Morneau Shepell survey indicates most pension plan sponsors believe Canada is in a retirement crisis
11 Jun, 2013, 13:35 ET
This according to 165 Morneau Shepell clients who sponsor pension plans and who took part in a 60 second survey in June 2013
TORONTO, June 11, 2013 /CNW/ - The majority of 165 pension plan sponsors who responded to a survey by Morneau Shepell (TSX: MSI) believe that Canada is experiencing a retirement crisis.
"Our perceptions of a crisis are virtually unchanged from three years ago when we conducted a similar survey," said Fred Vettese, Chief Actuary of Morneau Shepell and co-author of The Real Retirement: Why You Could Be Better Off Than You Think, and How To Make That Happen. "This is in spite of statistics that recent retirees are generally retiring with adequate, or more than adequate, assets. The numerous media reports of a crisis over the past few years have been effective in shaping our perceptions."
While 71 per cent of pension plan sponsors who answered Morneau Shepell's 60 second survey believe there is a retirement crisis, they are split on what should be done. A little more than half of the sponsors in this camp think that governments need to take decisive action soon, while the rest say it is up to employers and individuals to solve the crisis. Of the remaining 29 per cent who don't feel there is a crisis yet, 21 per cent believe we're heading toward a crisis in the future. Only eight per cent of all respondents think that the retirement system is in need of just a little fine-tuning.
As for the most effective action that governments can take to improve the situation, a surprisingly small percentage of respondents chose expansion of the Canada/Quebec Pension Plan (C/QPP) or the introduction of Pooled Registered Pension Plans (PRPPs). Only 36 per cent of respondents identified one of these two solutions as being the most effective. The most popular solution, chosen by 37 per cent of all respondents, was the adoption of a national strategy for pensions rather than tackling reform province by province.
Mr. Vettese added, "Each province insists on having its own solution and while there is an ongoing, half-hearted attempt at harmonizing pension legislation, there are still many minor and even major variations from province to province that make it difficult for national employers to administer pension plans. This problem affects only private sector employers. If public sector employers were also affected, the odds are a solution would have been devised decades ago."
The second most popular solution on how to improve the situation, chosen by 29 per cent of survey respondents, was for better risk-sharing options in occupational pension plans, such as target benefit plans.
Breaking down the respondents even further, the 88 who sponsor primarily defined contribution plans or no plans were even more emphatic in their thoughts on what government should do. More than half of them said the most effective action governments can take is to adopt a national strategy for pensions and about a quarter of them felt that better shared-risk options should be available to plan sponsors. Only 10 per cent thought that an expanded C/QPP was the most effective strategy.
Of the 165 pension plan sponsors who participated in the survey, 47 per cent sponsor mainly defined benefit plans for their employees and 6 per cent provide no pension coverage at all. The rest sponsor primarily defined contribution plans. There was broad representation from organizations of all sizes in the survey, with 44 per cent representing organizations with more than 1,000 employees and 26 per cent having between 200 and 1,000 employees. The rest were smaller employers.
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 pension and benefits plans. 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 8,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,000 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.
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