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FROM: SEP-OCT 2009 ISSUE | BY PEGGY HOMAN, EDITOR
Finance ministers from across Canada met in Vancouver at the beginning of August to discuss the possibility of a national solution to the shortfall in retirement incomes. Is a new public policy on the horizon? Perhaps, but the debate over viable solutions continues to rage. In the meantime, more and more government and media attention is being given to the need to address growing gaps in pension coverage.
The statistics are grim. According to a recent survey by Hewitt Associates, pension plan assets on a global level plummeted by US$4 trillion between the last quarter of 2007 and the first quarter of 2009. Two-thirds of all Canadians earning between $30,000 and $100,000 in the private sector who plan to retire in the next 20 years won’t be able to pay their necessary living expenses. And it’s estimated that roughly five million Canadians – one-third of the work force – aren’t saving enough to maintain their standard of living when they retire.
Our cover story takes an in-depth look at this looming crisis. Many companies have not taken adequate measures to guard against defined benefit pension risk and many funds are suffering as a result. CGA-Canada has proposed an alternate funding model based on the time value of money – details can be found in the sidebar.
Financial journalist Andrew Allentuck has written extensively about effective retirement planning, and authored this issue’s Profession feature, Going it Alone. He outlines the basics of retirement budgets and investment plan options for CGAs without defined benefit pension plans.
Risk management is a critical part of pension planning. In his Reflections column, CGA-Canada’s president and CEO discusses the urgent need for reforming risk management processes around the world.
One final note on pension planning: The Association of Canadian Pension Management’s 2009 national conference is taking place in Montreal, September 15-18. Topics include pension, investment, and governance issues. Details at www.acpm-acarr.com.
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