Middle-income Canadians headed for lower living standards in retirement: report
OTTAWA — About half of middle-income Canadians between the ages about 40 and 65 now can expect to see a substantial decline in their living standards in retirement, according to a new study.
The study, released by the Institute for Research on Public Policy on Friday, said about 50 per cent of those born between 1945 and 1970, averaging yearly income of between $35,000 and $80,000, can expect a decline in spending power of about 25 per cent, even after taking into consideration costs for things such as mortgages and children are likely to be absent in retirement.
The study, authored by Michael Wolfson, a former chief statistician of analysis and development with Statistics Canada, says a gradual doubling of Canadian Pension Plan and Quebec Pension Plan, as has been proposed, would do little to alleviate the retirement pressures for the cohort of people focused on in this research.
Besides an inadequate public pension system, Wolfson said in an interview that unreliable or lacking workplace pension plans as well as the failure of people to save privately also factor in to why so many people are heading toward lower living standards in retirement.
While there have been proposals for a gradual doubling of CPP/QPP benefits, Wolfson’s report argues it would do little to help those now between the ages of 40 and 65, since it would take about 40 years for the program to be fully funded as outlined in most proposals.
Wolfson said proposals to double the CPP benefit generally call for personal premiums to increase by about 2.5 percentage points — so 7.5 per cent versus about five per cent of maximum insurable earnings of $48,300.
The retired statistician suggested accelerating the doubling of the public pension plan to have it fully funded within a decade. He did not have figures available for how much that would cost individuals.
Wolfson did, however, argue against the criticism that such a plan would effectively mean members of the workforce are being forced to subsidize the lifestyles of retired people.
“What they forget is that if one enlarges the Canada Pension Plan and people pay for it 100 per cent and it’s fully phased in, the future working-age generation is going to have lower income taxes because the guaranteed income supplement won’t cost as much and there will be higher income taxes from the people who are getting the enlarged CPP,” he said |
發表於 2011-4-30 07:58
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