CIBC research shows nearly 6 million Canadians are at risk of a significant decline in standard of living when they retire
TORONTO, Feb. 20, 2013 /CNW/ - Canadians should have the choice to make additional, voluntary contributions to the Canada Pension Plan in order to avoid facing a significant decline in living standards when they retire, said Gerry McCaughey, President and CEO of CIBC in a keynote address at the National Summit on Pension Reform.
He told the audience of senior government and business leaders in Fredericton, New Brunswick that, according to new research conducted by CIBC's economics group, nearly 6 million Canadians will face a drop in living standards of more than 20 per cent if current savings rate trends continue.
"Our research found some 8.4 million people will experience a decline of more than five per cent in their standard of living at retirement," said Mr. McCaughey. "Far more troubling is the fact that 5.8 million Canadians are on pace to experience a significant decline - meaning a reduction in living standards of more than 20 per cent."And, here is perhaps the most alarming takeaway: when we look at those 5.8 million people - we see that most of them are young. In fact, our economists estimate that almost 60 per cent of adults in their late 20s or early 30s, can expect to experience a significant decline in their standard of living when they retire." Mr. McCaughey noted that many of these young Canadians - especially those with lower incomes - can't afford to buy the average home, so they will also be deprived of the benefits of the forced savings represented by home ownership. They're also coming of age in an era when private pension plans are increasingly scarce. And they're finding it hard to replace what those private plans offered: scale, obligatory participation, expert investment management, locked-in contributions, a long-term horizon and certainty of outcome.