Another key finding of the national survey: 31% of respondents said they don’t know what percentage of their current annual income they will need to achieve their expected standard of living in retirement. When asked how they expect to enjoy themselves in retirement, 59% of respondents expect to do things that they currently are unable to do prior to retirement such as travel.
“Belief in the promise of a competitive pension payout remains strong in the minds of Canadian defined benefit plan members,” said Scott MacDonald, Head, Pensions, Insurance, Financial Institutions Product for RBC Dexia, in a press release. “Even with the well-documented and highly-publicized challenges DB plans have faced, this research shows that plan members both rely on and trust that their retirement income will be there when they are ready to stop working.”
When asked what they recall reading, seeing, or hearing about company or union pension plans in Canada, only 5% could recall hearing about problems, and only 4% indicated awareness that DB plans are becoming more rare and being phased out.
Regina Baezner, Principal, Pension and Benefit Practice, Grant Thornton LLP noted: “Plan members remain in the dark about the issues and challenges facing Canadian defined benefit plans. The pressure for DB plans to keep members aware of the viability and health of their plans increases with every new high profile plan that struggles, particularly in a financial market with so much uncertainty and tumult. “
Key to retirement plan members’ confidence in their DB pension plans is also reflected in how much they intend to rely on that income stream in retirement. Seventy-four percent say it is their primary vehicle for retirement savings. On average, members expect 55.7% of their retirement income to come from their DB plan. They expect a further 17.2% to come from government sources, such as Canada Pension Plan (CPP) or Old Age Security (OAS). Another 12.6% is expected to come from Registered Savings Plans.
MacDonald added,”Plan members may need to adjust their expectations to be able to enjoy their retirement while not earning a full income. It’s up to plan sponsors to help educate their members about the amounts that might be needed to enjoy a long and fruitful retirement.”
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