A comfortable retirement may be a more distant prospect for some Canadians these days as a result of recent market plunges. And a recent web poll conducted by COMPAS Inc. found an overwhelming majority of CEOs are concerned about the state of retirement planning.
The survey asked 135 business leaders to comment on a study from the Canadian Institute of Actuaries that found two-thirds of households may not be saving enough to meet expenses in retirement. More than 80% of the respondents in the COMPAS poll believe the issue is serious.
The CEOs were also asked to comment on a paper from the C.D. Howe Institute proposing the Canada Supplementary Pension Plan. Author Keith Ambachtsheer writes that the alternative pension plan addresses two major shortcomings of existing pension models: the 3.5 million workers who are not members of a workplace pension plan, and the 5.5 million households with retirement assets invested in retail products with high sales and management costs.
All eight key features of the CSPP received majority support from the respondents in the COMPAS survey. “As a result of the current disaster in the financial markets, it makes perfect sense to provide some decent retirement income for people with backing from government,” wrote one CEO.
The flexibility of the CSPP was the most popular feature with the CEOs. Individuals can opt in or out, and RRSP assets could be invested in the proposed CSPP. The respondents also liked the fact the CSPP would operate at arm’s length from government.
“I am concerned that the Canada Pension Plan is going to struggle to meet its commitments in the future, and another program that is at arm’s length from the government would seem to add a level of security,” said one CEO.
Not every respondent was enamored of the plan, however. Some of the CEOs felt another pension plan would needlessly complicate an already convoluted system. “We need to publicize what we have and concentrate on making that work. The solution to one set of problems is not to start another set of problems. The current system that we have needs to be simplified — not made more complicated by adding CSPP,” wrote one respondent.
Others were skeptical of government involvement. “The question is if governments can invest funds better than individuals. Setting up another plan would add to costs and will not solve where to invest funds,” wrote one CEO.
“At the end of the day, anyone placing faith in government to cover their retirement costs will more than likely be disappointed,” wrote another. “When was the last time government met or exceeded expectations on anything?”