Canadians have doubts about their private and government-funded pension plans, according to a survey carried out as part of the National Bank of Canada’s Retirement Index.
Despite an increase from 2010 in Canadians’ overall confidence regarding retirement and savings (from 5.4 to 5.9 out of 10), confidence remains low—particularly with respect to the government’s ability to provide adequate retirement income for Canadians. The survey’s statement about government-funded pensions (“I am confident that the government will have enough money to pay the pensions they are supposed to”) was one of the lowest-scoring statements, rating only 4.8.
Sadly, employer-provided pension plans don’t appear to offer Canadians much reassurance. The statement “I am confident that private pension funds will be able to meet their commitments” scored only 5.2.
And for those with DC plans, poor financial literacy poses an additional threat to confidence level. The statement “I know quite a bit about the financial aspects of retirement” scored only 5.5, and the statement “I’ve done disciplined and comprehensive retirement planning” scored the lowest at 4.7.
Perhaps not surprisingly, then, pension plan members’ confidence appears to be influenced by whether they participate in a DB or a DC plan. Those contributing to a DB pension plan are more confident about their retirement (ranking 6.8) than those who have a DC plan (ranking 6.0).
“The precarious situation concerning the funding of some pension plans is definitely a concern with the general public,” said Jean-Sephane Parent, senior manager of strategy and client experience for National Bank. “There is no doubt that as the population ages, Canadians will, more and more, have to take charge of their retirement planning.”