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Aug 15 2013

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Canada Needs More Sustainable Pension Options

Canada Needs More Sustainable Pension OptionsHelp Me Retire

I came across an article in Benefits Canada related to Canada’s public and private pension plans. Here are some observations from the article.
  1. In 1950, a 35-year-old Canadian had a remaining life expectancy of 38.6 years, but in 2010, this climbed to 46.8 years, according to the C.D. Howe Institute. That’s a life expectancy of 73.6 versus 81.8 respectively, or an 8.2 year increase.
  2. More than 60% of Canadian workers do not have access to a registered pension plan, according to 2010 data from the Office of the Superintendent of Financial Institutions.
  3. Also, public servants still have mainly DB plans, but these plans have become more scarce in the private arena—52% in 2010 from 76% in 2000.
Pension plans come it two types. DB, “defined benefit” plans (lifetime pension based upon years of service and earnings) and DC, “defined contribution” plans (where employer contributes are defined, but pension depends upon employee’s investment performance in the plan). Employer’s with plans are shifting away from DB to DC plans to limit their liability in funding retirees.

Manulife PensionBuilder

An innovative solution offered by Manulife is called PensionBuilder. It’s like a DB pension plan in that it allows you to convert retirement savings such as an RRSP into a source of dependable income that you can’t outlive. Here is a link to a neat calculator where you can estimate how much you’d receive for an invested amount.

 

ps…more information can be found at the following.

I recommend you review your risk profile at least annually to determine if it’s still appropriate.  As a certified financial planner, I do this at the client’s annual review and make changes as appropriate. We also discuss any major life  changes and how they may impact your retirement income plan or risk management plan.

If you have further questions about how Manulife PensionBuilder could help you build a stable, secure retirement income stream, please complete the form on the right.

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