A strong majority of Canadians trust that their pensions will have sufficient money to pay them during retirement, despite the challenges defined benefit pension plans face.
RBC Dexia Investor Services and Grant Thornton in Canada said Tuesday that 83% of Canadian DB plan members \/ participants trust that when they retire their organization\u2019s DB plan will have sufficient money to pay them, while only five percent say they recall hearing about underfunding problems or deficits in DB plans.
The results are from a national survey to gauge the views of Canadians that participate in, or are currently benefitting from, a defined benefit pension plan.
In another key finding, 31% of respondents said they don\u2019t know what percentage of their current annual income they will need to achieve their expected standard of living in retirement. And when asked how they expect to enjoy themselves in retirement, 59% of respondents expect to do things that they currently are unable to do prior to retirement such as travel.
\u201cBelief in the promise of a competitive pension payout remains strong in the minds of Canadian defined benefit plan members,\u201d saya Scott MacDonald, head, pensions, insurance, financial institutions product for RBC Dexia. \u201cEven with the well-documented and highly-publicized challenges DB plans have faced, this research shows that plan members both rely on and trust that their retirement income will be there when they are ready to stop working.\u201d
When asked what they recall reading, seeing or hearing about company or union pension plans in Canada, only five percent could recall hearing about problems, and only four percent indicated awareness that DB plans are becoming more rare and being phased out.
\u201cPlan members remain in the dark about the issues and challenges facing Canadian defined benefit plans. The pressure for DB plans to keep members aware of the viability and health of their plans increases with every new high profile plan that struggles, particularly in a financial market with so much uncertainty and tumult,\u201d says Regina Baezner, principal, pension and benefit practice, Grant Thornton LLP note:
Plan members\u2019 confidence in their DB pension plans is also reflected in how much they intend to rely on that income stream in retirement \u2014 74% say it is their primary vehicle for retirement savings. On average, members expect 55.7% of their retirement income to come from their DB plan. They expect a further 17.2% to come from government sources, such as Canada Pension Plan or Old Age Security. Another 12.6% is expected to come from Registered Savings Plans.
\u201cPlan members may need to adjust their expectations to be able to enjoy their retirement while not earning a full income. It\u2019s up to plan sponsors to help educate their members about the amounts that might be needed to enjoy a long and fruitful retirement,\u201d concludes MacDonald.
Data for the DB pension member study was collected online between April 28 and May 16, 2011. The study is based on survey results from 879 Canadians who participate in an employer- or union-sponsored DB pension plan. An additional 127 Canadians who are offered but do not participate in their employer or union-sponsored DB pension plans also responded. The participant data is weighted according to Statistics Canada data, to accurately reflect the composition of DB plan members by gender, region and public versus private sector.<\/p>\n","protected":false},"excerpt":{"rendered":"
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