With the growth of DC pension plans, Canada is moving toward a retirement system that requires people to have financial acumen. Employees need to understand the difference between capital accumulation plans (CAPs) and DB plans, as well as various investment concepts—yet for many Canadians, financial terminology is a foreign language.
Simple math tasks are a struggle for almost half of Canadians, according to ABC Life Literacy Canada. It’s hardly a surprise, then, that personal and household finances are the main source of stress in the country, affecting 41% of Canadians, according to Sun Life Financial’s 2013 Canadian Health Index report. The report also indicates that another 29% are stressed about trying to maintain a budget.
One major reason why so many people worry about money is that they lack a solid financial plan, says Lori Casselman, assistant vice-president, health and wellness, with Sun Life Financial. “Becoming very reactionary and managing from paycheque to paycheque can be a great source of financial stress.” And that anxiety carries over into the workplace. “Financial stress significantly impacts an individual’s productivity and overall health,” adds Frank Wiginton, CEO of the Employee Financial Education Division of A Better Quality of Life Financial Consulting. “This ends up costing a company.”
November is Financial Literacy Month—but employers should give this subject year-round attention.
According to 2011 data from ABC Life Literacy Canada:
- 72% lack full confidence that their math and money management skills will help them to achieve a stable financial future
- 38% don’t put away any money on a monthly basis for long-term savings
- 38% say their household doesn’t follow a budget
- 36% save $200 or less per month
According to this year’s CAP Member Survey:
- 46% of CAP members—less than half—feel financially prepared for retirement
- Only 37% have an excellent or very good understanding of their retirement plans
- 24% owe between $10,000 and $39,999 in personal debt (excluding mortgages)
- Just 16% of non-participants have a formal personal or household budget
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