Tag Archives: Benefits Canada

Mar 30: Best from the blogosphere

Is Freedom 55 changing to Freedom 70?

Younger people are, for the most part, saving away merrily for retirement. But new research from Mercer, reported on by Benefits Canada, suggests the younger set may be going about things too conservatively.

That, in turn, could force them to keep working until age 70, the article explains.

Why?

“The report found millennials often opt to invest conservatively in low-risk, short-term investments such as money market funds. Using this strategy means many younger workers may not be able to retire until they’re 70,” the magazine reports.

(Save with SPP will remark that at the time of writing, with stock markets making thousand-point daily swings, “low-risk” investments are sounding pretty good.)

However, Benefits Canada reminds us, it’s not short-term results that matter with retirement savings – it’s a long haul from being a perky young person to a grey-haired gold watch recipient. Your rate of return over the long-term, not the short-term, is what really matters.

A more balanced approach, the magazine reports – citing the Mercer findings – such as “a healthy mix of equities and bonds” could allow our millennial friends to log off for the last time as early as age 67.

Equities carry risk, the article notes, but millennials need to aim for a long-term rate of return of six per cent or better to reach retirement savings targets. “A savings rate that’s any lower than six per cent total annual combined employer and employee contributions means retirement may not be possible at all,” Benefits Canada warns.

Other retirement-limiting factors for millennials include debt, paying off student loans, and entering the expensive housing market,” the magazine notes. “Those factors make age 65 retirement very unlikely for most millennials.

It’s a similar story for the slightly older Gen X group, the article reports. Those age 45 should be trying to ensure that they contribute 17 per cent of their gross earnings (this includes their own contributions plus any employer match) towards retirement savings, the article adds.

Even boomers, who generally had better access to workplace pension plans, are going to find it hard to leave work by age 65, Benefits Canada tells us. “One factor delaying retirement age for boomers is the shift from DB to defined contribution plans, requiring a mindset shift many aren’t making, said the report. Also, employers offering less conservative investment vehicles, such as target-date funds, didn’t become commonplace until 2010, which likely proved too late for some boomers,” the article explains.

Do you see the common thread here? Those who save early in a balanced savings vehicle have a better chance of hitting their retirement goals. Those starting in their 40s need to chip in much more, and once you are 60 plus you better hope you have a pension plan at work, because your savings runway is running out of pavement.

It sounds daunting, for sure. But if you are looking for a balanced approach to saving for retirement, the Saskatchewan Pension Plan offers the Balanced Fund, which has averaged an impressive eight per cent rate of return since its inception in the 1980s. With SPP, you decide how much to contribute – you can start small when you’re young, and ramp it up as you get older. Fees are low, and the level of expertise by SPP’s investors high. Be sure to check out SPP 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Feb 3: Best from the blogosphere

Many plan post-retirement work, but few actually do: RBC survey

You’re forever hearing folks who haven’t done a lot on the retirement savings front say that their retirement plan is to just keep working.

However, a recent Benefits Canada article, citing new research from RBC, brings up some interesting findings that may throw a bit of water on those “keep working” plans.

The survey asked a group of pre-retirees if they planned to keep working, either full or part-time, after they retired. Half of those surveyed said yes, they’d keep at it.

But when actual retirees were asked if they were still working, only 11 per cent “reported they actually had returned to full or part-time work,” the magazine advises us.

The pre-retirees had many reasons for planning to work after retirement, the article notes, including “staying active mentally (68 per cent) and physically (48 per cent), staving off boredom (44 per cent) and generating income (43 per cent).”

Part of the reason why people aren’t working in retirement, the article notes, may lie in the fact that retirement is not always as “planned” as people expect. More than half of the pre-retiree group (55 per cent) say they “expect to know their retirement date a year or more in advance.” But of the retirees, only 39 per cent said they knew their retirement date well in advance, with 16 per cent “reporting they had no advance notice at all.”

“We know that the majority of Canadians do not have a retirement plan, and those who do are more prepared and confident,” states RBC’s Rick Lowes in the Benefits Canada article. “A plan helps you understand all your options so you don’t have to make major trade-offs to enjoy the retirement lifestyle you desire.”

Findings in the UK, reported on by the Daily Express, reached a similar conclusion. There, “nearly two-thirds of people who retired earlier than expected said they were forced to stop working rather than choosing to leave due to no longer needing the income,” the newspaper reports.

The chief reason they stopped working early related to health or physical problems (40 per cent), followed by being “made redundant” or losing their job (18 per cent), followed by eight per cent who left work to care for a family member, the story informs us.

In the UK study, the Daily Express notes, less than one in five people (17 per cent) had sufficient savings to be able to retire earlier than they expected.

There seems to be a sort of sunny view of retirement from pre-retirees that is tempered by the experiences of actual retirees. The idea that one can pick a retirement date a year or more out, and then keep working away afterwards, seems to be challenged by the findings of research.

The majority of retirees didn’t pick a date, with some not having a choice at all. Health, losing a job, caring for a loved one all play a part in determining whether or not we can keep at it on the job front. Only 17 per cent said they had enough savings to be able to pick their own day, thanks to personal retirement piggy banks and/or pensions at work.

Most of us don’t have a pension plan at work. Saskatchewan Pension Plan, a do-it-yourself DC pension plan that handles the heavy lifting of investment and generating a lifetime pension for you. Join the 33,000 SPP members who have watched the plan generate returns of 8 per cent annually since the plan’s inception in 1986.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Jan 27: Best from the blogosphere

US looks at making retirement plans easier for small businesses to offer

Up here in Canada, workplace pension plans are becoming scarce, especially for small, private sector employers.

It’s the same story in the USA – however, a report in Benefits Canada suggests that our friends south of the line are getting encouragement from their government to roll out more retirement programs for small business employees.

The article reports that “the Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act, won final congressional approval” late last year, and has been signed into law by President Donald Trump.

One of the more interesting angles of this legislation, the magazine notes, is that it will make it easier for “small businesses to band together to offer 401(k) and other retirement plans. The option, called multiple-employer plans, lower the costs of administering a plan.”

A 401(k) is a defined contribution-like product that is similar to an RRSP. Unlike an RRSP, the 401(k) can have an employer match. So instead of each small business having to face the cost of setting up and administering its own 401(k), this new legislation would allow them to join together with other small companies to form a multi-employer plan – a plan for multiple businesses. This would greatly lower administration costs, the article notes.

As well, the old $500 credit US businesses got for starting a retirement plan has increased ten-fold to $5,000, the article reports.

It’s hoped, the article concludes, that this new legislation will increase access by companies with less than 50 employees to retirement benefits – right now, only half of them have any kind of retirement program through work.

The 401(k) program got a boost recently from Alan Greenspan, former head of the US Federal Reserve, although it was a bit of a backhanded compliment.

In a recent interview broadcast on BNN Bloomberg, Greenspan suggested that the American equivalent to the Canada Pension Plan, Social Security, be changed from its current defined benefit mode to a 401(k) like defined contribution model.

“The source of the problem is that we have a defined-benefit program for social security…  what we need to do is go to a defined contribution program… that will put a damper on our major problem,” he says in the interview. The concern in the US is that the Social Security program, paid entirely out of tax revenue, is not sustainable for the long term.

Putting the two thoughts together, perhaps having more workplace retirement programs is a good thing if the Social Security program that backstops US retirement isn’t in the best of health. Let’s choose to focus on the good news that a federal government is making it easier for small businesses to offer retirement benefits.

If you don’t have a workplace pension plan, or you do but want to contribute even more towards your retirement, the Saskatchewan Pension Plan is a logical place to start. The SPP offers the winning combination of low fees, a strong track history of growth, and the ability to convert your savings into a lifetime stream of retirement income. It’s a one-stop retirement centre – 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Jun 24: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Be sure you don’t miss out on pension benefits from long-ago work

When this writer was a young reporter in the 1980s, it seemed that moving to a new job took place every year or two. It’s quite common, in fact, for people to have many different jobs over the course of their careers.

So it’s not that surprising that some of these folks had pension or retirement savings through their old employers that they’ve forgotten about – and that unclaimed pension money is still there, looking for them.

A recent report in Benefits Canada took a look at the size of this problem. While no one knows exactly how much unclaimed pension money is out there, “the federal government says the number could be rising with people switching jobs more often, qualifying for plans faster, retiring abroad more often and not updating their mailing address because of increased reliance on online accounts,” the magazine reports.

The Ontario Teachers’ Pension Plan, for instance, “has about 30,500 members it can’t locate,” the article says. In the UK, an estimated $682 million in unclaimed pension money is piling up in various accounts, hoping to be reunited with its owners.

When the various plans can’t reach members, they’ll try tracking them down “through Equifax, search firms, and the Canada Revenue Agency,” the story notes. Unfortunately, there are so many fake CRA calls out there now that many people don’t respond, believing it all to be a scam, the article adds.

So what should you do if you think you might have had benefits in a retirement plan of a long-ago employer?

The article recommends that you “call up the human resources or pension administrator at the old company. If the company has been taken over, gone bankrupt or is otherwise hard to find, (you) can try getting in touch with the provincial regulator.”

If you think you may be missing out on benefits from long ago, it’s a good idea to make that call.

Take a tip and help your retirement

The Retire Happy blog offers some great tips to help you plan for retirement.

First, the blog notes, “take care of your health and make fitness a priority.” As well, “prepare for the retirement process by having a good idea, in advance, of what your income will be as well as your expenses,” the blog advises. The idea here is to have no surprises.

A third great bit of advice that many retirees wish they had taken is to “pay off debts while you are still working.” The blog notes that a surprising 59 per cent of retirees are in debt, and “for 19 per cent, that debt has grown in the last year.” The blog advises “laying off the credit cards” before retirement and remembering that in nearly every case, your retirement income will be less – not more – than what you were making at work.

Save with SPP has an additional tip to add to these excellent suggestions, and that is this – start saving early. The earlier you start saving for retirement, the more you’ll have when work is a fading memory. You can start small and grow your contributions to savings when you get a raise or a bonus. A terrific tool for your retirement savings program is the Saskatchewan Pension Plan; be sure to 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Jun 10: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Millennials need to boost their savings discipline

A story from CNBC, citing research from U.S. bank Wells Fargo, suggests younger folks, “those who grew up… listening to Bon Jovi” have a harder road to retirement than their Beatles-fan parents.

The Wells Fargo report, called Reimagining Retirement, looks at the savings needs of all the different generations, and reaches some interesting conclusions.

Assuming, the article notes, that you will need to save $1 million to self-fund your retirement, younger people will have to be more self-reliant. “Millennials, less likely to have a traditional pension than baby boomers, need to develop financial discipline. Members of Generation X, finding themselves in their peak earning years, need to ramp up their savings right now,” the article notes.

The report itself shows some of the barriers younger people have to face when it comes to saving (remember, this is U.S. data, but it probably paints a similar picture to what is going on here). The report notes that “65 per cent of GenXers’ monthly income goes towards meeting monthly expenses,” and that only “48 per cent of GenXers agree that they are saving enough for retirement.” The GenXers are advised to avoid dipping into their retirement accounts for non-retirement purposes, to sign up for any retirement savings plans available at work, and to “invest for growth.”

Millennials, the report says, find basic financial skills to be “intimidating.” A surprising 32 per cent of this age group don’t “believe the stock market is a good place to grow their retirement savings,” the report notes. For this group, the advice is to sign up for any retirement programs work may offer, and to try to move any work-related savings with you when changing jobs. They are advised to avoid being too conservative when investing (avoiding risk) and avoid getting caught up in “the latest investment craze.”

Retirement can last a really long time!

Writing in Benefits Canada, Simon Deschenes, a partner at  Eckler Limited, notes that when he was growing up in the 1980s, people living to age 100 “made the news,” it was that rare and unlikely.

These days, he writes, actuaries assume that males age 65 “will live to about age 88 and females age 65 will live to age 90 – and that’s for the average Canadian pensioner.” He notes that he recently “came across two statistics that blew my ‘80s childhood mind – the chance of one half of a retired couple, both age 65, reaching 94 is about 50 per cent.” The chances of one member of that couple reaching age 100 is a surprisingly high 10 per cent, he adds.

He concludes by saying the “risk” of living a really long life (known in the industry as longevity risk) should be a major consideration for retirees in how they draw down their savings; he also suggests the new advanced-life deferred annuities are a new tool worth looking at that can bolster your retirement income if you live a really long time.

The Saskatchewan Pension Plan has you covered if you are worried about outliving your savings. SPP has a wide variety of annuity options, check out the SPP Retirement Guide for full details.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Jun 3: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

When working becomes the new saving

The boomers are often blamed for having had an easy time of things versus the younger generations – lower costs for education and housing, better employment opportunities, and so on.

Despite this apparent rosy and opportunity-ridden life path, however, new research shows that boomers – even the youngest tier – haven’t been savers.

According to a study by Franklin Templeton Investments Canada, reported on via Benefits Canada, a stunning 21 per cent of “younger baby boomers” haven’t saved anything for retirement.

Young boomers, “defined as those between the age of 55 and 64,” have a simple solution to their lack of saving, the article notes. Forty-six per cent of them, the report states, “said they would consider postponing retirement.” In plainer terms, they are extending their careers.

How long will the extension be? “Fifteen per cent of Canadians said they expect to work until the end of their life and 22 per cent said they don’t ever plan to retire,” the article states. However, paradoxically, about half of the young boomer group (54 per cent) “retired earlier than expected,” the article explains.

It’s sort of hard to imagine people working on into their 70s and 80s. Even if there is work to be had, will people’s health be good enough for them to keep at it? At best it seems like an iffy option.

“With life expectancy increasing and retirement savings becoming ever more challenging, due to the high costs of living, we are seeing increased concern over having enough money for retirement across all generations,” states Franklin Templeton’s Matthew Williams in the Benefits Canada article.  “Although it’s never too late to start saving, the best time to start contributing to retirement savings vehicles is when a person starts out in their career and may not have big financial commitments like a mortgage or childcare costs, and to find a way to maintain healthy savings habits as they age.”

Saving for retirement gives you options. You may be able to work less, and ultimately, not at all if your own savings augment your government retirement benefits. Your savings will also provide extra income, over and above that of any workplace pension you may be able to join.

If you haven’t started down the saving path, the Saskatchewan Pension Plan is worth a hard look. It’s open to any Canadian citizen, it’s been professionally run since the 1980s, has a strong record of good investment returns (at a low management expense) and has many options to turn your savings into an income stream when you retire.

Don’t let working be your savings plan – sign up for SPP 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 29: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Should 67 become the new 65?

While many of us were brought up expecting Freedom 55, a new report by the Canadian Institute of Actuaries suggests we might all enjoy things better if it was Freedom 67.

The report, featured in Benefits Canada points out that since Canadians are working longer and therefore, retiring later, government benefits should be pushed out farther into the future.

“Canadians are living longer than ever, and many are choosing to work beyond age 65,” John Dark, president of the CIA, states in the article. “It makes sense to update our country’s retirement income programs to reflect this fact.”

Save with SPP interviewed Dark about the research, you can find that story here.

The article notes that men now live nearly 19.9 years after age 65 on average, and women, 22.5. This longer life expectancy, coupled with people working longer, is the reason given for considering system changes, the article states.

The changes the CIA suggests are moving CPP/QPP and OAS “full” benefits from age 65 to 67. The earliest you could get benefits would move from 60 to 62, and the latest from 70 to 75, the article notes.

“In addition to the financial benefit of receiving higher lifetime retirement income, our proposal provides financial protection for retirees against the cost of living longer and the significant erosion of savings from the effects of inflation,” states Jacques Tremblay, a fellow of the CIA, in the article.

Moving the age of benefits has been tried before. There are important considerations to take into account. First, are people working longer because they want to, or because they can’t afford to retire? Moving the goalpost on those benefits may not help people in that boat.

And secondly, we can’t assume that everyone is healthy enough to work past 65 and into their 70s. It will be interesting to see if the CIA’s recommendations are heeded by government.

Retirement’s value outweighs all financial concerns

Many authors have noted that the value of actually being retired outweighs most financial concerns about getting there.

From the Wow4U blog here are some great quotes about retirement.

“We work all our lives so we can retire – so we can do what we want with our time – and the way we define or spend our time defines who we are and what we value.” Bruce Linton

“The joy of retirement comes in those everyday pursuits that embrace the joy of life; to experience daily the freedom to invest one’s life-long knowledge for the betterment of others; and, to allocate time to pursuits that only received, in years of working, a fleeting moment.” Byron Pulsife

“Retirement life is different because there is no set routine. You are able to let the day unfold as it should. Enjoy, be happy and live each day.” Suzanne Steel

Whatever happens, if anything, to government benefits, it’s a wise idea to put money away for your own future retired self. The Saskatchewan Pension Plan offers great flexibility, professional investing, and a variety of options for retirement, whether you plan to start it early or late.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 15: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

DC industry looks at automatic enrolment, waiving waiting periods

Getting people to save for retirement is never easy – even, it seems, if they have a defined contribution (DC) workplace pension plan.

A report in Benefits Canada on their recent DC Summit held in Banff, Alta., says a roomful of DC sponsors, industry officials and investment people “recently compiled a wish list for DC plans.”

On that list – auto-enrolment and mandatory contributions. As well, the sponsors discussed “the suggestion to shorten or eliminate any probation period required before new employees can join a workplace plan.”

Auto-enrolment, the article explains, has already been rolled out in the UK. The idea is that instead of letting an employee decide whether or not to join, you just automatically enroll them – if they don’t want to be in the plan, they can opt out. This “nudge” approach works, because most people, once in, don’t bother to opt out.

The other ideas are similar – mandatory contributions meaning, once you are in, you stay in, and can’t decide to stop contributing. And getting rid of waiting periods would ensure people join more quickly, allowing them to contribute more.

The author of the article, Jennifer Paterson, explains it all very well. “For my part, I’m extremely supportive of this type of legislation. I believe one of the most fundamental barriers to retirement savings is inertia, so I welcome anything the government and employers can do to ensure people automatically join a workplace plan with mandatory contribution levels, and do so as soon as possible.”

Save with SPP agrees strongly. Workplace pension plans of any sort are increasingly hard to come by in most private sector companies, so it is essential that those who can join, do. They will certainly thank themselves in the future for having done so.

Another nice trend spotted lately is the return of savings optimism, not seen for some time. A recent CNBC survey found Americans were more confident (30 per cent) or much more confident (27 per cent) about their ability to save for retirement versus three years ago.

“With the economy in its 10th year of expansion, wages creeping up and unemployment below 4 per cent, experts say being in a better place financially is a good opportunity to address your savings anxiety,” the article notes.

If you are fortunate enough to have a retirement program at work, be sure to join it if you haven’t already. And if you don’t, the Saskatchewan Pension Plan provides a way for you to create your own plan. Once you enrol, you can set your level of contributions and can choose to increase what you pay in whenever you get a raise. And SPP is a full-featured plan, in that there’s a simple way, once you retire, to turn those hard-saved dollars into income for life. Be sure to check it 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Feb 4: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Just six per cent of Canucks plan to save for retirement in 2019

A mere six per cent of Canadians intend to make retirement saving a top financial priority in 2019, according to research from CIBC published in Benefits Canada.

The reason? They’re swamped with debt, the magazine notes. Paying down debt was the top priority in the research, followed by “keeping up with bills and getting by, growing wealth, and saving for a vacation,” the magazine reports.

CIBC’s Jamie Golombek, who was interviewed by Save with SPP last year,  says debt can be a useful tool, but if you are using it for day-to-day expenses, “it may be time for cash-flow planning instead.”

Golombek, who is Managing Director of Financial Planning and Advice at CIBC, says despite the fact that paying down debt is a legitimate priority in any financial plan, retirement savings can’t be totally overlooked.

“It boils down to trade-offs, and balancing your priorities both now and down the road. The idea of being debt-free may help you sleep better at night, but it may cost you more in the long run when you consider the missed savings and tax sheltered growth,” he states in the article.

Obviously, paying off debts in the short-term does feel more like an imperative than saving for the future. After all, the telephone company and the credit card folks will certainly let you know if you’re late with a payment with helpful, blunt little emails and terse phone messages. No such calls come from your retirement savings team.

But even if retirement savings isn’t a squeaky wheel today, you’ll depend on it one day. A Globe and Mail article from a couple of years ago noted that half of Canadians, then aged 55 to 64, did not have a workplace pension plan, and of that group, “less than 20 per cent of middle-income families have saved enough to adequately supplement government benefits and the Canada/Quebec Pension Plan.” The Globe story cited research from the Broadbent Institute.

Government pensions won’t usually replace all of your workplace salary, so if you don’t have a pension at work, you really need to find a way to save. An excellent choice is the Saskatchewan Pension Plan, where you can start small and build your savings over time. You can set up automatic deposits, a “set it and forget it” approach. All money saved by the SPP is invested, and when it’s time for you to start drawing down your savings, they have an abundance of annuity options to produce a lifetime income stream for you.

Be a six per center, and make retirement savings a priority in 2019!

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