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The Voice of Canada’s Investment Funds Industry

Letters to the Editor

To the Globe and Mail

December 18, 2018

Re: Making life more affordable through efficient retirement savings
(December 17, 2018)

There is often a false debate where one type of retirement plan is put forward as the best solution for Canadians’ retirement savings needs. The truth is that most Canadian’s retirement income comes from a variety of sources.

In their op-ed on Dec. 17, Healthcare of Ontario Pension Plan (HOOPP), Common Wealth, and the National Institute on Ageing incorrectly claim that the cost of achieving retirement security using a typical individual approach is up to four times higher than a “high-quality” defined benefit (DB) plan.

We would not argue against the benefits to employees of well-governed defined benefit plans. And we wish the authors well in their mission to reverse the trend of declining private sector DB coverage. However, the report makes inaccurate comparisons with the costs and value of personal savings. For example, when looking at private savings, the report uses the total cost of investment management, administration, distribution and financial advice. However, when it comes to defined pension plans, it explicitly excludes administration costs.

More fundamentally, though, the report fails to appreciate the value of private retirement savings. At $1.7 trillion, individuals saving using mutual funds and ETFs have amassed wealth that rivals all of Canada’s trusteed employer and government sponsored pension funds. These individual investments, typically purchased with the help of an advisor, now account for 59% of Canadian’s RRSP assets. It is important to encourage Canadians to continue to save in this manner, particularly when they don’t have access to a collective DB plan.

The federal government is consulting on how best to strengthen retirement security. One of the most practical and achievable strategies is to promote individual retirement savings in addition to the many workplace and government incentives available that facilitate these savings.

Paul C. Bourque, Q.C.
President and CEO
The Investment Funds Institute of Canada

Submitted: December 18, 2018