Canadians' private retirement savings drop

The evidence is clear that many Canadians today aren't doing enough to plan for their retirement. What happens when these folks approach retirement and are faced with the enormous cost of their own health care and that of elderly parents who go into nursing homes near the end of life?

There's a sign at last that Finance Minister Jim Flaherty is at least aware of the issue.

Here is an edited article on pension reform from the CBC website:
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Only about half of all employed Canadians who filed tax returns put money into private retirement plans in 2008, a slight decline over 1997, according to a study released Friday by Statistics Canada.

The Statistics Canada study comes two days after Finance Minister Jim Flaherty announced public hearings over the next five weeks on improving Canada's retirement income system. The study came as the federal and provincial governments begin looking at ways to reform the country's pension system, widely viewed as inadequate to support a population with a growing proportion of older people.

On Wednesday, Finance Minister Jim Flaherty announced a series of hearings on Canadians' views on whether the country's retirement income system needs to be improved, and, if so, how that should be done.

Those will include public town hall meetings, roundtables and online consultations over the next five weeks.

There are three options to be discussed at those consultations, and when the federal and provincial finance ministers meet to discuss pensions in May:

• Create a Canada Supplementary Pension Plan in which Canadians would automatically be enrolled to increase their savings.
• Expand the current Canada Pension Plan to produce a higher level of pensions.
• Change some of the restrictive rules in pension regulations and tax laws that would allow the financial services industry to offer products to encourage people to save for retirement.

Keith Ambachtsheer, director of the Rotman International Centre for Pension Management at the University of Toronto, told CBC News the Statistics Canada study shows the need for Canadians to participate in the government's pension consultations.

"If we're going to make some significant changes," he said, "you do need a lot of population buy-in. This can't be a bunch of politicians or experts deciding by themselves what's best for the population."

Ambachtsheer said there is a precedent. When concerns were raised in the 1990s about the solvency of the CPP, consultations between Ottawa and the provinces led to a decision to double contributions and the plan is now financially stable. Those most at risk of not having enough in retirement, he said, are the 75 per cent of middle-income Canadians who aren't in private savings plans that automatically deduct contributions from income.

RRSP contributions fall
Statistics Canada said there was also a decrease in the share of employed tax filers who contributed to a registered retirement savings plan during the decade. In 1997, 41 per cent of employed tax filers participated in an RRSP; by 2008, the proportion had declined to 34 per cent. At the same time, the share of employed tax filers participating in employer-sponsored pension plans remained stable at 32 per cent.