Healthcare of Ontario Pension Plan

Nov 21: BEST FROM THE BLOGOSPHERE

November 21, 2022

Employers top fear is losing employees; some see retirement benefit as a retention tool

New research from the Healthcare of Ontario Pension Plan and the Angus Reid Group finds that the top concerns for Canadian employers this year are “employee burnout and losing staff,” according to a HOOPP media release.

And, the release notes, “while employers recognize the value of retirement benefits for addressing these concerns, the current high-inflation environment is driving them to favour wage hikes instead.”

The research involved 778 Canadian business owners with 20 or more employees, the release states.

“Current inflationary pressures are understandably leading many employers and workers to prioritize cash in hand, even as they recognize the short- and long-term value of retirement benefits,” states Steven McCormick, SVP, Plan Operations, HOOPP, in the media release. “It is arguably more important than ever for leaders – in business, government and the retirement industry – to take measures that will help workers save for retirement, even when it’s challenging to do so.”

And, the release continues, 17 per cent of the organizations surveyed had indeed improved or introduced retirement savings plans in the past year, or “plan to do so in the year ahead.”

The other good news found through the research is a feeling of optimism among business owners about their prospects, the release continues. Eighty per cent said they “are optimistic about their business’ success over the coming year,” the release tells us.

“What they’re worried about is employees, with leading concerns being: greater competition for hiring (82 per cent), employee burnout (79 per cent), labour shortage (79 per cent) and high turnover (77 per cent). A strong majority are also worried about inflation (82 per cent),” the release notes.

That’s why, the release continues that 67 per cent “favour wage increases over benefit enhancements” as the best way to “mitigate” inflation’s impacts for employees, while 71 per cent see wage increases as the best “means to attract new employees.”

“Some employers may be underestimating the degree to which retirement benefits can serve both their business needs and their employees’ needs,” states Demetre Eliopoulos, Senior Vice President, Public Affairs, Angus Reid Group in the release. “The survey found some significant correlations between benefits and a happy, productive work force.”

Sure, wage hikes are great in the short term, but it’s the long term most people should be worrying about. When you leave the workforce, you’ll still need money to pay your bills, and benefits from the Canada Pension Plan and Old Age Security are pretty modest. Having a workplace pension plan equips you for that future – you’ll probably be able to stop working earlier, and you’ll enjoy a higher level of retirement income security.

We often note that for those of us without a retirement program at work, the Saskatchewan Pension Plan provides everything you need to create your own plan. But that’s also true if you are an employer thinking of offering a retirement program for your employees. SPP can make it easy for you to provide this benefit, which helps retain your employees in a time when staff shortages are the norm. Contact SPP for information on how you can offer our pension plan to your employees!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


JUL 11: BEST FROM THE BLOGOSPHERE

July 11, 2022

Even if you have zero saved for retirement, these steps will get you started

One of the findings of a recent survey from the Healthcare of Ontario Pension Plan (HOOPP) was that “32 per cent of working Canadians said they have yet to save anything for retirement.”

South of the border, reports GoBankingRates via Yahoo! Finance, the situation is similar, with 23 per cent of Americans having saved nothing for retirement, and “25 per cent of Americans between 45 and 55 years old” not having even started saving.

Like dieting and going to the gym more often, saving for retirement is something we know is good for us but is easy to avoid doing. GoBankingRates offers a few ways to fire up your own personal retirement savings program.

The first step is to start budgeting, the article notes. “When payday comes around, it’s tempting to pay for immediate expenses, such as rent and groceries, and use the rest of that money for spending and splurging. Instead, you should consider budgeting,” the article urges. “By setting aside a little money every month towards retirement, you will be able to enjoy that money in the future,” states Jay Zigmont of Live, Learn Plan in the article.

Next, the article continues, is addressing your debt load.

“Debt is a frustrating thing to have, but the sooner you are able to eliminate it, the more money you will have for saving for retirement, investing and spending,” the article tells us. This is a very valid point. Next time you get your credit card bill, see how much interest you were charged on the balance over the last month. That amount could go to savings if you were able to pay off the card.

To target your debt, the article advises you to first be sure to make at least the minimum payment on all debts. They then advise that you put any extra money you can on the debt with the highest interest rate. Once that one’s gone, add what you were paying on high-interest debt 1 to high-interest debt 2, and repeat until you are debtless.

A third idea in the article is goal-setting for savings.

“Make sure you know why you are saving,” Zigmont states in the article. “What do you want your retirement to look like? What are you willing to give up to get there? What is the dollar number you need to hit to retire? When do you want to do it by?”

If you want, for example, to have $20,000 in savings for 20 years of retirement, a target might be $400,000. For simplicity, we are not talking about interest rates and investment returns in this example, but both can help you get there.

Other ideas from GoBankingRate include investing your savings, rather than putting it all in a savings account. “Follow the general rule of only investing in things you understand,” Zigmont states in the article. “Take the time to learn what your options are and be sure to understand both what you are investing in.” In Canada, your choices include workplace pension plans, the Saskatchewan Pension Plan, registered retirement savings plans (RRSPs), Tax Free Savings Accounts (TFSAs) and plain old cash trading accounts. Be sure you know the limits and rules for each type of investment vehicle.

The final advice in the article is to “take ownership” of retirement. “The key to retirement is making it your own,” the article concludes. Do you want to fully retire, or move to part-time work? Having an idea of what your own retirement will be like will help guide your savings plan, the article concludes.

Over many years of reviewing books for Save with SPP, there was one piece of advice that really stood out, and actually worked for us when money was tight. That idea was to put aside five per cent off your pay for savings right off the top, and then live on the rest.

A barrier to savings is the feeling that you won’t have anything left over after bills and groceries. But if you take five per cent off the top, and put it somewhere where you can’t get at it to spend, you’ll be amazed how quickly the savings start to add up, and how little you miss the five per cent (eventually).

A safe and secure cookie jar for your newfound savings is available through SPP.

With SPP, you can stash away up to $7,000 per year in a locked-in, voluntary defined contribution plan. “Locked-in” means you can’t raid your savings for non-retirement expenses; you can only access the money once you reach retirement age. And during that run up, your money will be invested professionally and at a low cost. SPP is a sensible savings option available to any Canadian with RRSP room; check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


JUL 4: BEST FROM THE BLOGOSPHERE

July 4, 2022

HOOPP research shows saving for retirement is a struggle for most

New research from the Healthcare of Ontario Pension Plan (HOOPP) finds that while Canadians view retirement savings as a priority, few are able to do much about it.

A media release from HOOPP outlines some of the key findings of the research, carried out for HOOPP by Abacus Data.

“Saving for retirement is the number two priority amongst Canadians, with 53 per cent citing it (affording the day to day was number one, at 62 per cent), but many are struggling to accomplish it. Thirty-two per cent of working Canadians said they have yet to save anything for retirement, and 38 per cent said they have saved nothing for retirement in the past year,” notes the release. 

So, how are people planning to pay for their retirement, if they aren’t saving?

The research found that “nearly half of Canadian homeowners are planning to rely on the sale of a home to set themselves up for retirement (45 per cent), but that plan is becoming increasingly risky in the current environment,” HOOPP reports.

“The general outlook for retirement security in Canada is darkening,” states David Coletto, CEO of Abacus Data, in the release. “Seventy-five per cent of all Canadians agree there is an emerging retirement crisis in Canada and 72 per cent feel that saving for retirement is prohibitively expensive — both up seven points over last year. And if current trends continue, it will be tougher for younger generations.”

David Coletto spoke to Save with SPP a couple of years ago on the issue of millennials and retirement saving.

So if, as the research suggests, the price of housing is so high that there’s no way to get into real estate while also saving for retirement, what’s the solution?

HOOPP’s Senior Vice President of Plan Operations, Steven McCormick, states in the release that the answer may be wider access to workplace pensions.

“Savings challenges are more acute for younger adults, but there is an agreement across generations that an important solution to the problem is better workplace retirement savings plans, and that everyone has a role to play on this front,” states McCormick in the article.

The release notes three interesting findings from the research:

  • 82 per cent of Canadians agreed that all workers should have access to a pension that guarantees a percentage of their working income in retirement. Sixty-six per cent are willing to pay for this access themselves by accepting a slightly lower salary in exchange for a better (or any) pension.
  • 77 per cent agreed that all employers should be required to contribute in some way towards pensions for all workers, and 74 per cent agree governments could save money by supporting pensions that are more efficient.
  • 83 per cent agreed that without good pension plans at work, many Canadian seniors will experience poverty and 77 per cent said workers without pensions will become a burden on the taxpayer. 

HOOPP has long been an advocate for retirement income security, and their latest round of research clearly shows that the problem of having enough to live on in retirement is not one that is going away.

If you don’t have a workplace pension plan – and are one of the majority of Canadians who want access to one – take a look at the Saskatchewan Pension Plan, which is open to any Canadian with registered retirement savings plan room.

SPP offers a voluntary defined contribution plan – the money you contribute is pooled for investment efficiency, professionally invested, and – at retirement – can be converted to retirement income, including the option of a lifetime annuity. SPP has been delivering retirement security since 1986. Check them out today.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Jan 17: BEST FROM THE BLOGOSPHERE

January 17, 2022

Offering a retirement program benefits employers as well as workers: study

Research carried out by the Healthcare of Ontario Pension Plan (HOOPP) and retirement benefits organization Common Wealth has found that offering a pension program for employees offers positive benefits for employers as well, reports Wealth Professional.

The study, titled The Business Case for Good Workplace Retirement Plans, notes that a good workplace pension plan should offer “value drivers” such as “regular automatic savings, lower fees and costs, investment discipline, fiduciary governance, and risk pooling,” the article, written by Leo Almazora, notes. As well, portability – the ability to keep the retirement program even if you change jobs – was seen as a positive feature, the article adds.

Common Wealth’s Alex Mazer states in the article that “having a plan that lets workers keep benefitting from the first five value drivers over the course of their career, even as they go from job to job and into retirement, can translate into hundreds of thousands of dollars in additional wealth accumulated over their lifetime, compared with saving for retirement on one’s own.”

Alex Mazer spoke to Save with SPP a few years ago about ways to encourage more retirement saving, and to make it automatic.

What’s interesting, the article notes, is that employers offering such programs also benefit.

“From an employer’s perspective, being able to offer a good workplace retirement plan is also a powerful tool. According to the research, having a vehicle to help them progress toward retirement is highly prized by employees, as it consistently emerged among the top benefits for recruitment or retention. Beyond that, it can also contribute greatly to improving productivity on the job,” the article reports.

“There’s a real linkage between people’s financial stress and their productivity,” Steven McCormick, senior vice president for Plan Operations at HOOPP, tells Wealth Professional. “In the research we’ve done, three quarters of employers said that any financial stress on an employee has an impact on productivity overall. I think that really makes the case for business owners to see workplace plans as an investment in their business as well as their people.”

Some business owners may see offering a pension plan as just another big expense, but McCormick says there’s a different way to look at it.

“For business owners who may have preconceived notions about the impact of putting a retirement plan in place, we’d suggest they should perhaps take another look,” McCormick states in the article. “They might not have a plan that hits all our five value drivers right off the bat, but we think it’s something to consider building toward to help their staff, their business, and society as a whole.”

This is a great look at an important issue. Let’s not overlook the fact that without a workplace pension plan, the responsibility for retirement saving becomes an individual burden. As well, those without sufficient savings for retirement may find themselves living on the spartan monthly income provided by the Canada Pension Plan, Old Age Security, and – if applicable – the Guaranteed Income Supplement.

Did you know that the Saskatchewan Pension Plan can be leveraged as a company pension plan? Contact us to find out how your company can offer SPP to its employees.

And, if you don’t have a pension program at work, perhaps the SPP can do the job for you. With SPP you get the benefit of low investment costs and pooling, and good governance. You can arrange to make regular, automatic contributions and SPP travels with you if you change jobs. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


July 12: BEST FROM THE BLOGOSPHERE

July 12, 2021

Retirement saving concerns top health, employment and debt: HOOPP research

Writing in the Globe and Mail, Rob Carrick reports on new research that shows Canadians are more worried about retirement savings than they are about their physical and mental health, employment security, and debt burden.

Carrick cites research from the Healthcare of Ontario Pension Plan that found that, of 2,500 respondents, “48 per cent said they were very concerned about have enough money in retirement. Only the cost of day-to-day living ranked as a larger worry. Health and other financial/economic worries lagged well behind.”

The survey was carried out in April 2021, and clearly the pandemic has had an impact on people’s attitudes towards their finances, Carrick reports. “The poll results suggest 52 per cent of Canadians have been financially harmed by the pandemic, notably younger and lower-income people,” he writes.

Carrick notes that another recent survey by the Canadian Centre for Policy Alternatives that found that “Indigenous and racialized seniors… have average retirement income that is, respectively, 25 per cent and 32 per cent lower than seniors who are white.” But, he points out, the HOOPP research shows that even those with higher incomes are worried about retirement income – “42 per cent of those making more than $100,000 said they were very concerned about their retirement savings,” he writes.

Carrick sees a glimmer of good news mixed in with all the gloom, and that is, that the pandemic creates, for many of us, an opportunity to save.

“One more highlight for the well-off is the opportunity to save more money than ever as a result of economic lockdowns that curtailed travel, concerts and commuting to work for many. In the HOOPP survey, almost half of participants said they were able to save more money,” he notes.

He suggests that while those who have managed to stay employed throughout the crisis and have some unspent money should definitely sock some of it away in an emergency fund, retirement savings is a logical destination. “A lot should be put away for retirement using tax-free savings accounts and registered retirement savings plans,” writes Carrick.

The HOOPP survey found that Canadians generally are concerned about the national retirement savings rate. “Sixty-seven per cent of participants agreed with the statement that there is an emerging retirement crisis,” Carrick reports.

Those surveyed cite the rising cost of living, the “prices home buyers are paying,” and inflation as being inhibitors to retirement saving. Save with SPP will add another factor – high household levels of debt – to this category.

It’s easier to save for retirement if you belong to a pension program at work. The money comes off your pay before you have time to spend it. But if you don’t have a workplace plan, the Saskatchewan Pension Plan may be a solution. With SPP, you can set up automatic withdrawals that can coincide with your payday, allowing you to pay your future self first. The folks at SPP, who have been running retirement money for 35 years now, will diligently invest your savings and – when work is in the rear-view mirror – will help you turn savings into retirement income. Check them out today.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Mar 1: BEST FROM THE BLOGOSPHERE

March 1, 2021

Is shopping for a good retirement plan getting too complicated?

A lot of ink (or perhaps, pixels) gets spent on why Canadians aren’t saving for retirement in sufficient numbers and amounts.

But an equally important question is raised in a recent article by three leading retirement experts – are the retirement products out there getting too complicated?

The article appears on the Common Wealth site and is authored by Jim Keohane, recently retired CEO at the Healthcare of Ontario Pension Plan, and Common Wealth founding partners Alex Mazer and Jonathan Weisstub.

The article asks if employers offering retirement programs – and members joining them – are being well served by the retirement industry. For starters, the trio writes, most group retirement plans offer a dizzying array of choices.

“The traditional industry’s focus on a high degree of investment choice is based on a flawed premise: that employees and plan sponsors have the desire and capacity to engage in the choosing and ongoing management of the investment of their retirement savings. If our goal is to help employees achieve retirement success in the most cost-effective way — which it should be — then a better focus should be not on choice but on simplicity,” the authors write.

Today’s typical choices for group plan members are far from simple, the authors note.

Service providers – typically banks and insurance companies – sell their services to employers “on the basis that they have hundreds of funds and dozens of managers to choose from,” the article notes.

Providers have thus become “supermarkets of funds, outcompeting each other for who could offer the greatest selection,” Common Wealth notes.

But there are downsides to giving employees – the folks who will actually want retirement income from these products – all that choice, the article warns.

A study by Columbia University in the U.S. found that “greater investment choice led to lower participation” in retirement programs, with plans offering 10 choices or less getting the highest participation.

Streamlining choices could result in greater savings – up to $10,000 U.S. per employee, found a study by the Wharton School.

And even highly-educated investors “make common mistakes,” such as paying too much in fees, when selecting investments for retirement, says research from Yale and Harvard.

Will the average person, the article asks, know what asset mix to select? Will they fall into the trap of trying to time the market? Will they “chase performance” by tending to choose investment products that have done well recently? The article goes on to focus on the higher costs end-users pay for having all that investment choice, which they pay for via higher fees.

The authors say a simpler way to go exists.

The use of “target date” funds is said to increase wealth by up to 50 per cent, the authors note, citing Wharton School research. Other simplification ideas include:

  • Using “smart defaults” in retirement products, so those who don’t make a choice are automatically moved into a fund that is “appropriate for their age and desired retirement date.”
  • Removing choices for employers, who have “little interest in becoming investment experts.”
  • Using an “index-based approach” rather than trying to beat the markets.
  • Work with “world class” providers, rather than smaller ones trying to create a supermarket of choices.

The authors conclude by pointing out that the goal of offering a retirement program is “helping people secure the best possible retirement outcomes for themselves and their families.” Boxing people into programs where they have to make complex investment choices can “cost employees tens or even hundreds of thousands of dollars.”

Save with SPP can personally attest to a lot of this. When saving on your own – especially if you don’t have any professional advice – you will tend to gamble a bit with your own future income. One remembers being told by friends, for instance, that Nortel “would come back,” and that money could be doubled by the then-booming tech market. Not so much, it turned out.

If you are looking for a simple, “set it and forget it” pension plan that takes care of tricky decisions for you, think about the Saskatchewan Pension Plan. With SPP, there are two funds to choose from – The Balanced Fund, or the Diversified Income Fund. Both funds are professionally invested for you. As well, the SPP is “full service,” in that after it has grown your savings, it provides you several options for collecting income when you retire, including lifetime annuities. Let the pros do the heavy lifting for your retirement – check out SPP today.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Workplace pensions can ease pandemic financial worries, panelists say

December 3, 2020

A recent online event, COVID-19 and Canada’s Workforce: A Crisis of Financial Security, suggests the pandemic has thrown a wrench into the retirement plans of Canadians.

The event, hosted by the Healthcare of Ontario Pension Plan (HOOPP) and Common Wealth, took a look at how the pandemic is impacting our finances.

Common Wealth’s founding partner, Alex Mazer, noted that even before COVID-19, 43 per cent of Canadians were living cheque to cheque. Forty-four per cent had less than $5,000 in emergency savings, and 21 per cent had less than $1,000, Mazer says.

On the retirement savings front, Mazer says, things are even bleaker. “The median retirement savings of near-retirement households is only $3,000,” he notes. Four of 10 Canadians have no retirement savings at all, and 10 million lack any kind of workplace pension program.

With the pandemic now impacting work and income, many Canadians “don’t feel they have the capacity to save… and that is a real problem for our society,” he warns.

Citing recent research from FP Canada, Mazer noted that worries about money impact our performance at work. That research found 44 per cent of Canadians are “stressed” about their finances, and research from the Canadian Payroll Association found we are spending “30 minutes a day worrying” about money.

“If you are worried about your finances, it’s hard to bring your full self to work,” Mazer notes.

He noted that the lack of workplace pensions, long considered a pillar of Canada’s retirement system along with government pension benefits and individual savings, is having a negative impact.

“The greatest weakness in the Canada’s retirement system is the lack of workplace pensions,” he says. Coverage levels today are at about half of what they were in the 1970s.

Mazer is a proponent of giving more Canadians access to pension programs; he says the most efficient types are “large scale pooled plans, or large Canada model (defined benefit) plans.” Both types feature retirement saving at low fees, professional investing, and risk pooling, he explains.

Elizabeth Mulholland, CEO of Prosper Canada, says 47 per cent of people working in the non-profit sector work freelance or part time, and face lower pay. “Insecurity is a way of life for our sector,” she says.

She notes that 28 per cent of Canadians have raided their registered retirement savings plans or Tax Free Savings Accounts due to the pandemic. “They have depleted their already inadequate retirement savings, and are now further behind due to COVID,” Mulholland says, adding that the pandemic has been “a wakeup call for the financial vulnerability of Canadians.”

Pension plans should consider automatic enrolment – an “opt out” feature rather than “opt in” – and need to be flexible for part-time workers. She says support for workers with general financial literacy would help them make the most of their retirement benefits.

Bell Canada Vice-President, Pension & Benefits and Assistant Treasurer Eleanor Marshall says her company’s pension plan is appreciated by employees. “Eighty per cent strongly value the pension plan,” she explains.

When COVID hit, she says, “there were a couple of responses from our employees.” Top priority, she says, was health and safety and social distancing. Next was job security. But the third concern was their pension plan and its investments.

Marshall says there needs to be more emphasis on individuals building emergency savings for situations – such as during the pandemic – when they need to “bridge the gap” for a period of job loss.

Pension plans, she adds, are important “for attracting and retention.” While younger employees don’t worry much or think about their pensions, they “will eventually appreciate having a pension plan” once they get older.

In general, Marshall said, there’s a link between financial wellness and mental wellness, and delivering a retirement system for employees is a positive measure on both fronts.

Renee Legare, Executive Vice-President and Chief Human Resources Officer at The Ottawa Hospital, says that during the pandemic, the worry for hospital workers wasn’t so much job security but definitely “their health and wellness.” She says healthcare workers feel lucky to have a good workplace pension.

She says portability – the ability to continue with the pension when you move from one job to another – is a solid feature of the plan. “It’s a major benefit for healthcare workers; they can move from one employer to another without losing their (pension) investment,” she explains.

The event was chaired by Ivana Zanardo, Vice President of Client Services at HOOPP. Save with SPP would like to thank James Guezebroek of HOOPP for directing us to the presentation.

If you’re among the many millions of Canadians who don’t have a workplace pension plan, the Saskatchewan Pension Plan may be the savings program for you. It features low-cost, professional investing and pooling, and since it is a member-directed savings program you can continue to belong to SPP even if you change jobs. SPP can also be offered as a workplace pension. Why not check out it today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


What are the big funds doing about investments during the pandemic?

September 24, 2020
Photo credited to: Chris Liverani

The pension industry has a big footprint.

With the top 300 pension funds around the world managing an eye-popping $19.5 trillion (U.S.) in assets – and with quite a few of those funds being Canadian-based – Save with SPP decided to take a look around to see what our own country’s pension leaders are saying about investment markets.

With $409.6 billion in assets, the Canada Pension Plan Investment Board (CPPIB) is the nation’s largest pension fund. CPPIB has identified four sectors of the economy it thinks will grow in the near future – e-commerce, healthcare, logistics (aka shipping/receiving) and urban infrastructure.

CPPIB expects “massive changes” in those areas, CPPIB’s Leon Pederson tells Tech Crunch. And while CPPIB invests for the long-term, the four areas identified by their research might “indicate where the firm sees certain industries going, but it’s also a sign of where CPPIB might commit some investment capital,” the magazine reports.

The $205-billion Ontario Teachers’ Pension Plan (OTPP) saw small losses in the first half of 2020, reports Bloomberg.

“Some of our hardest hit investments were among our private assets. Heavily-impacted segments were leisure and travel, including our five airports, and assets where consumer spending declined, which is our shopping malls and Cadillac Fairview,” OTPP’s CEO, Jo Taylor, states in the article.

However, losses were cushioned by the plan’s strong fixed-income returns, the article notes – in all, $7.9 million in income from its bond portfolio helped OTPP limit losses.

The $94.1 billion Healthcare of Ontario Pension Plan’s (HOPP) CEO, Jeff Wendling, recently told Benefits Canada that the plan is considering looking at some new investment categories as it pursues its “liability driven investing” strategy. With a liability driven investing strategy, the investment target is not beating stock market indexes, but ensuring there is always enough money to cover every current and future dollar owed to pensioners.

“We’re very focused on liabilities, but what you do when interest rates are at really extreme lows, in our view, is different than what we did in the past,” he states in the article. HOOPP, he adds, is now looking at infrastructure investing, insurance-linked securities, and increased equity exposure to generate income traditionally provided by bonds.

Large pension plans like CPPIB, OTPP and HOOPP have enjoyed a lot of success over the years. The takeaway for the average investor is that the large scale of these plans allow them to do things the average person can’t – like directly owning businesses (private equity), or shopping centres and offices (real estate) in addition to traditional stock and fixed-income investments. The big guys are taking advantage of diversification in their holdings, and so perhaps should we all.

Individuals and workplaces can leverage the investment expertise of the Saskatchewan Pension Plan. Its Balanced Fund is invested in Canadian, U.S. and international equities, bonds, mortgages, and real estate, infrastructure and short-term investments. And the fund has averaged an eight* per cent rate of return since its inception in the mid-1980s. Check them out today.

*Past performance does not guarantee future results.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


What do millennials think about retirement?

April 9, 2020

It’s clear to most of us – especially older Canadians – that younger people have a very different way of doing things. So that said, what do they think about retirement?

Save with SPP spoke recently to David Coletto, founding partner and CEO of research firm Abacus Data. His firm has carried out a lot of research on millennials – indeed, he has a book in the works – and he has noticed quite a few things about how younger people approach money and saving.

“No one young Canadian is going to be the same,” he says. As well, he adds, the current COVID-19 situation was not yet a factor when he carried out his research. However, he notes that the data suggests that some millennials are “as well off as the previous generation,” but others, less so. It really comes down to whether or not they live somewhere where they can afford a home, he explains.

There are reasons why housing affordability is an issue for millennials, he notes. For starters, housing prices in Canada’s major cities are near all-time highs. As a group, millennials do tend to have debt, and “the debt levels are much higher” than those of older generations, he explains. Dealing with heavy debt from student days, or the cost of raising kids, tends to “delay key milestones” for millennials.

“So much of their experience is different,” he says, “that it is difficult for them (millennials) to think of retirement when they are still focused on today. About one-third of this generation is struggling more than their parents did, and they will be less well off as a result.”

Abacus recently did some research with the Healthcare of Ontario Pension Plan that found, among other things, that 80 per cent of respondents would take a job that paid less money if it offered a pension.

Job security isn’t what it once was, Coletto explains. “There’s more freelance work, more part-time work – what we call precarious work, and less pensions available.”

When there’s no workplace pension, the onus for retirement saving falls on the individual. “It’s lower on the list for them, and saving (for retirement) is difficult to do,” he explains. “They are having to manage a lot of other expenses. And we are talking about the pre-COVID era, here.”

“It’s a big chunk that has to go to savings for a down payment, or to pay for a mortgage,” he says.

And it’s not just the workplace that has changed. Millennials are dealing with “a climate change crisis that is existential.” Some “are putting off having a family” over climate concerns, he says.

Millennials therefore tend to want to do things now, while they still can, instead of deferring life experiences and grand trips until they are older. “If the experiences won’t be there, or are not possible, what’s the point of trying to save? Especially when you can’t afford to,” asks Coletto.

Statistics show that only “one in four millennials put any money into an RRSP, and even those that do don’t have a lot of equity in them,” Coletto explains. And while Tax Free Savings Accounts are more attractive to younger people (due to the fact they aren’t locked in) take-up is pretty low there as well.

Absent personal savings, Coletto is concerned that the gap between those with pensions – such as their parents – and those without will create a real split. “There’s an inequality there which will continue to grow,” he predicts.

A way to avoid that scenario might be for Canada to adopt the Australian model for retirement savings, he explains. There, a percentage of every worker’s salary is automatically placed into retirement savings, no matter where you work. The money is then invested by large funds offering pooling and low-cost investing. Moving to an Australian model is “something that needs to be seriously discussed,” he says.

A final piece of advice from Coletto for millennials is this – look at what your parents did for their retirement, and see what you can learn from them.

We thank David Coletto for taking the time to speak with us.

There’s no question that access to a workplace pension is a great benefit for an employer to offer. The Saskatchewan Pension Plan can help. Please contact us for more 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 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

Life after retirement doesn’t need to be scary, says Life Two author Don Ezra

January 30, 2020

We all spend a lot of time worrying about retirement – can we afford it, will we enjoy it, will we feel like we’re on the sidelines of life – but very little is written about what that phase of life is actually like.

Save with SPP reached out to noted retirement expert Don Ezra, whose latest book, Life Two , explores what it’s like in that other place, life after work.

Q. You talk about the “u-curve” and how 70-year-olds are as happy as 20-year-olds, which is a great analogy. What are some of the reasons why retired folks are so happy?

Yes, retirement (which I prefer to think of as Life Two) really is the best time of life. Happiness studies in every country say the same thing: that this is the time when we tend to rate our happiness highest. There are so many reasons.

The neurological reason is that our brain chemistry changes, and we’re less stressed and less driven, and more inclined to be content, and see the glass as half full rather than half empty. Our measuring stick changes.

Even without the science, think of it this way. When we’re kids, we have no money. We have lots of time. When we work and raise a family, we start to accumulate money. But we’re very stressed for time, during Life One, our working life. It’s not until we retire, or at least stop working full-time, that we have both the time and the money to truly enjoy all of life. That gives us freedom!

So think of Life Two as a full life; a mature life rather than an immature one; a happy life rather than a stressful one.

That’s how we ought to reframe retirement.

Q. We love the casino analogy and the advice about investing (safety and growth). Why do you think so many people think they know enough about investing to do it by themselves without professional advice? Is there anything that could be done to help improve general investing knowledge?

It’s strange, really, isn’t it? We don’t think of ourselves as knowing enough about medicine or the law to practise it ourselves. And yet, as you say, so many people think they can do investing by themselves. It’s a field of study, a discipline that requires expertise, that’s all I can say. And I’m not convinced that general education can help the cause much, just as it wouldn’t with medicine or the law.

We do need to understand some fundamental aspects of medicine and the law – what it’s about, how it operates, how to explain our own circumstances to the professionals so that they can help us. (Because, yes, we are the experts on ourselves!) I think it’s the same with investing.

That’s what I tried to do with the analogy of the casino, because that’s something that most people can associate with: uncertain outcomes, with chances of making money and losing money. And then, very importantly, we should understand the ways in which investing differs from a casino. All of that leads to the general notion that there are two main financial goals. To some extent we’d like safety and predictability, and to some extent we’d like long-term growth. Typically the two are fundamentally opposed, and the more we want of one, the less scope there is for the other. So, the most important decisions regarding our financial selves are the ones that say how much safety we want and how much growth we want. The rest, the implementation to deliver our goals, can be left to the experts.

Q. We get more research, like the recent research carried out by the Healthcare of Ontario Pension Plan and Abacus Data that suggests that folks are afraid to retire, largely because they fear they can’t afford it. Is this because everyone has so much debt they can’t imagine living on less money. Are there other reasons driving this?

There are lots of reasons for the fear. In fact there are three main questions that people fear thinking about, and two are not financial at all.

The first is psychological: Without my work to define me, how do I define myself? A sort of: what would I put on my new business card? “Retired” is so negative. So … you need to learn how to find new motivation and redefine yourself.

Second: How will I fill my time? Linked to this: I have a partner, and we’re frankly not used to spending that much time together.

And third (and this is what surveys say is the biggest fear): Will I outlive my money? This is the one you’ve asked about, so let’s deal with it.

One reason is that most people have little idea about longevity. And to the extent they’ve ever thought about it, they tend to remember a number for life expectancy at birth. They don’t realize that life expectancy for the average retiree takes you much further than life expectancy at birth, because some people pass away before they retire. And they don’t realise that life expectancy is simply an average, not the limit of life.

For example … Suppose there’s a country for which life expectancy at birth is 80. That means it’s the average age at death. But some people pass away before they get to 65. They are the ones who keep the average as low as 80. Those who survive past 65 are, in general, a longer-lived group, and their average age at death may be more like 85. And in addition, that’s an average: half of them will outlive that age. But typically people in this hypothetical country, to the extent they think about lifespan at all, will believe they’ll be gone by 80.

Even if people realised this, it still wouldn’t tell them how to calculate an annual drawdown from their assets that ought to be sustainable over their future lifetimes. Most people tend to grossly overestimate how much they can draw down each year: they guess something like 10 per cent every year instead of a much lower number.

These are all technical reasons, of course, and they say nothing about one’s personal circumstances, like ongoing debt. Even without debt and a mortgage, people are still afraid of thinking about these things.

That’s why I wrote my book Life Two, first to reassure them that they’re not alone in their fear. In fact, even the experts have those three fears! And second, to show them how they can think through some of the issues and answer those questions for themselves. I can’t tell them, “Don’t worry, everything will be all right” – because that simply isn’t credible. What I try to do is show them how to relate the expertise to their own circumstances. And that should give them a feeling of control. It’s like driving a car. They’ll still have their own decisions to make – direction, speed – but at least it’ll put them in the driver’s seat.

Q. What’s the best thing you have experienced – maybe the nicest change – now that you are in Life 2?

Oh gosh, so many things! And that’s even though at first I felt totally discombobulated, like a tree that had been uprooted, and I didn’t know what kind of new tree I wanted to be, nor where I should plant my new roots. The long (for me) transition between Life One and a good Life Two is what caused me to start doing the research (hey, let’s learn from what others have experienced) that led to my Life Two book.

If I had to pick out just one thing, it would be very personal. It’s the totally unexpected gratification of hearing from readers of the book and the accompanying website that something I wrote or identified caused them to change their thinking or to take action that made life better for them. And they come from countries around the world – because of course the three fears are not country-specific. Every personal note makes my day, my week, my month – and together they make my life.

I suppose I could generalise and say that the discovery that, in your own Life Two, you realise things about yourself that you were unaware of, and which please you, is a very nice unexpected aspect.

Q. Why do you think it is so hard for working folks to visualize what it will be like to be retired?

I think it’s that we become so used to the routine of our Life One. And then we’re forced to change it. It’s that tree analogy. I experienced this myself.

For over 40 years I had planted my roots deep into soil that nurtured growth.  I loved the experience of life and work. It had a pattern, a rhythm, that I grew deeply attached to. Then that changed, when I retired. Harry Levinson, a pioneering professor of psychology at Harvard, had this piece of wisdom in one of his books; he said: “All change is loss, and all loss must be mourned.” Retirement was a big change. And mourning isn’t something we look forward to.

I needed to plant a new tree. But, as I said earlier, I didn’t know what kind of tree I wanted it to be, nor where exactly I wanted to plant it, nor if I would change my mind. The freedom to choose, freedom that I’d dreamed about, freedom that was the first word in our family Christmas letter that year … it was still new. And it took time – more than three years, in my case – before I had some idea about my personal answers to those questions. And even then, I remember thinking: some roots are growing in new soil, but they’re new roots and not yet deep; and only time will give them traction.

That’s why the questions “Who am I?” and “How will I fill my time?” are so scary, for many of us. As you can guess, the conferences that I speak at are attended by geeky types (like me!), and it’s terrific to see how pleased they are that someone actually talks about these touchy-feely issues.

Q. What’s the most surprising thing you’ve learned about retirement?

How much I like it. I’ve been flattered to be asked, many times, if I would take something on as a part-time role. No! Anything that imposes an ongoing obligation will send me back to a condition that I’m thrilled to have solely in my past, and I don’t want it in my future. Now I’m free and I’m happy. I had always thought that part-time work (yes, I really loved my work) would be something I’d love to do forever. And for a few years that was great. Now … my family says I work as hard as ever, but the difference is that it isn’t a job, it’s pursuing a passion.  Makes all the difference in the world. Freedom.

We thank Don Ezra for taking some time from Life Two for some questions from Save with SPP. Be sure to check out his website.

If you are saving for your own life after work, a helpful resource is the Saskatchewan Pension Plan. This plan, unlike most, isn’t related to anyone’s workplace. The money you contribute is grown by professional investors at a low cost, and at the time you retire you can receive it as a lifetime pension. 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