The majority of pension plan sponsors believe that Canada is experiencing a retirement crisis, according to a survey.
While 71% of plan sponsors that answered Morneau Shepell’s 60-second survey believe there is a retirement crisis, they are split on what should be done.
A little more than half of the sponsors in this camp think that governments need to take decisive action soon, while the rest say it is up to employers and individuals to solve the crisis.
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Of the remaining 29% that don’t feel there is a crisis yet, 21% believe we’re heading toward a crisis in the future. Only 8% of all respondents think that the retirement system is in need of just a little fine-tuning.
As for the most effective action that governments can take to improve the situation, a surprisingly small percentage of respondents chose expansion of the Canada Pension Plan/Quebec Pension Plan or the introduction of pooled registered pension plans.
Only 36% of respondents identified one of these two solutions as being the most effective. The most popular solution, chosen by 37% of all respondents, was the adoption of a national strategy for pensions rather than tackling reform province by province.
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“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,” says Morneau Shepell’s chief actuary, Fred 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% of survey respondents, was for better risk-sharing options in occupational pension plans, such as target benefit plans.
Of the 165 pension plan sponsors that participated in the survey, 47% sponsor mainly DB plans for their employees and 6% provide no pension coverage at all. The rest sponsor primarily DC plans.