Workers value pensions over higher salary: survey

TORONTO Most Canadians would rather have a better pension than a higher salary, according to a new survey showing a high level of anxiety about retirement savings.

As much as 80 per cent would prefer pension improvements over better salary, says the poll by the Healthcare of Ontario Pension Plan, the fourth-largest in Canada by assets under management with $79 billion.

Two-thirds of respondents are most concerned about saving enough for retirement compared with those who are worried most about current personal debt (55 per cent) or government debt (64 per cent). Meanwhile, 81 per cent say that diminishing pension coverage will reduce their quality of life; and 83 per cent want government to change rules to allow for different pension and retirement saving types.

“It is clear that Canadians have a high level of anxiety around retirement security and that we, as a country, need to talk about how to address this growing concern,” Jim Keohane, president and CEO of HOOPP, said in a statement.

The concern over pensions and retirement savings has risen over the past few decades as more companies shift from defined benefit (DB) plans, which are funded mostly from corporate earnings, to defined contribution (DC) plans in which a portion of the employee’s paycheque is set aside and matched by the company.

Rising costs and risks to administer DB investments have prodded companies to switch, but there are concerns that employees will have to invest more and more of their income to meet the same level of savings they would have earned under DB plans.

That has coincided now with a low investment return market in which 30-year bonds are at about 1.5 per cent when they used to be eight to nine per cent 20 years ago, Robert Kavcic, senior economist at BMO Capital Markets in Toronto, said.

“You have to be saving more every month to hit those same numbers at the end of your period or you have to stay in the labour force longer, and a lot of people are actually doing that, too,” he said.

For its part, HOOPP, which covers 350,000 health-sector workers, said it had no plans to transition to DC from DB.

HOOPP’S poll of 2,500 Canadians aged 18 or older was conducted by Abacus Data in May this year.