There is a looming shortfall of retirement income for lower middle and middle class Canadians, according to a professor at the University of Calgary’s Haskayne School of Business, who has called on regulators to carefully consider the role of government in providing a new way for Canadians to save for retirement.

In a research paper released today by U of C’s School of Public Policy, Norma Nielson examines the benefits of creating a regulated Voluntary Pension Plan (VPP) that would allow earners and employers to contribute to a large, co-mingled investment pool.

The VPP would face the same regulation as employer sponsored pensions (RPPs), but would bring the benefits of being able to invest in a wider variety of instruments to a wider audience, thereby mitigating risk.

“The current pension system in Canada, while protecting many employees, is sufficiently complex that it serves as a barrier to middle-class individuals, especially this who work for small- and medium-size employers,” says Nielson.

“The VPP could be a solution that allows professional investment services to be more readily accessible to solve what is solidly a middle-class Canadian problem.”

Nielson’s review of recent research argues that the Canada Pension Plan and other programs provide adequate retirement income for low income earners, and that high income earners use the opportunities they are afforded under the current system to save and invest adequately for retirement. However, those in the middle do not have sufficient disposable income to adequately save enough to provide a middle class retirement.

IE