Canadian HR Reporter

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(prices subject to change without notice) ONTARIO LAWYER'S PHONE BOOK 2017 Retirement crisis looms on horizon 'Precarious' work, fewer pensions, rising debts contribute to lack of savings: Experts BY SARAH DOBSON WHILE the fact that people are living longer is of course a trend to celebrate, there are still challenges for a society with an aging popula- tion. And one of the biggest is re- tirement income security, as fewer people are saving what's needed, workplace pensions are on the decline, and debt levels are rising. But employers can still play an important role, according to ex- perts speaking at a recent confer- ence in Toronto. Changing environment Workplace pension coverage has gone from about 45 per cent to 35 per cent, according to David Her- le, owner of polling and research firm Gandalf Group in Toronto. In looking at a potential retire- ment "crisis," people often say retirees are doing OK — but cur- rent retirees are much more likely to have a workplace pension plan than people who will retire in the future, he said. And one-third of Canadians don't put away one dollar for re- tirement, said Herle, speaking at an "Evolving Nature of Re- tirement" conference hosted by Ryerson University's Centre for Labour Management Relations (CLMR). Even among people approaching retirement, 38 per cent said they put away nothing; one-half of those earning under $55,000 of household income put away nothing, and the same is true for people without a workplace pension plan, he said, citing Gan- dalf research. "You're going to find savings rates for retirement that are wholly and wildly inadequate, and people know it." Around 70 per cent agree they won't have enough money to stop working at 65, he said. "ere is a significant difference depending on the pension cover- age you have." In aggregate, it's about work- place pension plans disappear- ing outside of the public sector, said Herle, "where defined ben- efit plans are even rarer outside the public sector, where the risk is transferred from a shared-risk environment between employees and employers to solely being on the basis of employees… real in- comes for most Canadians have been flat for 30 years now, so they were expected to take up that burden of saving for their own retirement out of existing income — and they haven't done it, and they won't do it." And with changes to a more gig- type of economy, with less per- manent work and fewer workers working for one single employer, "it's going to make it even more difficult to put anything away for retirement," he said. When people are asked about what's contributing to the crisis, the number one answer is em- ployers don't offer good pension plans, followed by government's failure to make it mandatory for employers to offer pension plans, said Herle. "Canadians, frankly, do not ac- cept the proposition that employ- ers can't afford to offer these plans, even in a tough economy. ey think employers are choosing not to offer these plans anymore and, therefore, they think there's a role for government." We are in a period of height- ened inequality when it comes to income, according to Sheila Block, senior economist at the Ontario office of the Canadian Centre for Policy Alternatives in Toronto, citing the escalation of "precarious" and part-time work. With declining union density, growth in low-wage industries and reduced pension coverage across all age groups, there are higher debt levels and, therefore, less of a capacity to save, she said. "Of particular importance to look at is the really marked in- crease for people in their 30s and their 40s, because we know that those are really essential years if you want to have adequacy in retirement, those are the years where you really need to start sav- ing," said Block. "We really need policy changes to catch up with the changing la- bour market… We really have a labour market, labour relations and an employment standards regime that's based on that model of standard employment that's no longer the case, and although we've had a shift in pension policy, we still need to move further to re- ally provide a pension policy that will provide adequacy of incomes for people who are retiring from this new, more precarious labour market." Younger workers Independent workers who make up much of the precarious work- force pay double that of a con- ventional employee for the Can- ada Pension Plan (CPP) benefit through their income tax, accord- ing to Andrew Cash, co-founder of the Urban Worker Project in Toronto. "ey don't have an em- ployer that contributes to their plan." Young people have a hard time engaging in the issue of pensions, he said. "From a political perspective, it's very difficult, and so what needs to happen in that context is much more… education, much more talking to young people about pensions, about their CPP," said Cash, adding many don't file income tax in their early years. "No one explains to anybody under the age of 35 that through their income tax, they're making contributions to their pension. It's a really important point and it impacts people in a number of different ways." Most labour laws and policies remain rooted in an era predicat- ed on full-time, stable work, and many precarious workers lack a pension, he said. "For them, the evolving nature of retirement is really one of de- volution," said Cash, and many instead focus on their health, as- suming they'll have to work as long as they're healthy. "As work continues to change, as more and more young people are in independent work, our prescriptions, including for retire- ment, must change too." Increasingly, the deck is stacked against the younger demographic, making it hard to save for retire- ment, said Paul Kershaw, associ- ate professor at the University of British Columbia in Vancouver. A typical 35- to 45-year-old to- day earns thousands of dollars less for full-time work than the same-aged person in 1976, even though she's twice as likely to have post-secondary education, which means more people are starting with more student debt than in the past, he said. And, of course, housing prices have gone up considerably. "is is squeezing a younger demographic with time and money pressures, which then compromises their ability to set some dollars aside in their young adult years for retirement," said Kershaw. "Younger people are not dumber today about saving than they were in the past. When you earn thousands (of dollars) less and are facing housing prices that are hundreds of thousands more, it is just more much challenging to save dollars, and if we mandate that they save more now, then you exacerbate the current squeeze." Many millennials lack aware- ness or knowledge about pensions and the importance of contribut- ing, said Tamar Becker, research co-ordinator at the CLMR. "A lack of information leads to low millennial engagement in the MULTI-EMPLOYER > pg. 21 With declining union density, growth in low-wage industries, reduced pension coverage and higher debt levels, there is less of a capacity to save.

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