Morneau Shepell calls for a targeted solution to our pension woes
Chief Actuary, Fred Vettese, argues there is no current retirement crisis, although critical challenges lie ahead
TORONTO, Nov. 5, 2014 /CNW/ - Morneau Shepell (TSX: MSI), the largest administrator of retirement and benefits plans in Canada, reports that while some middle-income Canadians are heading for a retirement shortfall, the percentage who are in trouble is below crisis proportions. By contrast, lower-income workers can already expect to have more disposable income in retirement than when they were working and would be better off without an enhancement in CPP. This is communicated through Morneau Shepell's latest issue of the company's Vision newsletter titled, "Closing the retirement income gap" by Fred Vettese, the Company's Chief Actuary.
"It is no secret that some Canadians are not on a trajectory to retire comfortably," said Vettese. "This is why some provinces, Ontario in particular, feel the need to enhance the CPP or to introduce their own program. It is also why more than 70 per cent of employers surveyed believe the country is experiencing a retirement crisis. New data, however, shows that what we are currently experiencing should not be described as a crisis."
The newsletter aims to identify the households that are actually at risk of a precipitous decline in their standard of living. The research findings show that:
- A large number of households will continue to be significantly better off after retirement than when they were working. In these situations, over-saving certainly boosts retirement income but it also results in a lower standard of living during one's working years
- The lowest income group is generally well-served by our current retirement income system
- About one in five middle-income and upper middle-income earners could benefit from an enhancement in existing pension programs, or possibly the addition of a new supplementary program
- Trends point to a less favourable future which means the retirement income gap will probably grow in the absence of government intervention
The chief actuary concludes that while some well-meaning pension reform proposals may actually represent a step backwards, it is possible for governments to devise a modest, targeted solution that addresses the retirement income gap without exacerbating the phenomenon of over-saving that exists in some pockets of the population.
About Morneau Shepell Inc.
Morneau Shepell is the largest company in Canada offering human resources consulting and outsourcing services. The Company is the leading provider of employee and family assistance programs, as well as the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves more than 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,600 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
SOURCE Morneau Shepell Inc.