Holding tight to pension benefits

Last week’s tanking of stock markets around the globe provides a good opportunity for gaining some insight into one reason why Co-op Refinery Complex employees in Regina are fighting so hard for their pensions.

Stocks generally make up a significant component of pension investments. The migration of DB (defined benefit) to DC (defined contribution) pension plans during the past few decades, has effectively resulted in an entire transfer of pension investment risk from employer to employee. Retirees with DB plans generally enjoy predictable pension income for their lifetime unless their employer goes bankrupt, as was the case with Nortel and Sears Canada. Holders of DC plans are entirely responsible for ensuring that they have sufficient pension holdings to last for their lifetime.

This is just one reason retirement ages are increasing, as employees on DC plans consult with their financial advisers and realize the need to move toward lower risk/ return pension investments with age, and also work longer before they will be able to afford retirement.

While I am not a refinery employee, I face the same DC pension risk reality. I am still thankful for my employment pension, since according to a 2016 study from the Broadbent Institute, 47 per cent of Canadians have no employer pension and only 15 to 20 per cent of middle-income Canadians without such a pension have saved anywhere near enough for retirement. Translation: The number of seniors in poverty is likely to increase significantly within the next few decades.

Gavin Jensen, Regina