TORONTO, April 6 /CNW/ - Morneau Sobeco released today the results of a survey showing that 68% of employers believe the country is facing a retirement crisis. The group is split evenly between employers who believe that responsibility for finding a solution lies with the government (34%), and employers who feel that it is business and individuals who should be taking action (34%).
Within occupational pension plans, the most popular action that the government could take is to facilitate the introduction of innovative, new hybrid pension plans. Thirty-three percent cited this as the most effective option. "Employers are acknowledging that traditional Defined Benefit (DB) plans may not be the answer since they expose companies to too much risk," said Fred Vettese, chief actuary of Morneau Sobeco. "But at the same time, they also see problems with Defined Contribution (DC) plans which put almost all of the risk on individuals. New hybrid solutions are needed."
Vettese further noted, "Mandatory plans are supported by 25% of all respondents and 32% of respondents under age 45 - quite a bit more than we expected. Until now, the idea of mandatory occupational plans has received very little attention."
Another potential solution to the crisis involves resolving surplus asymmetry (28%). This relates to employers being obliged to fund deficits, yet not being permitted to access surplus when performance is strong. Other potential actions to solve the crisis include: a voluntary, Canada-wide DC plan (37%); expansion of the Canada/Quebec Pension Plan (29%); and lastly, increasing the retirement age for government pensions (11%). "It is clear that Canadians do not want to retire later," said Vettese. "Any move to increase the retirement age under the Canada Pension Plan will be unpopular."
Morneau Sobeco Income Fund is the largest Canadian-owned firm providing human resources consulting and outsourcing services. The firm delivers solutions to assist employers in managing the financial security, health and productivity of their employees. With over 2,400 employees in offices across North America, Morneau Sobeco Income Fund offers its services to organizations in Canada, the U.S. and around the globe.
SOURCE MORNEAU SOBECO INCOME FUND
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