Category Archives: Interviews

People behind the scenes at SPP.

Rising future costs of long-term care will cause financial risks: NIA’s Michael Nicin

The National Institute on Ageing at Ryerson University recently prepared a report entitled The Future Co$t of Long-Term Care in Canada. The report predicts long-term costs may more than triple by mid-century.

Save with SPP reached out to the NIA’s Executive Director, Michael Nicin, to ask a few questions about how future increased care costs will impact the finances of retired Canadians.

Q. Your study shows that the cost of long-term care will jump to $70 billion by 2050, from $22 billion today. That’s a more than 300% increase. Should pension plans and retirement programs be factoring this possible huge cost increase into their design so people can pay their share in the future?

Depending on the pension plan type and member profile, pensions already act as a bulwark against this type of late life expense. Indeed, one can argue that that the costs to individual Canadians and public coffers would be assisted by more widespread pension coverage.

The bigger financial risk applies to Canadians without a robust pension or sufficient personal savings.

A 2016 report by Richard Shillington, for example, shows that Canadians with pension coverage have significantly higher income than Canadians who don’t. In 2011, median income for senior families with pension income was $55,400, compared to $31,400 for households without pension income.

The same report shows that median personal savings for Canadians aged 55-64, without pension coverage, is only $3,000.

So, while all Canadians could put more income to good use, the bigger issue with respect to long-term care costs is the two-thirds of Canadians who have no pension coverage at all, and haven’t saved enough on their own. Herein lies the bigger personal and social risk on long-term care affordability.

Q. There is also an indication that the burden on unpaid caregivers (such as family members) may nearly double to eight hours a week. I think there are tax credits and so on for this work, but is that enough? Could other things be done to help the caregivers?

The federal government, and a number of provincial governments, have indeed acted to provide some level of support to caregivers – ranging from tax-credits and work-leave protection for employed caregivers.

Federally, for example, Canadians caring for eligible spouse or dependant over 18 years of age, can claim up to $6,883 annually. At the moment, however, the tax credit is non-refundable, and as such doesn’t help caregivers who have no reportable income.

Some provinces offer work-leave protection, respite programs, and other sources of support to caregivers. For a full assessment of government support programs, Dr. Samir Sinha’s report, Why Canada Needs to Better Care for Its Working Caregivers, provides a good overview.

The bigger picture painted in our report on the future costs of long-term care shows that additional support will certainly be needed, but the fundamental challenge will be the availability of Canadians to continue to provide the level of support we’ve seen historically. Younger baby boomers had fewer children than previous generations of Canadians, which may mean fewer available family members to provide care. Likewise, Canadian families live farther apart from each other, making it impractical to physically support older family members. Women have also typically provided the bulk of unpaid care, but with women increasingly entering the workforce, there will again be fewer traditional sources of unpaid care. Indeed, at this level, concern for caregivers extends beyond the seniors’ care spectrum; it increasingly will affect economic and personal productivity.

To start then, governments should look to expand existing programs for caregivers. The federal government can start by making the tax credit refundable.

Employers may also need to step-up. Caregivers often juggle work obligations with providing care. And for those that have to leave work, the employer suffers the loss of an employee and the employee loses income. Caregivers tell us that they would like more flexible work arrangements, for example, so they can step away from a full workload without sacrificing the job altogether.

Q. From personal experience, the cost of LTC even today is pretty high. Here in Ottawa, it is about $2,000 a month for a publicly funded long-term care spot and around $5K plus for a private nursing home. Does your research say anything about the expected future costs of such services so we can show it on an individual basis (might make it easier to understand).

Our projected costs are actually rather conservative, in that they show what the status quo will look like if extended to a larger, ageing population. But in discussions with experts and in reviewing Canadian and global literature, the big cost risk associated with the future of long-term care is labour. Personal Support Workers are the front lines of health professionals who care for seniors, in their own homes and in nursing homes. Canada is already facing a shortage of PSWs and isn’t alone. Globally, there’s a shortage of PSWs, which likely means that a short supply and high demand will increase labour costs over time. This could certainly implicate costs for Canadians in the future, as recruitment and retention become more difficult in an ageing world. In the medium and long-term, then costs for care in the home and in nursing homes may grow beyond our projections.

Q. Would increased government funding for additional “subsidized” spots help stave off a future crisis? What else can be done today to prepare us for the future?

The NIA structured these reports as a series of three. The first two look at the current state of long-term care and project costs into the future, if we don’t shift practices, funding methods, and other aspects of how we deliver care to an ageing population. The third and final paper of the series is in progress now. In the final report, we’re working with a broad range of experts, government officials, and other stakeholders to identify real and potential means of delivering better care as lower or more contained costs.

But looking at best practices around the world, the countries that seem to be doing better than Canada have flipped spending in recent years and decades, pouring more resources into home and community care, as opposed to building more nursing homes, which cost more to build in the first place, and typically cost more to operate.

Q. What results from this research surprised you the most, and why?

Amongst the eye-opening projections on the future cost of long-term care and the current lengths of waitlists for home and nursing care, we can’t lose site of the fact that Canadians are already living longer, healthier lives than ever before. Centenarians are the fastest growing cohort in Canada. This is an incredibly positive trend that’s worth noting and celebrating. In a sense, the challenges we face now and on the horizon are partially the result of great gains in population health and longevity. We’re living longer, healthier lives. That can be surprising to anyone whose job it is to focus on problems and solutions, as we do at the NIA.

We thank Michael Nicin for taking the time to answer our questions.

It’s clear that we can all expect long-term care costs will be more than they are today when, in the future, we need them. If you have a retirement arrangement at work, be sure you are contributing all that you can towards it. If you don’t, consider setting up your own savings program. The Saskatchewan Pension Plan offers an end-to-end way for your to turn savings into future income; check them out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

RBC Wealth Management survey sees rising living costs, unexpected expenses, as barriers to wealth for higher-income Canadians

A recent Royal Bank of Canada survey on wealth management, conducted by Ipsos, found there were a few new obstacles that were impeding even wealthy Canadians’ efforts to build wealth.

Save with SPP reached out to RBC Wealth Management to probe a bit more about these obstacles, and to ask if the study’s authors found any other surprises in their research. Their answers are here:

Q. Did the study and its authors find higher levels of debt to be a part of the “cost of living barrier” to building wealth, given the high record of household debt? Helping kids is also mentioned.

The study didn’t specifically ask respondents about levels of debt. After the rising cost of living, the next reasons that ranked highest on the survey were:

  • Unexpected expenses
  • Cost of raising children (survey did not specify what “helping kids” meant)
  • Home prices

Q. The survey says “traditional ways of building wealth” may not be doing the job like they used to. Is this referring to the volatile stock markets and the low-interest environment for fixed income? Are there any thoughts about new types of investment strategies/alternative categories that the study and its authors think could address this?

In the survey news release, Tony Maiorino, Head, RBC Wealth Management Services, says “regardless of income, many Canadians find themselves behind on their wealth goals as many of the traditional ways we build wealth have changed over the generations. With the added backdrop of market uncertainty, clients are voicing their concerns and looking for support using non-traditional methods of meeting their wealth goals.”

Howard Kabot, Vice-President, Financial Planning, RBC Wealth Management Services, elaborates, saying “things like tax strategies, insurance and retirement planning play a key role in building wealth today but I’m not surprised that so many respondents find them challenging. The financial landscape is always evolving and people have less time to research and learn about wealth management topics. Most clients need to explore a variety of tactics through a holistic lens to build and preserve wealth.”

The survey found that 81 per cent of Ontario respondents, 80 per cent of Albertans and 77 per cent of BC residents felt “building wealth now is more difficult than it was in previous generations.” Thirty-eight per cent of BC respondents (vs. 26 per cent for Ontarians and 20 per cent for Albertans) reported experiencing “poor investment performance.”

Q. Did the study indicate when respondents would use the services of a financial adviser like RBC? Did the study turn up any sense that people are having difficulty putting away as much as they would like for retirement, given the high cost of living, lower salaries, and maybe the lack of workplace pension plans?

The study found that three-quarters of higher-income Canadians were confident “they will reach their financial goals before retirement.” However, 41 per cent of the same group said they would “work with a financial expert to invest the money” if they experienced a windfall, such as an inheritance. Advisors might come in handy with things that “challenged” respondents, such as “staying on top of markets” (76 per cent) and “using… strategies to minimize taxes (71 per cent).”

The lack of a pension plan at work was cited by 20 per cent of those surveyed as one of the “unexpected expenses,” like the increased cost of living, raising children, lower salaries than expected and poor investment performance, that was a factor in respondents being less wealthy than they expected.

Q. Where there any other findings that surprised the authors?

The news release noted that it was surprising that respondents found it challenging to understand financial topics but still felt confident they would meet their financial goals.

The release noted that “of the 48 per cent of respondents who are not as wealthy as they thought they would be, almost three quarters (73 per cent) believe they will reach their financial goals before retirement.” This optimism seems to be at odds with their confidence when it comes to aspects of wealth management topics, with the majority agreeing the following topics are challenging:

  • Knowing which information to trust (78 per cent)
  • Staying on top of what’s happening in the financial markets (76 per cent)
  • Using tax strategies to minimize taxes (71 per cent)
  • Ensuring they don’t outlive their assets during retirement (70 per cent)
  • Understanding the use of insurance in a financial plan (66 per cent)

If you lack a workplace pension, and need a do-it-yourself solution for retirement savings, consider membership in the Saskatchewan Pension Plan. You can start small and gear up your contributions over time. At retirement, the SPP can convert those savings into a lifetime income stream – you won’t be able to outlive your savings. Check them out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Why people aren’t saving – an interview with Doug Hoyes

As co-founder of Hoyes and Michalos, a debt relief firm, and a commentator on personal finance, Doug Hoyes has seen it all when it comes to debt.

And he has a straightforward view on why Canadians aren’t saving much for retirement, telling Save with SPP that these days, “people don’t save for anything.”

The savings rate, he notes, was as high as 15 per cent in 1980 and has plunged to “less than one per cent” today. In other words, people are saving less than a penny of every dollar they earn.

“People don’t save anything; it’s just not a thing we do anymore,” he explains. “I think the cost of living is high and job security is low.” The old “job for life” days are long gone, and people now expect to have multiple jobs through their working career, he explains.

“You are seeing sporadic employment, contract work – it is hard for people to put down roots and save. And house prices are rising sharply, and everything costs more. We’re not able to save, and we are seeing more people using debt to make ends meet,” he says.

Those who do try to save tend to be punished for their efforts – savings account and GICs pay interest in the low single digits, and if savers look to invest in mutual funds “there are high fees, and they take on risk,” he explains. Since low-interest lines of credit are so prevalent, for many people, debt has replaced savings, a practice that Hoyes says just isn’t sustainable in the long term.

Save with SPP asked how this lack of saving affects retirement plans.

“It’s become uncommon to have a pension plan (a traditional defined benefit plan) at work,” he says, “unless you work for the government. It’s just not a thing newer companies offer.” He says that from an employer’s point of view, “it is a hassle to set them up, and there is a potential for liabilities that need to be funded, and more money needing to be put in.” Sears and Nortel show the potential downside for employees and DB pensioners if the parent company runs into financial trouble, he notes.

So traditional pension plans in the private sector have generally been replaced with things “like a group RRSP, where there is zero risk (for the employer).” Employees are satisfied with a group RRSP because they “know they are not going to be there, at the same employer, for 50 years,” and a group RRSP is portable and easy to transfer, Hoyes explains.

With more and more working people dealing with debt, it’s not surprising to Hoyes that more seniors are retiring with debt, a situation he says can lead to disaster.

“In retirement, your income goes down, and while some of your expenses that were related to work go down, others will go up,” he explains. “Your rent doesn’t go down when you retire, so your cost of living is about the same.”

Retired seniors, living on less and still paying down debt, face other problems, he says. It’s more common for retirees to divert savings to “helping their adult kids.” Examples of this might include a divorced child moving home, or college and university graduates, unable to find work, staying home instead of moving out. So the seniors may use up their savings or borrow to help the children, “as any parent might,” but that drives them into a financial crisis, he explains.

With debt to pay and possibly little to no workplace pension, many seniors are heading back to work. Others, Hoyes notes, are starting to have to file for insolvency.

“Maybe you only have CPP and OAS coming in, and you have a $50,000 debt that you can’t service – you may need to file for bankruptcy and make payments through a trustee,” he explains.

We thank Doug Hoyes for speaking to Save with SPP.

If you don’t have a pension plan at work, consider opening a Saskatchewan Pension Plan account. It’s like setting up a personal pension plan. The money you set aside is invested for you at a low fee, and when you are ready to collect it, it’s available as a lifetime pension with several survivor benefit options.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Is senior poverty linked to a lack of retirement saving or workplace plans?

An interview with Chris Roberts of the Canadian Labour Congress 

These days, it’s pretty common knowledge that many of us don’t save enough for retirement, and/or don’t have a savings plan at work. Save with SPP reached out to Chris Roberts, Director of Social and Economic Policy for the Canadian Labour Congress, to see how this lack of retirement preparedness may connect to seniors having debt and poverty problems.

Is the shortage of workplace pension plans (and the move away from defined benefit plans) in part responsible for higher levels of senior poverty/senior debt?

“Certainly old-age poverty rates and indebtedness among seniors have risen over the past two decades, while pension coverage has fallen (and DB coverage in the private sector has collapsed). Seniors’ labour-market participation has also doubled over those time period.

“It’s clear (from research by the Broadbent Institute) that falling pension coverage and inadequate retirement savings more broadly will deepen the financial insecurity and even poverty of many seniors. But while there’s been considerable research linking stagnant wages and rising household indebtedness, studies linking falling pension coverage with rising poverty and indebtedness among seniors are relatively scarce.

“Both rising poverty rates and growing indebtedness among seniors have several causes. Canada’s public pensions, especially Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), provide a minimum level of income in retirement for individuals without private pensions or other sources of income. Part of the rise in the low-income measure of old-age poverty has been due to the fact that OAS is indexed to the consumer price index rather than the average industrial wage, causing seniors’ incomes to lag behind median incomes. Unattached seniors, especially women, are at particularly high risk of poverty, but so are recent newcomers to Canada who are eligible for only a partial OAS benefit.

“With respect to rising indebtedness, a declining number (according to Stats Can data) of senior-led households are debt-free. More Canadians are taking debt (especially mortgage debt) into retirement, and they’re shouldering more debt in retirement as well. At the same time, the total assets of senior-led families have also risen, and their net worth has grown even as debt levels rose. Indebtedness and net worth seems to have grown fastest (again according to Stats Can data) among the top 20 per cent of families ranked by income.

“So I think we have to be somewhat careful to avoid seeing rising senior household debt levels as driven solely or even primarily by financial hardship caused by declining pension coverage. There is certainly ample evidence (according to research by Hoyes Michalos) of a significant and growing segment of seniors that are struggling with debt and financial pressure. But rising debt levels among higher-income senior households likely have other causes besides financial hardship.”

Is a related problem the lack of personal retirement savings by those without pension plans?

“Richard Shillington’s study for the Broadbent Institute demonstrated that a retirement savings shortfall for those without significant private pension income will be a major problem for many current and future retirees. This shortfall has also been documented in the United States (see a study by the Center for Retirement Research at Boston College). While retirement contributions as a share of earnings have been rising (even as the household saving rate fell), these additional contributions have gone toward workplace pension plans; contributions to individual saving plans have declined, suggesting that those without a pension have not been able to save independently to compensate for not having an actual pension (see this article from Union Research for an explanation).”

Is debt itself a key problem (i.e., idea of people taking debt into retirement and having to pay it off with reduced income)?

“I think rising debt levels in retirement do pose risks, even if the challenges vary significantly with income. For low- and modest-income seniors, some forms of debt (e.g. consumer credit, payday lending) can be onerous and even unconscionable. For home-owners, even if mortgage debt is accompanied by rising home values and rising net worth, servicing debts while managing health-related and other costs on fixed incomes can be challenging for seniors. Debts acquired at earlier stages of the life-cycle will likely become a mounting problem in Canada, as, for instance, the student debt of family members (see article from Politico) and seniors themselves (see coverage from CNBC) is becoming an urgent problem in the United States.”

Apart from things like CPP expansion, which seems a good thing for younger people, can anything be done today to help retirees to have better outcomes?

“Increasing GIS but especially improving OAS will be important to improving financial security for seniors. For the reason discussed above, OAS will have to be expanded or indexed differently in order to stabilize relative old-age poverty. But in my view, there are also good reasons to expand it. Current as well as future seniors would benefit. OAS is a virtually-universal seniors’ benefit (about seven per cent of seniors have high enough incomes that their OAS benefit is clawed back by the recovery tax), and it’s particularly important to low- and modest earners, women, Indigenous Canadians, and workers with disabilities. It isn’t geared to employment history or earnings, so it’s purpose-built for a labour-market increasingly characterized by precarity, and atypical employment relationships (e.g. “self-employment,” independent contractors, etc). Modest income-earners with pensions would benefit from a higher OAS; these workers earn only a small workplace pension benefit, and unlike increases to CPP, their employers would be unlikely to try to offset the costs of a higher (tax-funded) OAS benefit. While growing along with the retirement of the baby-boom cohort, the cost of OAS (as a share of GDP) is projected to peak around 2033 before declining. And at a time when workplace pension plans, individual savings plans, and even the CPP increasingly depend on uncertain and sometimes volatile investment returns, the OAS is funded through our mostly progressive income tax system.”

We thank Chris Roberts for taking the time to talk to Save with SPP.

Given the scarcity of workplace pensions, more and more Canadians must be self-reliant and must save on their own for retirement. An option worth consideration is opening a Saskatchewan Pension Plan account; your money is invested professionally at a very low-cost by a not-for-profit, government-sponsored pension plan, and at retirement, you have the option of converting your savings to a lifetime income stream. Check it out today at saskpension.com.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Shelties, Duncan and Phoebe, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Aging study explores impacts of isolation, poverty and frailty as we age

An interview with Dr. Parminder Raina

A large-scale research study, called the Canadian Longitudinal Study on Aging (CLSA) has been underway for a few years now, and is expected to provide insight on why some of us fare better in our old age than others.

Save with SPP contacted Dr. Parminder Raina, a professor at McMaster University and director of the McMaster Institute for Research on Aging, who is leading the research along with Christina Wolfson of McGill University and Susan Kirkland of Dalhousie University. We wanted to find out what the study – which follows 50,000 Canadians who were aged between 45 and 85 at recruitment for 20 years – has found out thus far.

The CLSA’s Report on Health and Aging, says Dr. Raina, shows that “when you look at the overall picture, people are aging in a healthy fashion.” However, he says, subpopulation data shows “that poverty rates are higher in women, and depression rates are higher, probably because of the social isolation issues.

“So while the overall picture looks good, you see some patterns that are not as positive when you start to segment populations differently. So from that point of view, this is an important finding because many of the data that are out in Canada are not specifically able to look at health issues in women,” he states.

Dr. Raina says the study has also helped develop what he calls “a normative cognitive score tied to age. It’s similar to a growth chart for children, but instead tied to memory and cognitive function,” he explains.  Having the score means that a cognitive test with your doctor could “be compared to a normal value developed using the CLSA data,” he states. “We know that aging is a developmental process. At the early ages, there are lot of gains and few losses. But in old age, there can be more losses than gains. By developing cognitive norms, we are able to determine what is normal and what is not when it comes to cognitive changes as we age.”

Another area being explored is frailty. “The traditional sense is that frailty is limited to older people that as they come into their 70s and 80s, they become weak, they lose resilience and become frail. The belief is that is part of growing old. And some older people are frail, and others aren’t,” Dr. Raina says. “Part of our goal is to understand frailty and how does it manifest itself. Some of our initial analyses and results are indicating that frailty is as prominent, in a different way, in a 45-year-old as it is in a 75-year-old.”

Is that frailty seen in younger people “the same as the frailty we see in older people?” he asks. “The other question, which we will answer over the years, is the people who are already frail in some ways, are they more prone to be much more frail in later life? That actually changes the way we look at the whole area of frailty in older people. We need to look at it in a very different way. It might be an issue that cuts across the whole age spectrum.”

Save with SPP asked Dr. Raina if any of the findings thus far come as a surprise.

“Overall, Canada is doing quite well when it comes to aging of the population. However, we can’t paint everyone with the same brush. There are some populations who experience more challenges than others. We need to keep this in mind, especially when developing policies and programs,” he says.

Finally, we asked Dr. Raina what those of us who are older can do to stay in better health as we age. “The two things tend to drive many health issues are smoking and lack of physical activity. Keeping people socially engaged is also tied to healthy aging. So exercising more, eating well and staying connected to friends and family can have a major impact on how we age. Those are the things that will actually lead to some beneficial impact on the health and well-being of people as they grow older,” he says.

In May 2018, the CLSA released its first report on health and aging, which included some important findings, such as:

  • 95 per cent of older Canadians rate their own mental health as excellent, very good or good
  • Women are more likely than men to express feelings of loneliness and social isolation, and that there is a notable correlation between feelings of loneliness and the prevalence of depression among older Canadians
  • 44 per cent of older Canadians report that they provide some level of care to others, and caregiving rates are at their highest (almost 50 per cent) among individuals aged 55-64
  • Driving a motor vehicle is the most common form of transportation for older Canadians regardless of age, sex, geographic location, health or functional status

Save with SPP thanks Dr. Raina for taking the time to answer our questions.

Poverty, as we learned, is a factor that influences health and aging. If you don’t have a workplace pension plan and are saving on your own for retirement, a good option to consider is the Saskatchewan Pension Plan. Find out more today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Senior reliance on food banks evidence of a hunger crisis: OAFB

 

Are we looking at a hunger crisis for Canadian seniors? Recent research from the Ontario Association of Food Banks (OAFB), called The 2018 Hunger Report suggests that with more than half a million Ontarians accessing food banks each year, including a growing number of seniors, the crisis is already here.

Save with SPP contacted Amanda Colella-King, OAFB’s Director of Communications & Research, to find out more about the report.

Q. Were you surprised by the findings?

“In reviewing the data, we were surprised that there was such a significant increase (10 per cent) in seniors accessing food banks over the previous year. This is a rate nearly three times faster than the growth of Ontario’s senior population.”

Q. What did you see as the most significant finding in this research?

“I think the most significant finding is just how hard it is for so many seniors and adults to afford their basic necessities each month.  The workforce has changed significantly over the last decade, from secure well-paying jobs to more precarious contract or part-time positions that often do not provide benefits or retirement savings assistance, like a pension plan. This often results in adults having to spend their savings during downtime or rough patches, rather than put money away for retirement. 

Alongside this, government support programs for seniors have remained relatively stagnant over the last 15 years, while the cost of living has continued to rise. This has made it increasingly more difficult for seniors to afford even their most basic necessities each month. 

As the job market continues to change and the cost of living continues to rise, we believe that more seniors will have no other choice but to turn to food banks for support.”

Q. Does a lack of retirement savings/ pensions from work/ low retirement income fuel this crisis, is it a driver? Are there other drivers?

“Hunger is a symptom of a much larger problem: poverty. Low income, whether due to precarious employment or insufficient social assistance or retirement support, alongside the rising cost of living means that adults and seniors are having trouble affording their most basic necessities each month, like rent, transportation, medicine, and food. 

One of the largest expenses faced by adults and seniors is the cost of housing. In the last year, nearly 90 per cent of food bank visitors were rental or social housing tenants who spent more than 70 per cent of their monthly income on housing.”

Q. What are your next steps with this research – will you share it with government?

“Yes, the Ontario Association of Food Banks regularly meets with government officials to discuss its research and recommendations for change. The 2018 Hunger Report was also sent directly to all MPPs in the province and discussed during Question Period, Dec. 4, 2018 at the Ontario legislature, Queen’s Park. 

The OAFB will continue its research and expects to release a number of new reports over the upcoming year on food bank use and poverty trends in the province. It collects real-time data on food bank use across the province throughout the year. This information is used to inform our research and the evidence-based recommendations for change that we advocate for to the provincial and federal governments.”

Q. Can you tell us a bit about the OAFB?

“The OAFB is a network of 130 direct member food banks and over 1,100 affiliate hunger-relief agencies, including breakfast clubs, school meal programs, community food centres, community kitchens, and emergency shelters. Together, we serve over 501,000 adults, children, and seniors every year. For every $1 donated, we can provide the equivalent of three meals to someone in need.”

We thank Amanda Colella-King for taking the time to answer our questions.

Having retirement income over and above what the government provides is an important factor for retirees. If, like so many Canadians, you lack a retirement plan at work and aren’t sure how to invest in an RRSP, the Saskatchewan Pension Plan may suit your needs. You determine how much to contribute, up to a maximum level of $6,200 annually, and the SPP does the rest. The government-sponsored, not-for-profit SPP invests the money efficiently and effectively and also provides, at retirement, ways to convert your savings into a lifetime income stream.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Pension plans are a sure way to deliver retirement security: Dobson

For Derek Dobson, the fact that Canadians “are struggling to put money toward their retirement goals” is a “monumental issue” that needs to be addressed.

Dobson is CEO and Plan Manager of the Toronto-based Colleges of Applied Arts & Technology Pension Plan. At the end of 2017, the CAAT Plan had $10.8 billion in net assets and served more than 46,000 working and retired members.

Dobson tells Save With SPP that the statistics show that “there has been a decline in the percentage of working Canadians who have access to a pension savings program” in most Canadian workplaces. He says that the decline of workplace pensions started in the 1960s when the Canada Pension Plan started, a trend that has continued for decades.

But that trend can and should be reversed, he says. These days, it is harder to attract and retain valuable employees, and workplace pensions play an important role. “Employers are competing for workers again,” he explains. He says CAAT’s new defined benefit (DB) plan design, DBPlus, open to any organization, is getting inquiries from large and small employers. “We had a tree service company owner, with a staff of four, call us up about joining, because he found his people would leave to get jobs where there is a pension.”

Both CAAT and another Ontario jointly sponsored DB plan, OPSEU Pension Trust, have developed pensions that expand access to well-run defined benefit pensions that are easy for members and employers. Recently Torstar and its employees joined CAAT Pension Plan’s DBplus. When the matter was put to a vote, 97 per cent of the members of the Torstar plans voted in favour of the merger.

“Along with other pension plans, we are trying to get the message out that a measure of the health of Canada is how good its standard of living is in retirement,” Dobson explains.

People, he says, visualized getting old around age 75 and then passing away soon after. “Their jaw drops when we show them that it is highly likely they will live until their high 80s or early 90s,” he says. “They could easily live for 25 years of retirement. With improving longevity people need to think more about their financial security in retirement.”

Yet, he notes, those without pensions at work aren’t saving much on their own. The average RRSP balance in the country is only around $65,000 at age 65. That’s not going to be sufficient to keep people at a reasonable standard of living for 25 years, Dobson says.

Saving for retirement on one’s own is not easy, he says. While financial literacy courses help, retirement savings is a complex challenge for most. Canadians already are having to manage their debts, so “having a picture of what they want their future to be like” is difficult. “They want a good standard of living in retirement, but they don’t know where to start, or where to find value across so many choices.” And that can be so overwhelming that people “are not getting started putting money toward their retirement goals.”

Pensions in the workplace work because it is an automatic savings program, Dobson explains. “Your contributions come off your paycheque, so you don’t have to think about it,” he says. But decades later, he says, CAAT members notice that they are receiving a pension comfortably and the value is strong as they receive about $8 in benefits for every dollar they contributed, a fact that “resonates” with them, Dobson says.

The importance of having an adequate pension is something Dobson is passionate about; it is his hope that more and more employers will take advantage of the new and easy defined benefit offerings available to extend retirement security to more Canadians.

We thank Derek Dobson for taking the time to speak to Save With SPP.

If you are saving on your own for retirement and want someone else to do the heavy lifting of retirement asset management and decumulation – turning savings into lifetime monthly income — the Saskatchewan Pension Plan may be the plan for you. Check it out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Retirement “think tank” group looks for smart solutions for retirement security

The National Institute on Ageing is a relatively new university-based think tank focused on leading cross-disciplinary research, thought leadership, innovative solutions, policies, and products on ageing.

The NIA brings together thinking not only on the money side of retirement, but the health side as well.

So says the NIA’s Dr. Bonnie-Jeanne MacDonald, PhD and FSA (she is also resident scholar at Eckler Ltd.), who recently took the time to speak with Save with SPP. “A happy, healthy retirement is not just about money,” Dr. MacDonald notes, adding that NIA hopes to tap into university, government and other worldwide research to come up with “better ideas that will help Canadians as they age.”

One aspect that Dr. MacDonald has done much research about is the “decumulation” phase of retirement, the period when savings from the work years are used to finance life after work.

“Retirement planning used to focus on saving up until age 65,” she explains. You would then start spending and travelling, with “the old assumption (being) that you would begin to need less money as you aged, that you wouldn’t be spending as much by age 90.”

However, Dr. MacDonald notes, this type of thinking overlooked the possibility that retirees might eventually need to pay for age-related healthcare costs, including living in a nursing home.

In reality, many retirees in their 60s and even 70s “can still earn money, and can choose to downsize, or reduce spending. Their expenses are flexible,” Dr. MacDonald explains. “Once you are 80 to 85, there is less flexibility, expenses are increasingly less ‘voluntary’ (namely the costs arising from declining health) – so it is at this age when having a steady stream of income becomes much more necessary for financial security.”

What she calls “shifting socioeconomic customs” have driven changes in the way retirement money is spent and the effect it has on individuals and families.

“Society has shifted, women are now working more and are not able to provide elder care without accruing considerable personal expense,” notes Dr. MacDonald. Even still, the majority of caregivers are women. The NIA’s report on working caregivers, authored by Dr. Samir Sinha, a geriatrician and Dr. MacDonald’s colleague at the NIA,  shows that women are not only more likely to be working caregivers, but that they provide much more care to their elderly relatives than do men. What’s more, the typical age at which women provide care overlaps with peak career earning opportunities and with their own family building, which in turn causes a knock-on effect on their lifetime earnings and income potential. Financial independence in older age has significant ripple effects, beyond just the individual.

In the past, it used to be more likely that the family would look after elderly parents, helping to feed them, socialize them, prepare their taxes, transport them, and so on. And while 75 per cent of elder care is still done by the family, increasingly people are finding they have to or want to pay for their own care as they enter their late 80s and 90s. And while family caregivers play an important role in the lives of the elderly, people generally prize their independence. But independence also comes at a cost. “It costs a lot of money to replace (the care provided by family), it has become extremely expensive for nursing home care.,” says Dr. MacDonald.

While some retirees can afford to cover the costs of their own care, those who can’t must be assisted by the government, she explains. “The overall effect of this is that some older people aren’t decumulating their savings as expected. They are holding onto their money; they are concerned about the future,” she adds.

Dr. MacDonald is the author of a recent paper on this topic for the C.D. Howe Institute called “Headed for the Poorhouse: How to Ensure Seniors Don’t Run Out of Cash Before They Run Out of Time.” The paper suggests the creation of a government-sponsored LIFE (Living Income for the Elderly) program that would provide additional life income beginning at 85.

“LIFE would provide longevity insurance to Canadian seniors at their most vulnerable time of life… giving them choice, flexibility and income security at advanced ages,” she writes in the paper.

In an article for the Globe and Mail written last year, she suggests women – who live longer – consider not starting their CPP benefits until they are older. “Starting CPP benefits at the age of 70 instead of 65 will increase a person’s CPP by 42 per cent,” she notes in the article.

NIA is looking at other ways to boost income security for older retirees. One way, says Dr. MacDonald, would be to find ways “for people to stay in their own homes longer.” Another way would be to allow family members providing care to be paid. Currently rules generally allow paid caregiving by strangers, but not by someone’s daughter,” she notes.

We thank Dr. MacDonald for taking the time to talk with us.

Remember as well that before decumulation can occur there needs to be retirement savings. The Saskatchewan Pension Plan offers a flexible savings program for individuals.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Interview with HOOPP’s Darryl Mabini

Factor high healthcare costs into your retirement savings strategy: HOOPP

One of the biggest problems retirees can face is unexpected, major healthcare costs in retirement – and that possibility should be factored into retirement savings.

So says Darryl Mabini, Senior Director, Growth & Stakeholder Relations for the Healthcare of Ontario Pension Plan (HOOPP). HOOPP is a $77.8-billion public sector defined benefit pension plan serving healthcare workers in Ontario.

HOOPP recently produced a four-paper series called Retirement Security – Is it Attainable? One of the four papers, called Seniors and Poverty – Canada’s Next Crisis found that 12.5 per cent of Canadian seniors – and a startling 28 per cent of senior women – live in poverty.

A factor behind this, the series suggests, is the lack of good workplace pension plans (the defined benefit type, which provides pensions based on a percentage of your earnings, is rare outside the public sector) and inadequate personal retirement savings.

“People saving for retirement don’t factor in the healthcare costs when they get older,” explains Mabini. While Canadians are proud of their universal healthcare system, he notes, they “are not aware of what it doesn’t cover.”  Some long-term care costs are not covered by provincial plans and can cost thousands a month, he notes. Treating chronic diseases and illnesses can also be expensive in retirement, particularly if you don’t have health benefits, says Mabini.

So retirement income – having enough of it – is critical. “We found that about 40 per cent of Canadians are covered by a workplace pension plan. For the other 60 per cent, it is do-it-yourself; they are saving on their own,” Mabini says. But doing it on your own is hard – the savings are voluntary, not mandatory, and no one tells you how much you actually need to save to be able to afford retirement, he explains.

“Our research found that the amount people have saved is heavily impacted around age 85, once long-term care costs are factored in,” he says. Those who are age 85 and older are at risk for having insufficient income, and because of their longevity; it is usually women who come up short on retirement income, Mabini notes.

“The problem is that those without a good workplace pension plan tend not to save on their own,” he says. They think CPP and OAS will be sufficient, he adds. “The most you can get from CPP, and few get it, is about $12,000 a year at age 65. With OAS, it is about $8,000.” While $20,000 a year may sound OK for a retiree, it isn’t enough when facing long-term care costs of thousands a month, Mabini says.

If you don’t have money to cover healthcare costs, you have to depend on government income supplements and other programs which are not always readily available, he notes.

“There needs to be more education about the importance of retirement savings, and the risks of not having a workplace pension,” he says. “Saving on your own can work, but putting away two per cent of what you make is not adequate for some people. People need to realize the risk of senior poverty.” If you are saving on your own, Mabini recommends setting an income replacement target, making savings automatic and ideally mandatory, pooling, and having a way to turn those savings into a lifetime income string.

The full findings from HOOPP’s Retirement Security series can be found here.

We thank Darryl Mabini for speaking to Save with SPP. The Saskatchewan Pension Plan provides an excellent way to save for retirement if you don’t have a workplace plan, and it offers annuities to turn your savings into a lifetime pension. Find out more at www.saskpension.com.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22