CAAT’s 2022 Annual Webinar and Canadian Retirement Security
Before I get to it, Sadie Janes of Benefits Canada reports on how employers can support workers as record number of Canadians near retirement:
With a record number of Canadians nearing retirement, employers can support workers through retirement planning initiatives and education, says one expert.
According to a report released last week by Statistics Canada, more than a fifth (22 per cent) of Canadian employees are aged 55 to 64. It also found more Canadians are aged 55 to 64 than young adults aged 15 to 24, the ages at which individuals typically enter the labour market. In 2021, there were 81 persons aged 15 to 24 per 100 persons aged 55 to 64, while in 1966, there were more than 200 persons aged 15 to 24 per 100 persons aged 55 to 64.
Bonnie-Jeanne MacDonald, director of financial security research for the National Institute on Ageing at Toronto Metropolitan University (formerly Ryerson University), says employers can help their employees by providing ways for them to pool their savings and by making employees more aware they can delay their Canada Pension Plan benefits.
“Only one per cent of Canadians [delay their CPP benefits] and it’s really the best decumulation strategy you can do. You have the option to take your CPP anywhere between 60 and 70. [By] waiting until age 70, [you can] more than double CPP, but 95 per cent of Canadians take it at 65. . . . We’re at a situation where [almost] a quarter of Canada’s population is now on the brink of retirement. They’re facing a very different situation than retirees have in the past, because a lot of them are going to be [retiring] without a pension plan and post-retirement benefits have declined all around.”
MacDonald says employers will also have to contend with the impact of more employees providing care for elderly parents, leading to higher levels of emotional and financial stress. She says employers can provide additional support services for employees who are taking care of elderly family members.
Given the large amount of upcoming retirees, it’s also important for employers to have a transition plan in place, says MacDonald, noting people often retire due to factors such as health issues or family emergencies and employers can have a hard time facilitating a knowledge transfer.
“I think over the next five years, there’s going to be a major exodus from the labour force, so we’ll need to fill that knowledge gap.”
Benefits Canada also reports that according to a recent survey, a third of Canadian employees are planning on retiring sooner than planned:
A third (33 per cent) of recently retired Canadians said they retired sooner than they planned and 30 per cent of pre-retirees intend to change their retirement date because of the coronavirus pandemic, according to a new survey by RBC Insurance.
It found Canadians are still largely relying on traditional retirement savings tools, such as tax-free savings accounts (54 per cent), registered retirement savings plans (53 per cent) and Canada Pension Plan/Quebec Pension Plan/old-age security (52 per cent), while fewer employees are taking advantage of annuities (seven per cent) or segregated funds (three per cent).
More than three-quarters (78 per cent) said their No. 1 concern is the impact of inflation on savings, expenses and purchasing power, followed by a lack of guaranteed income (47 per cent) and outliving their savings (48 per cent).
“The events of the last two years are clearly affecting Canadians, including those nearing retirement,” said Selene Soo, director of wealth insurance at RBC Insurance, in a press release. “And with the current high inflation rate added to the mix, many are feeling concerned about their purchasing power and increasing expenses. What people must remember is they can take control — good planning is critical in driving confidence around their future finances.”
I started off with these two comments for a reason, more Canadians are retiring sooner because of the pandemic but their angst is palpable as they retire in a highly uncertain and inflationary environment.
As far as delaying your Canada Pension Plan benefits, if you're in decent shape and don't plan on retiring before you reach 70 years-old or later, great, but many people don't have that luxury and they need their benefits as soon as possible.
I think the more telling thing is that even though Canadians are retiring sooner, inflation concerns as well as the real possibility of outliving their savings are weighing on them.
This is why I keep harping on how we need to do a much better job of covering Canadians who don't have a defined-benefit plan.
Canada has some of the best pension fund managers in the world but we do a lousy job of covering Canadians who are increasingly looking for safer options to retire in dignity and security.
This is where the CAAT Pension Plan comes in.
Through its pension solutions, it offers employers and employees a real, flexible and cost-effective way to have a well managed and sustainable pension plan they can count on over the long run.
The main advantages of a well-governed defined-benefit plan are they pool savings, pool investment and longevity risk and if they are managed properly, they reduce costs significantly so members enjoy those extra savings.
Now, CAAT's DBplus offers many of the advantages of traditional DB plans and adds more flexibility which employers and employees are asking for. You need to read about these advantages here to really appreciate them.
CAAT isn't the only one offering their services to others. OPTrust is offering its pension services to Ontario's non-profit organizations through its OPTrust Select.
I welcome these programs but to be truthful, I want to see more of them.
Every small, medium and large corporation in Canada looking to cover its employees' retirement needs should be contacting CAAT at firstname.lastname@example.org or if you represent an employer or member group, contact Marnie Niemi Hood, Vice President, Pension Solutions at MNiemiHood@caatpension.ca.
As a pension expert, I can tell you not only will it not cost you more, you will be relieved to have contacted them and so will your employees.
CAAT Pension Plan now has 75,600 members (49,700 active and 22,500 retired) and it is managing just over $18 billion in assets.
Most of its members make a modest income and for them retirement security is something they really appreciate.
Not only is CAAT Pension Plan well-designed, it's jointly sponsored, well-governed, well-managed and sustainable over the long run.
It boasts an 124% funded status and it gained 15.8% net last year. More importantly, its 10-year annualized net rate of return is 11.1% which is excellent.
This is why I'm doing my part to get the message out to small and large employers to do your part and look into joining CAAT's Pension Plan.
You have nothing to lose in terms of being properly informed and it's safe and affordable, a win-win-win for employers, employees and the overall economy.
Don't take my word for it, listen to the webinar below and pay attention to what CEO and Plan Manager Derek Dobson states at the beginning and then listen to the insights from CIO Asif Haque and Marnie Niemi Hood, Vice President, Pension Solutions.
I'm dead serious when I say I want to see more Canadians becoming members of CAAT Pension Plan or OPTtrust's OPTrust Select. Listen below and you'll understand why.
Also watch why DBplus, is the pension of choice for both employees and employers. Employers have peace of mind by improving their talent and retention strategy and securing predictable, fixed rates – to name a few. While employees/members enjoy peace of mind having their investments taken care of, and knowing they will receive lifetime retirement income.