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!

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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!

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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.

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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!

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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.

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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!

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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.

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Recent research commissioned by the Healthcare of Ontario Pension Plan (HOOPP) has found that four of five Canadians would choose a better pension (or any pension) over a pay raise – even at a time when most of them are struggling to make ends meet.

The research, conducted by Abacus Data, found that there is a high level of retirement anxiety amongst Canadians. Among the findings were that most were more worried about saving for retirement (75 per cent) than they were worried about government or personal debt, and that 76 per cent were concerned that the lack of workplace pension coverage hurts the economy.

Save with SPP reached out to Darryl Mabini, HOOPP’s Assistant Vice-President, Growth & Stakeholder Relations, to ask a few more questions about the organization’s findings, and their thoughts about possible solutions.

Asked what, if anything, can be done to encourage more Canadians to save for retirement, Mabini noted that we are “in a climate” where workplace pension plans are scarce in the private sector. While public sector workers generally have pensions at work, “about 60 per cent of Canadians don’t have access to a pension plan.”

Mabini agrees that high personal debt levels are a restrictor on personal retirement savings for those without pension plans. “Canadians currently owe about $1.70 for every dollar they earn – that’s an historically high debt to income ratio,” he explains. When you are owing substantially more than you make, it is pretty hard to find a way to put aside some of your earnings for retirement, he says.

“A lot of Canadians are just barely making ends meet,” he says. He points out that while there is “good debt,” such as having a mortgage (because you are building equity in your home), many working Canadians are relying on bank loans, credit cards, and other borrowed money to pay for living expenses between paydays. Yet, he points out, HOOPP’s research found that Canadians would take a job with a pension over one that offered more pay.

Those who also have no pension arrangement “are the most vulnerable to having insufficient income when they reach retirement age, Mabini adds. That’s because they are the least likely to be able to afford to save, he explains.

The danger of inadequate retirement income is another problem that needs to be addressed, he says. By doing nothing about boosting participation in retirement savings today, society is “kicking the problem down the road,” an oversight which could lead to increased reliance by seniors on taxpayer-funded government assistance, he says. “When Canadians don’t have access to pension plans… the risk (for their future income) shifts to the taxpayer,” he explains. But if they are living on savings they’ve amassed on their own, or through a pension plan, they are consumers with spending power who help the economy and pay taxes, he adds. HOOPP’s research (other highlights follow) also suggests Canadians are aware of the realities of pensions and retirement, and are looking to employers and government to help deliver solutions.

• Eighty-one per cent believe the shrinking of workplace pension coverage will reduce the quality of life of Canadians.
• Eighty-three per cent believe government should modernize regulations to allow for more innovative pension plans and savings arrangements.
• Eighty per cent would rather employers make direct contributions to a retirement plan over receiving that money as salary.
• Seventy-six per cent believe governments can save money by supporting pensions that are more affordable.

What type of pension would Canadians want to have? Mabini says that while that specific answer wasn’t captured in this round of research, an earlier HOOPP-led research project, The Value of A Good Pension, found that the “value drivers” of a good pension include:

• a design that is focused on saving (through “ongoing, regular contributions,” Mabini explains)
• operating with a low fee
• using a professional approach to investing
• offering “fiduciary oversight,” meaning it is run by a group that has a legal responsibility to act in the best interests of the member
• the pooling of risks

Our final question for Mabini was what finding surprised him the most. “What bubbled up to the top was the idea that four out of five would take a job with a pension over a job that offered them a higher income, but no pension,” he says, even at a time when most are struggling to make ends meet. This shows that Canadians are keenly aware of the value of having a pension, he concludes.

We thank Darryl Mabini and James Geuzebroek of HOOPP for their help in putting this article together.

If you are one of the many Canadians who lack a workplace pension plan, the Saskatchewan Pension Plan may be able to help. You can set up your own pension plan via SPP – the money you contribute to your account is professionally invested at a low fee, and when it is time to retire, SPP can convert your savings to a variety of different lifetime annuities, which ensure you’ll never run out of your retirement savings.

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

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