Quebecers have a retirement system that is often held up as a model, but this system is facing two major problems:
1
Insufficient level of savings among many workers
2
Significant pressure on pension plans (population aging and difficult economic context)
Still a long way from meeting retirement goals
According to a study conducted by the Canadian Payroll Association (CPA), although a number of employees in small and medium-sized companies save a little, the savings rate remains low. When asked, 73% of employees say they have saved less than a quarter of what they wish to accumulate. Among employees closer to retirement (50 and older), 45% report that they are less than a quarter of the way to their retirement savings goal.
Another survey, released in April 2012 by McKinsey & Company, found that 21% of Quebecers will be unable to maintain their current lifestyle in retirement. “I don’t want to be alarmist, but a quarter of Canadians will need to wake up and save more,” says co-author Claude Généreux.
This study also reveals that in Quebec, 37% of households with a gross annual income of $140,000 or higher will have to scale back their lifestyle in retirement, compared to 30% of households earning $90,000 and 19% of households earning $60,000.
Eloquent figures...
50%
of workers in Quebec – 2 million of them – do not have access to a workplace pension plan
30%
of workers have no personal savings
73%
of employees have saved less than a quarter of what they wish to accumulate
The Government of Quebec has already taken concrete steps to improve the situation, in particular to stabilize the financial situation of the Quebec Pension Plan and to encourage workers to delay retirement. However, these steps are not enough to generate stable, predictable retirement income for all workers. The government has therefore looked into other solutions. One of these alternatives is to create the voluntary retirement savings plan (VRSP).