The Canadian Life and Health Insurance Association (CLHIA) surveyed Canadians to gauge their interest in greater private sector involvement in the pension plan industry. They found overwhelming support.
Canadians are massively in favour of Pooled Registered Pension Plans (PRPP), a federal government initiative for which the industry lobbied intensely in recent years. A staggering 90% of respondents prefer a mixed plan, which would involve both the public and private sectors.
In addition, 40% of Canadians would approve of these plans’ being managed by the private sector alone, while 13% prefer them to be managed by the public sector exclusively. These findings come from a CLHIA poll on registered group pension plans.
“These results showed, to our surprise, that Canadians have decreasing confidence in the governments’ ability to honour all the promises made in public plans,” Yves Millette, senior vice president, Quebec Affairs, at the CLHIA told The Insurance and Investment Journal.
The survey shows that the vast majority of the Canadian public supports the federal government’s proposal of giving employers more access to multi-employer plans (registered group pension plans).
Support for these plans was highest among workers in the private sector, at 92%. By comparison, 88% of public sector and crown corporation employees would welcome these plans.
The CLHIA poll shows that Albertans have the highest rate of support for the pooled registered pension plan (94%), followed by Ontarians and respondents in the Atlantic provinces (91%). Quebecers are slightly less enthusiastic about the federal government’s proposal (86%).
“Culturally, English Canadians outside Quebec keep a closer eye on their finances and are more curious about all aspects of individual retirement savings,” Mr. Millette explains. “By nature, Quebecers are more ‘collective’ and tend to rely more on public plans.”
Discussions under way
The final structure of the PRPP has not yet been announced. “The government proposal is similar to what we recommended, but we’re not sure how it will work out. There’s no formal bill yet,” Mr. Millette pointed out in an interview that took place before the election was announced “Everyone agrees on the broad principles. We have reached the details stage,” he adds.
For now, discussions are ongoing. “The most difficult thing is to ensure that the project advances at the same pace in each province,” Mr. Millette says. “Harmonizing many different plans is fairly complicated. These differences are one of the reasons that not enough Canadians contribute to a pension plan.” The CLHIA vice-president hopes that the final proposal will include financial incentives for companies and participants.
In a brief published in March 2010, the CLHIA called for extending access to inter-employer pension plans to all employers and self-employed workers. These recommendations influenced the public consultation held in the following months.
A boon for youth
The CLHIA findings shore up the arguments of proponents of inter-employer plans. More than half of the workers surveyed (55%) said they would save more if they had access to PRPPs. Only 49% of respondents ages 18-29 said that they save. Respondents ages 30-49 and 50-64 save in proportions of 75% and 78%, respectively.
In its current form, the PRPP proposed by the federal government resembles the simplified pension plan (SPP). The Régie des rentes du Québec has tried unsuccessfully to introduce an inter-employer plan in Québec since the mid-1990s.
The insurance industry views inter-employer plans as the best retirement solution for SMEs. Often deterred by plan costs, smaller companies could benefit from economies of scale by grouping together to offer a plan. Not only could they reduce administration fees and paperwork, but pooled plans would also save each company the burden of forming a pension committee.
The CLHIA survey of 1000 Canadian workers was conducted in February 2011 by Research House.