Stark Retirement Savings Stats

If you haven’t been reading the Globe and Mail for the last few days I would suggest you head over and read their Retirement Lost series.  If nothing else the series seems to includes some eye popping pieces of data like this little data set:

  • 17.6 million: Number of people in the Canadian work force.
  • 11 million: Number of Canadian workers without pension plans.
  • 4 million: Number of those workers with registered retirement savings plans.

So by doing a little simple math we can get the number of those people without a pension plan (other than CPP obviously) and no RRSP (11 million – 4 million = 7 million).  Express that as part of the work force in % and we get 39.7% of working Canadian’s don’t have an RRSP or a pension plan, which seems like a huge number.

Yet keep in mind that would include those who are towards the start of their career or even summer jobs as students.  Neither of which you would expect to have an RRSP or pension.  So let’s be generous and assume that we don’t expect 20% of the workforce to have a pension or RRSP, that still leaves a staggering 20% of people with no obvious retirement savings.

Now consider for a moment that means two of even five people you would meet with a job would have nothing saved for retirement.  Then add in the fact that with the boomers retiring over the next decade and we that remain working will have to fund their health care costs and OAS benefits. Also keep in mind that most defined benefit plans are government run, which means most of them are funded with our tax dollars.   It’s getting fairly obvious that there will be some enormous pressure on the government to do something to deal with this and it will likely involve the younger generations footing the bill.

I like to think I’m fairly optimistic about the future most days, but in this case the picture isn’t looking good.  I wondering how long will it be before the government joins the rest of the employers in Canada and stops offering a defined benefit plan to it’s workers or at the very least offers much less of a benefit?  Or how long until someone does the math and realize OAS will have to be cut back in the future?

Regardless don’t ignore this ‘pension crisis’ that is going on or you might find yourself giving up your own retirement dreams to pay for your parent’s retirement.

9 thoughts on “Stark Retirement Savings Stats”

  1. I always thought that Canada should do something like offer a MANDATORY retirement savings account, as a percentage of your income.

    Much like taxation, but the deductions from your paycheque goes into your pocket for retirement purposes ONLY, and you can’t touch it until you’re 65.. or something.

    Those stats are really frightening.

  2. The easiest, cheapest and most fair option to all Canadian tax payers sould be to eliminate the rediculous defined benefit plans being given to most government employees. No privately run company can afford such plans so I seriously doubt governments have discovered the magic formula.

  3. Interesting data you found.

    I would argue that in Canada, there are not 11 million workers without pensions.

    Those people have CPP and OAS, plus additional money from OAS for the poorest of the poor. If the OAS is cut then more may qualify for OAS supplements.

    Everyone will get likely in-the-order of $1,000 or more per month. If it is a couple they will get more and a single person can find a room mate.

  4. Mitch

    I couldn’t agree more.
    At age 52 I have no access to a gold plated pension. I have to fund my own retirement and no guarantees from the taxpayers. I should be in quite good shape but only as a result of my own frugality and self discipline. I shouldn’t have to fund my own retirement and all the public service workers as well. As a parent of 4 young adults I don’t see it as their generation’s responsibility to finance my retirement or any other Canadian’s. We are all responsible for ourselves.

  5. FB,

    But we do have that. It’s called CPP (which by the way is a defined benefit plan). This is partly why some people have been considering should we expand the program to provide more coverage as part of the solution to this mess. That way everyone has some access to some of a DB pension. The trick would be how do you phase in the new benefits so that people don’t get a lot of extra money with no extra contributions.


    I think in time the government is going to have to either scrap those DB pensions or limit their payouts by a lot. It’s the only way to save the taxpayers the expense of running those pensions.


    You are partly correct. CPP is a pension that everyone has (which I did refer to in the post). OAS is called a pension, but technically isn’t one. Since it has no investment fund or set contributions it is in fact just a government program. As such it has no laws to protect the money used in the program and they can be cut at any time. So as the costs of the program grows to eat up more government revenue you can bet that some adjustments will be made to this program at some time.


  6. I work for the government but am still in my 20s and can’t possibly foresee my retirement to have a DB plan. I suspect it will be rolled over into a defined contribution plan, likely with some sort of signing bonus during the conversion process.

    Since the CPP is rarely enough to get by how about not capping contributions. I think the maximum is set at a percentage that’s based on a $45k/yr salary. Allowing people who make more than this to contribute more (and therefore extract more) might be a good idea. Although clearly any politician proposing taking more money from Canadians will surely be run out of town.

  7. @MM “Although clearly any politician proposing taking more money from Canadians will surely be run out of town.”

    Not if enough voters are on the receiving end of this. There are several million civil servants in this county with strong unions. If enough of them vote for a polition that is likely to protect their pensions then the rest of the tax payers are SoL.

  8. I brought up this article at work with a 30-something woman and she stated that she had no retirement savings as “she was living to enjoy today” and didn’t see the point in saving for the future – perhaps this is the thought process of some people – other people I think don’t even put much thought into savings at all in general, let alone retirement savings.

    @ MM – I’m fine with the cap, from October to the end of the year, it’s “bonus” time when I cap out on CPP and EI – good for saving for Christmas 🙂

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