There have been reports from around the world about The Great Resignation – how the stress and strain of working through the pandemic crisis has prompted many to opt out of the workforce altogether.

In Canada, reports The Globe and Mail, the primary way that Canucks are leaving the workforce is via retirement.

“Last week’s July employment report from Statistics Canada revealed that a record 300,000 Canadians have retired over the past 12 months,” writes columnist David Parkinson. “That’s up nearly 30 per cent from the same time last year, and nearly 15 per cent from the months leading up to the pandemic in early 2020,” he continues.

One might think that older workers leaving the workforce – boomers and near-boomers finally giving back their ID badge and parking pass – might be good news for younger workers.

However, the Globe continues, there may also be a downside to this “retirement frenzy.” The article quotes economist Stephen Brown as saying “the sharp increase in retirees this year presents downside risks to our forecasts for employment, and with gross domestic product (GDP) growth already faltering, further raises the probability that economic activity will contract.”

The article links today’s record-low unemployment rate with a less-good stat, a falling job participation rate. In plainer terms, less joblessness, yes, but overall, less people working. “All this poses downside risks for GDP, particularly if retirements increase any further,” notes Brown in the article.

A clearer example of The Great Resignation’s impacts can be gleaned from an article in Manitoba’s Thompson Citizen. In Northern Manitoba, the article reports, recruitment bonuses of up to $6,750 – bonuses that continue on after hire – are being offered to try and get nursing positions filled in remote First Nations’ facilities. A lack of healthcare staffing has sparked a crisis in the area, the newspaper reports.

In Northern Ontario, the CBC reports, the mining and supply industry is also seeing “a shrinking and aging labour force,” and a “scramble” to fill open jobs.

“You’re going to see businesses closing because they can’t find enough people. And then it could also be putting more pressure on the people that are currently working,” Reggie Calverson of the Sudbury Manitoulin Workforce Planning Board tells the CBC.

There, technology is being deployed to automate some jobs – more AI, more robots, self-checkouts and virtual customer service, the CBC report notes.

And the younger workers left behind as their older colleagues “resign” or retire are indeed finding it a strain to pick up the slack, reports Time magazine via Yahoo!.

Many, the magazine reports, are “quiet quitting,” which is “the concept of no longer going above and beyond, and instead doing what their job description requires of them and only that.”

Employers in the U.S. and elsewhere fear that while “quiet quitters” will avoid job burnout by leaving at quitting time and not dealing with after-hours emails and meetings, overall productivity could be impacted at a time when there are fewer workers in the job pool.

How to incent workers who feel “unengaged?” A Globe and Mail piece by Jared Lindzon suggests more bonus pay, such as commissions, or even retirement-related incentives.

Many employers are considering offering matching contributions to their company’s retirement program, or setting up new programs, the article says.

It’s interesting to read that for some experts, a wave of retirements is negative for the economy. Canadian research from a few years ago suggests that retired workers do give the economy a boost via their pensions, which they tend to spend on goods and services and taxes.

A study last year carried out for the Canadian Public Pension Plan Leadership Council (CPPLC) by the Canadian Centre for Economic Analysis found that “every $10 of pension payments generates $16.70 of economic activity and makes a total contribution of $82 billion to Canada’s economy annually,” reports Benefits Canada.

OK, a lot going on here. People are retiring in droves, particularly those aged 55 to 65. It’s harder to fill jobs. Those in jobs are feeling overburdened, perhaps thanks to the fact that older colleagues have left and have not been replaced. While some fear this Great Resignation will negatively impact the economy, others who feel retirees are already helping out the economy may see this as more good news.

So let’s look at retirement savings in a new way. What can you, as an individual, do to help the Canadian economy in the future? Why, you can save for retirement and then, when you are there, spend your income on goods and services, while paying your taxes. That helps your local economy and your local and federal governments.

If you are in a workplace pension plan, you are on the right path. But if not – or you want to augment the plan you have – consider the Saskatchewan Pension Plan. Consider joining the 400 businesses offering SPP and its 32,000 members whose retirement savings now represent an impressive $600 million.

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A new study has found that every $10 of public sector pension that is paid out to a retired member returns $16.72 of activity in the Canadian economy.

The study was produced by the Canadian Centre for Economic Analysis on behalf of the Canadian Public Pension Leadership Council.

Save with SPP spoke with Derek Dobson, CEO and Plan Manager of the Colleges of Applied Arts & Technology Pension Plan (CAAT) and a Co-chair of the Council, to further explore the survey’s results, and to talk generally about the value of pension programs.

He notes that the study is “agnostic” about what type of pension plan is producing the $10 spent by its retired members.

“Any plan that uses experienced investment professionals, and pooling – I include the Saskatchewan Pension Plan as an example of that – is delivering pensions efficiently,” he explains. So whether the $10 is produced by an efficient defined benefit (DB) plan or an efficient defined contribution (DC) plan, the economic benefits are the same.

The study noted that – looking at public sector pension plans only — $82 billion of economic activity was generated in 2019, “supporting 877,100 jobs and $33 billion in wages for Canadians,” according to the study’s executive summary. Governments gain $21 billion in tax revenue, the study notes. Collectively, Canadian public sector DB plans have an eye-popping $1.27 trillion in assets.

While the study found pension spending generally benefited all Canadians, one interesting aspect was that rural businesses seemed to derive more positive gain from local public sector pensioners.

Dobson says part of the reason for this may be the current trend towards a migration from expensive city living to more affordable smaller centres. “The housing is more affordable in smaller cities and towns,” he says. “We also found that those living in smaller towns tend to spend more locally than those in cities – so that is part of the reason the economic benefits of pensioners had a 6.5 per cent bump” in rural areas when compared to urban centres.

Given the “win win” nature of having a good pension plan – the retired member gets the steady, predictable income, while the economy benefits from it being spent – we asked Derek Dobson if there should be wider availability of good pension plans for those who lack them.

CAAT’s own DBplus pension plan, a program that offers a strong, secure lifetime pension program, has grown in just two years to include 200 participating employers. “We are trying to remove barriers to access to good pensions,” Dobson explains.

A good pension, he explains, has the added benefit of helping employers attract and retain good employees. It delivers twice the retirement benefits per dollar saved than investing independently in Group RRSPs, and helps employees reach their retirement goals faster with employer-matched contributions. Dobson says it is a shame to see well-trained healthcare workers and engineers leave the country for jobs elsewhere – a good pension program can keep them here in Canada.

Another advantage for employers is that if a pension plan is offered by a third party rather than being administered and funded by the employer, it’s a time, risk and funding relief for the employer. “No Chief Financial Officer in the private sector wants to see pension liabilities on their balance sheet,” he explains. With DBplus, the employer’s pension cost is a fixed amount.

“Many studies have shown that year after year, more and more Canadian workers are willing to forego more pay in order to get a better pension,” he says.

The only three organizations he currently sees as trying to bring pension coverage to underserved sectors are CAAT, through its DBplus program, the OPSEU Pension Trust, through its similar OPTrust Select plan, and the Saskatchewan Pension Plan through its voluntary, open defined contribution program.

Dobson concludes by saying that Canada has become known around the world for the efficiency of its pension system, the “Maple Model” of pension plan that feature pooling, low administration costs, expert investing, and joint governance where members and employers have an equal say in how the systems are run.

“Public service pension plans are an amazing and unique asset for Canada. So the more people that can be brought in, the better – pensions really help workers, retirees, their families and the economy.”

We thank Derek Dobson for taking the time to speak with us.

Did you know that the Saskatchewan Pension Plan has, according to its 2020 Annual Report, has more than $528 million in assets and 32,613 members? This growing open defined contribution plan is designed specifically for those without a workplace pension – a made-in-Saskatchewan solution to the problem of retirement saving for individuals and businesses. Check them out today.

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