A 2014 BMO Nesbitt Burns study finds that members of this generation, who are between the ages of 45 and 64, have saved just $258,000, on average—$560,000 less than what they think they need for their golden years.
The average amount that Canadians believe they need to save for an ideal retirement lifestyle varies by province. Quebecers think they have to put away an average of $447,000, while British Columbians say they’ll require $1,131,000.
The amount that Canadians have already saved for retirement also varies by region. Atlantic Canadians have saved the least ($166,000), while Albertans have squirrelled away the most ($491,000).
More than half (55%) of the members in the sandwich generation are currently caring for their children or aging relatives—or both. And, at present, almost one-third are taking care of a parent or older relative.
More than a third (39%) of this cohort are worried that these dual responsibilities will affect their ability to meet key financial goals, such as saving for retirement.
“There’s a sense among those in the sandwich generation that they’re getting squeezed and are being forced to balance a plethora of financial priorities, from paying down their mortgage to saving for their child’s education, to saving for retirement,” says Sylvain Brisebois, regional manager with BMO Nesbitt Burns.
The stress that comes with caring for children and aging relatives, balancing a career and generally keeping up with daily tasks can make it hard to focus on the future and saving for retirement, he adds.
Are your job applicants lying to you?
Getting a job is not so easy, prompting some applicants to play fast and loose with the truth on their resumés. A 2014 survey by CareerBuilder finds that 58% of American hiring managers have caught a lie on a resumé.
The most common lies relate to inflated skill sets (57%), embellished responsibilities (55%), employment dates (42%), job titles (34%), academic degrees (33%), companies worked for (26%) and awards (18%).
So what are the most unusual lies that employers have seen?
- applicant included job experience that was actually his father’s; both father and son had the same name (one was Sr.; the other one was Jr.);
- applicant claimed to be the assistant to the prime minister of a foreign country that has no prime minister;
- applicant claimed to have been a high school basketball free-throw champion;
- applicant claimed to have been an Olympic medallist;
- applicant claimed to have been a construction supervisor (the interviewer found out the majority of his experience was actually in building a doghouse);
- applicant claimed to have 25 years of experience at age 32;
- applicant claimed to have worked for 20 years as the babysitter for celebrities;
- applicant listed three jobs over the past several years (upon contacting the companies, the interviewer learned that the applicant had worked at one for two days, another for one day and not at all for the third);
- candidate applied for a position with a company that had just fired him (he listed the company under previous employment and indicated that he had quit); and
- candidate applied twice for the same position and provided different work histories on each application.
Fifty-one percent of employers say they would dismiss a candidate if they caught a lie on his or her resumé, while 40% say it would depend on the lie. Seven percent would be willing to overlook a lie if they liked the candidate.
Legal Briefs
❱ Ontario recently amended its Insurance Act so it no longer allows employers to self-insure long-term disability (LTD) benefits. A licensed insurer now has to insure those benefits. It’s unclear when the change will come into force. This amendment is similar to federal legislation, which came into effect on July 1 and requires LTD plans for federally regulated employees to be externally insured. Ottawa’s legislation applies on a go-forward basis, so LTD benefits that are in pay to employees on July 1, 2014, don’t need to be insured.
❱ Ontario recently introduced the Stronger Workplaces for a Stronger Economy Act, 2014 (Bill 18). Bill 18, which hasn’t been approved yet, calls for a number of changes. One is having annual reviews of minimum wage rates, with adjustments tied to inflation. The government would publish the new minimum wage rates by April 1 of each year, and those rates would come into force on Oct. 1 of the same year. The process would begin on Oct. 1, 2015. The bill also calls for expanding the definition of “worker” under the Occupational Health and Safety Act to include unpaid workers such as interns. Those unpaid workers would have the same obligations and rights as paid workers, including the right to refuse or stop work when there is a danger to health and safety.
❱ Alberta’s new Employment Pension Plans Act (New Act) will take effect in September, ushering in numerous changes. One covers plan design and governance. All plans—including single-employer ones—will be allowed to use joint governance models, whether or not they are subject to collective bargaining. Also, when changing existing DB plans or multi-employer plans to target benefit plans (TBPs), conversions of past service accrued benefits will not be allowed. The New Act also introduces restrictions for DB plans using going-concern surplus for contribution holidays. No more than 20% of the plan’s accessible going-concern excess will be available for the reduction or elimination of contributions in any fiscal year. Additionally, the New Act establishes that TBPs will not be subject to solvency funding; they will need to fund on the basis of going concern plus provision for adverse deviation. The new regulations cover DC plans, too: the default investment option for those offering investment choice to members should be either a balanced or a target-date fund.
Sources: Blake, Cassels & Graydon LLP; Hicks Morley
Meet an Advisory Board Member
Zaheed Jiwani, senior vice-president, client strategy, Greystone Managed Investments Inc.
What’s the most interesting part of your current job?
That’s a difficult question to answer, as there are so many interesting aspects. I’m fortunate to have a role within a great organization, within a great industry, doing things I love. I get to work with plan sponsors to help them understand their challenges, I work with investment teams on coming up with solutions, and I get to educate stakeholders on relevant industry topics. Through all of this, I hope I am able to contribute to the betterment of the Canadian retiree.
What’s the main challenge facing the DC industry?
The main challenge is that members are at risk of not having enough money in retirement. As an industry, we’ve been spending far too much time trying to make people into investment experts and not enough time focusing them on saving more. We are more likely to have success with teaching members the value of saving more and leaving the investment decisions to those with the resources to make them (committees, investment managers, etc.).
If you could retire anywhere in the world, where would it be?
Anywhere that I can be close to my family and my friends—and on a beach overlooking the ocean. And, quite honestly, if I get the first two, the third one doesn’t matter as much.
Diversifying Fixed Income
By Eric Léveillé
In a painting by Vincent Van Gogh, distortion is interesting. In the world of fixed income, a rearranged landscape is unsettling—especially when the interplay of policy and markets keeps changing the picture.
Consider that, in the spring of 2013, the mere suggestion that the U.S. Federal Reserve would wind down its third quantitative easing program produced distortions in the 10-year part of the U.S. Treasury yield curve and losses for investors with concentrated exposures there. Nine months later, with tapering well under way, it was the front end of the curve that was bent out of shape. Obviously, the Canadian fixed income market has not been immune to the impact of these forces.
Do more twists lie ahead for Canadian investors? If so, how should they respond? Read the full article at benefitscanada.com/diversifying.
Events
Looking for ways to meet new people, learn about industry trends and hear expert opinion on issues that affect your business? From group benefits to DB and DC plans, Benefits Canada hosts a variety of events to educate pension and benefits stakeholders. For more details and a full event listing, go to benefitscanada.com/conferences
Benefits & Pension Summit
Sept. 17, 2014
Fairmont Waterfront Hotel, Vancouver
BPS Vancouver offers presentations, case studies and in-depth panel discussions to provide delegates with the information they need to reduce costs, create solutions and improve their workforce. The summit has two tracks—group benefits and DC—allowing delegates to customize their experience. Sessions cover a wide range of subjects, from the legal implications of managing mental health in the workplace, to retirement planning in a challenging world and issues surrounding the decumulation phase of DC plans. This event is designed for senior-level personnel within plan sponsor organizations in both the public and private sectors.
DC Investment Forum
Sept. 25 & 26, 2014
Old Mill Inn, Toronto
The 7th annual DC Investment Forum is an exciting educational event that brings together senior representatives from Canada’s largest DC pension plans as well as academics and leading providers. The theme of this year’s event is Understanding the End Game. As the Canadian DC market matures and more employees retire from DC plans, the focus is shifting to income adequacy in retirement. The forum will explore the emerging investment strategies that can help members reach their retirement goals and how plan sponsors can facilitate access to these goals.
Agenda highlights include keynote speaker Alessandro Previtero, finance assistant professor, Richard Ivey Business School, with Western University, who will use insights from behavioural finance to provide take-aways for DC plan sponsors in motivating employee decision-making.
The theme of the expert panel is Rethinking Investment Decisions. Panellists will discuss how the need for member education can be balanced with the objective of a successful retirement.
Oct. 22, 2014
International Centre, Mississauga
The 14th annual Pharmacy Solutions in Drug Plan Management forum is a half-day conference bringing together pharmacists, plan sponsors, group insurers, benefits consultants, pharmacy benefit managers, pharmaceutical companies (brand and generic) and other healthcare stakeholders. The agenda includes two panel discussions: the evolution of preferred provider networks and how to incorporate pharmacists’ professional services into employee benefits.
Defined Benefit Summit
Dec. 11, 2014
Shangri-La Hotel, Toronto
The 2014 Defined Benefit Summit is an exclusive forum that brings together senior DB plan sponsors and leading industry experts to share their views, practices and theories about the challenges that DB plans face. The theme for this year’s event is Brave New DB World. Participants will discuss the future of liability-driven investing, the differences between annuity buy-ins and annuity buyouts, and pension risk management, among other topics. The event will also feature a panel discussion about the pros and cons of target benefit plans and how they might change the DB environment in the long run.
This month in numbers
- 78% of Canadians say they’re more focused at work after a vacation — Expedia.ca’s 2014 Vacation Deprivation survey
- 63% of Canadians would quit working if they won the lottery — 2013 CareerBuilder.ca survey
Market Watch
Manulife will launch a specialty drug care program later this year that targets patients with complex conditions who use high- cost specialty drugs. The program features drug case management services, including education on side effect management and medication adherence. It also features a preferred provider network, which offers preferred pricing and drug delivery services. Manulife has partnered with healthcare provider Bayshore HealthCare for this initiative.
Russell Investments Canada Ltd. recently launched the Russell Global Unconstrained Bond Pool. This enhanced fund (formerly the Russell Core Plus Fixed Income Pool) includes an expanded investment mandate and a new set of Russell positioning strategies. The new offering is an absolute return strategy managed without traditional fixed income benchmark constraints. The fund’s mandate has been broadened so it can diversify among a wider range of fixed income sectors, durations and markets beyond Canada.
iShares recently started a new exchange-traded fund (ETF). The iShares Core Short Term High Quality Canadian Bond Index ETF (XSQ) offers investors exposure to high-quality, liquid, short-duration Canadian bonds (one to five years) with a credit rating of A or higher, the firm says.
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