Recent research commissioned by the Healthcare of Ontario Pension Plan (HOOPP) has found that four of five Canadians would choose a better pension (or any pension) over a pay raise – even at a time when most of them are struggling to make ends meet.

The research, conducted by Abacus Data, found that there is a high level of retirement anxiety amongst Canadians. Among the findings were that most were more worried about saving for retirement (75 per cent) than they were worried about government or personal debt, and that 76 per cent were concerned that the lack of workplace pension coverage hurts the economy.

Save with SPP reached out to Darryl Mabini, HOOPP’s Assistant Vice-President, Growth & Stakeholder Relations, to ask a few more questions about the organization’s findings, and their thoughts about possible solutions.

Asked what, if anything, can be done to encourage more Canadians to save for retirement, Mabini noted that we are “in a climate” where workplace pension plans are scarce in the private sector. While public sector workers generally have pensions at work, “about 60 per cent of Canadians don’t have access to a pension plan.”

Mabini agrees that high personal debt levels are a restrictor on personal retirement savings for those without pension plans. “Canadians currently owe about $1.70 for every dollar they earn – that’s an historically high debt to income ratio,” he explains. When you are owing substantially more than you make, it is pretty hard to find a way to put aside some of your earnings for retirement, he says.

“A lot of Canadians are just barely making ends meet,” he says. He points out that while there is “good debt,” such as having a mortgage (because you are building equity in your home), many working Canadians are relying on bank loans, credit cards, and other borrowed money to pay for living expenses between paydays. Yet, he points out, HOOPP’s research found that Canadians would take a job with a pension over one that offered more pay.

Those who also have no pension arrangement “are the most vulnerable to having insufficient income when they reach retirement age, Mabini adds. That’s because they are the least likely to be able to afford to save, he explains.

The danger of inadequate retirement income is another problem that needs to be addressed, he says. By doing nothing about boosting participation in retirement savings today, society is “kicking the problem down the road,” an oversight which could lead to increased reliance by seniors on taxpayer-funded government assistance, he says. “When Canadians don’t have access to pension plans… the risk (for their future income) shifts to the taxpayer,” he explains. But if they are living on savings they’ve amassed on their own, or through a pension plan, they are consumers with spending power who help the economy and pay taxes, he adds. HOOPP’s research (other highlights follow) also suggests Canadians are aware of the realities of pensions and retirement, and are looking to employers and government to help deliver solutions.

• Eighty-one per cent believe the shrinking of workplace pension coverage will reduce the quality of life of Canadians.
• Eighty-three per cent believe government should modernize regulations to allow for more innovative pension plans and savings arrangements.
• Eighty per cent would rather employers make direct contributions to a retirement plan over receiving that money as salary.
• Seventy-six per cent believe governments can save money by supporting pensions that are more affordable.

What type of pension would Canadians want to have? Mabini says that while that specific answer wasn’t captured in this round of research, an earlier HOOPP-led research project, The Value of A Good Pension, found that the “value drivers” of a good pension include:

• a design that is focused on saving (through “ongoing, regular contributions,” Mabini explains)
• operating with a low fee
• using a professional approach to investing
• offering “fiduciary oversight,” meaning it is run by a group that has a legal responsibility to act in the best interests of the member
• the pooling of risks

Our final question for Mabini was what finding surprised him the most. “What bubbled up to the top was the idea that four out of five would take a job with a pension over a job that offered them a higher income, but no pension,” he says, even at a time when most are struggling to make ends meet. This shows that Canadians are keenly aware of the value of having a pension, he concludes.

We thank Darryl Mabini and James Geuzebroek of HOOPP for their help in putting this article together.

If you are one of the many Canadians who lack a workplace pension plan, the Saskatchewan Pension Plan may be able to help. You can set up your own pension plan via SPP – the money you contribute to your account is professionally invested at a low fee, and when it is time to retire, SPP can convert your savings to a variety of different lifetime annuities, which ensure you’ll never run out of your retirement savings.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22