More work required for secure retirement, institute says

Greater pension coverage, higher savings and longer working lives will all be needed to ensure an adequate retirement for Canada’s aging population, suggests a new report from the National Institute on Ageing (NIA).

The Toronto-based think tank at Ryerson University issued a discussion paper Tuesday that aims to prompt debate and action to enhance the retirement income system.

The paper — which was co-authored by pension expert Keith Ambachtsheer, senior fellow at the NIA and president of KPA Advisory Services Ltd., and Michael Nicin, executive director of the NIA — argues that many Canadians aren’t adequately prepared for retirement.

“Retirement is getting more expensive and harder to achieve,” the paper said.

For instance, it projects that the total cost of long-term care in Canada will triple to $71 billion in 30 years.

At the same time, pension coverage has steadily declined, and private saving is proving harder to achieve amid rising costs for housing, education and childcare, the paper said.

Additionally, investment returns look less conducive to saving.

“Today, we face historically low bond yields and uncertain equity returns in the face of climate change and political turbulence across the world. This means retirement savers may not get as much help from favourable financial markets as they did in the post-World War II decades,” the paper said.

Given these mounting challenges, the paper establishes three basic policy priorities: boosting pension coverage, increasing savings rates, and enhancing incentives and opportunities for people to work longer.

“Personal financial uncertainty now prevails for many Canadians. Enhancements to the Canada Pension Plan were important, but there’s more work to do,” said Nicin, in a release.

“As Canada continues to age, it is increasingly important to understand and address the financial consequences of this aging in a deliberate, informed manner,” added Ambachtsheer.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.