financing scheme for EI, Canada's actuaries said the new Canada Employment Insurance Financing Board is hamstrung by being mandated to only maintain a $2-billion cash reserve.
"Given a one-year look-forward, and new requirements to replenish the reserve within a year of its use, it really concerns us that during a deep and long recession, $2 billion is simply not enough," said Hale.
Instead, the CIA would like to see the reserve allowed to rise to between $10 billion and $15 billion over the next five to seven years, which would allow rates to stabilize over a normal business cycle, he said.
The CIA would also like to see the establishment of a chief health care actuary, who would be responsible for developing long-term investment and funding strategies for hum and technological resources in public health care.
The proportion of Canadians covered by a defined benefit pension plan dropped from 29 per cent in 1992 to 21 per cent in 2003 and a 2007 study by the University of Waterloo found two-thirds of Canadians planning to retire in 2030 aren't saving enough for retirement.
"Without appropriate remedies, the financial future of Canadians is in serious jeopardy," said Mike Hale, president of the Canadian Institute of Actuaries (CIA).
Within 90 days of the new federal government being formed, a national pension reform summit should be convened with all federal and provincial ministers responsible for pensions, said Hale.
The event should focus on implementing changes that will promote retirement savings, pension plan coverage and harmonization of pension legislation and regulation in Canada.
While the federal government recently changed the financing scheme for EI, Canada's actuaries said the new Canada Employment Insurance Financing Board is hamstrung by being mandated to only maintain a $2-billion cash reserve.
"Given a one-year look-forward, and new requirements to replenish the reserve within a year of its use, it really concerns us that during a deep and long recession, $2 billion is simply not enough," said Hale.
Instead, the CIA would like to see the reserve allowed to rise to between $10 billion and $15 billion over the next five to seven years, which would allow rates to stabilize over a normal business cycle, he said.
The CIA would also like to see the establishment of a chief health care actuary, who would be responsible for developing long-term investment and funding strategies for hum and technological resources in public health care.
