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The recession is changing a lot of assumptions that were used in financial planning. Perhaps the most pronounced is that Canadian boomers are readjusting their retirement dates in an effort to shore up their savings and secure their future income stream.

But a study released today by the BMO Retirement Institute suggests that many are making this decision, without having all the necessary information.

“Many retirees and pre-retirees are making moves to bolster retirement savings by working longer without a clear understanding of their retirement income gap; the difference between how much is needed and how much is available from various sources including personal savings, employer and government benefits,” said Tina Di Vito, director, retirement strategies, BMO Financial Group.

Nearly one third (31%) of those who had planned to retire in the next five years are now considering delaying their retirement date. And yet 42% of pre-retirees — and 59% of retirees — have not spoken with their financial advisor about the potential impact that delay will have on their retirement plans.

“In some cases, Boomers may discover they need to work fewer years than anticipated to realistically meet their retirement goals,” Di Vito says.

Working longer may secure their income stream, but it will also likely shorten the gap between the end of any group healthcare benefits, and the onset of health problems. The BMO study suggests that many future retirees have not set aside enough funds to deal with rising healthcare costs. Those planning to work later in life may want to pay extra close attention to the benefits plans their employers offer.

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More Canadians saving in recession

There’s nothing like the threat of a lengthy recession to inspire Canadians to start squirreling away a little cash. The HSBC Savers Survey has found 84% of us have set aside a little extra cash, compared to 67% in the bank’s 2006 survey.

Albertans appear to be the best at saving, with 92% saying they had some spare money on hand, compared to just 77% of Atlantic Canadians.

“It is not surprising that Canadians are becoming increasingly cautious about not only how and when they spend their hard earned dollars these days, but also how and where they save,” said Rick Kelln, senior vice-president, HSBC Bank Canada. “For example, not only are savings rates up but Canadians are increasingly becoming more conscious of the kinds of savings options available to them such as the TFSA or high rate savings accounts.”

The survey found that 88% of Canadians are already aware of the TFSA, with 68% saying they plan on opening an account.

As for what they plan on investing in, within the TFSA:

• 34% said they would open a high-interest savings account; • 15% will opt for GICs or term deposits; • 16% will invest in mutual funds or stocks and bonds; and • 36% will invest in a combination of all these

The HSBC Savers Survey of 1,000 Canadians was conducted in February 2009 by the national market research data collection firm Opinion Search.

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Job losses heaviest among low-paid staff

Jobs may be disappearing by the tens of thousands each month in Canada, but according to CIBC, the quality of remaining jobs has remained relatively unchanged.

Since October 2008, net job losses have accounted for 2.1% of the workforce, but the bank’s Employment Quality Index has dipped just 0.2%. The EQI assesses a number of factors such as the balance of part-time vs. full-time jobs; self-employment vs. paid employment; and the compensation ranking of full-time paid employment in more than 100 industry groups.

“The relative stability of employment quality during the current recession is at odds with not only the pace of job losses in the economy, but also the trajectory seen during previous recessions,” says Benjamin Tal, senior economist and author of the report.

That means that job losses have been concentrated among the lowest paid positions, with a heavy over-weighting among youth. Its little comfort for the more than 350,000 people who lost their jobs, but it is good news for the economy as a whole.

“During the 1991 recession, the 3% drop in overall employment coincided with a 7.7% drop in the quality of employment,” Tal points out. “The Canadian experience this time around is also very different than the situation in the U.S. where the quality of employment has fallen by 6.4% over the past year and by 4.2% in just half a year.”

One of the more positive bits of news in the survey is that employment quality for women has risen steadily since the last recession.

“And so far, women are faring much better than men during this recession, with total employment among women hardly changed over the past year versus a 3.3% drop among men,” adds Mr. Tal. “And the fact that many of these women hold relative high quality jobs was an important factor behind the resiliency of our quality index.”

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BCSC sides with IIROC against Golden Capital

The BCSC has upheld a decision by the Investment Industry Regulatory Organization of Canada (IIROC), which imposed a fine of $75,000 against Golden Capital Securities. The firm was also ordered to pay $76,760 in costs.

Golden Capital had appealed the original IIROC decision, claiming that the SRO could not justify its demand for certain information in the course of an investigation. The firm also claimed that the penalties imposed were unfair.

“[IIROC’s] only duty is to act in good faith,” the BCSC panel said, pointing out that “firms and individuals in the business of trading in securities have an extremely low expectation of privacy over records and things connected to their business.”

The hearing panel also said that the penalty and costs were reasonable and appropriate. In fact, Golden Capital might consider itself lucky, as the BCSC “would have considered a higher penalty reasonable and appropriate in the circumstances of this case.”

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UBS cuts staff in Asia

Global banking giant, UBS has announced plans to cut 3% of its Asia-Pacific staff, in what is expected to be a new round of layoffs by the world’s biggest financial institutions.

About 240 jobs are being eliminated in the bank’s wealth management business, including 100 positions in Singapore, one of the bank’s key operating bases in the region.

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Galileo plans fund mergers

Galileo Funds has tabled a proposal to merge four of its portfolios into the Galileo Small/Mid Cap Fund. The affected funds are:

• Galileo Absolute Return Fund; • Galileo Canadian Active/Passive Fund; • Galileo Fund; and • Galileo Global Active/Passive Fund

The investment objective of Galileo Small/Mid Cap Fund is to provide capital growth; the fund invests primarily in shares of smaller and medium North American companies that are expected to profit from future economic growth, and may also invest in income and royalty trusts.

The proposed merges still require unitholder and regulatory approval. A unitholder meeting is slated for May 15, 2009.

Galileo also plans to terminate the Galileo Money Market Fund effective June 19, 2009. Units that have not been redeemed prior to the termination date will be automatically redeemed.

(04/15/09)