This is Part 1 of a two-part series. Part two was published on August 28.
I’ve been involved in healthcare for many years now, from my early days as an registered practical nurse to my current work as chair of the Healthcare of Ontario Pension Plan (HOOPP).
HOOPP provides pension benefits to more than 274,000 active and retired healthcare workers across Ontario and is always interested in people’s attitudes toward retirement. With that in mind, HOOPP carried out a two-part white paper with The Gandalf Group called The Emerging Retirement Crisis.
Part 1 found that 64% of Ontarians surveyed are worried they won’t have enough income to live on in retirement.
Eighty-two percent of those who have DB plans are confident they’ll have enough to retire on, but only 57% of those in DC plans are as confident. But even those with pension plans at all are in the minority in this country—approximately 60% of Canadians have no workplace coverage whatsoever.
HOOPP proves that the DB model can work, and work well. As of the end of 2012, HOOPP was fully funded, meaning it has more than enough assets to cover all benefits owed to its membership.
Why does DB work? There are several key factors. First, contributions are mandatory, made each payday and matched by the employer.
Second, over time, the contributions are invested by HOOPP—and invested very well. A recent Boston Consulting Group survey showed that HOOPP and the other nine large public sector pension funds in Canada managed more than $714 billion in retirement assets at the end of 2011—roughly 35% of the total retirement savings in the country.
Third, professional, low-fee investing by HOOPP means that about 80 cents of every pension dollar payout comes from investment returns. And HOOPP paid out $1.4 billion in pensions last year.
We can’t expect healthcare workers to be experts in money management and investment. They—frankly, all workers—need a little hand with things they’re not familiar with.
Ontarians are fearful about growing older and fearful they may not have enough money to see them through till the end of their life. Let’s listen to what they’re saying and work to ensure that all Canadians can retire as they worked—with independence and dignity.
Helen Fetterly is chair of the Healthcare of Ontario Pension Plan. The views expressed are those of the authors and not necessarily those of Benefits Canada.
Related links: