Thank you.
What we wanted to talk to you about today is the current state of the retirement savings system in Canada and where it's expected to go, according to three themes: coverage, meaning who has access to a pension plan; adequacy, meaning how many people are likely to have saved enough; and pension benefit security. I'll be covering the first two points and my colleague, Steve, will cover the third.
I've also brought with me some statistics from Statistics Canada on what we can expect women, as compared to men, to have accumulated in retirement savings.
The questions for retirement income security in Canada really are: what are you going to get from government pensions; how many Canadians have pension plans, and who are they; how much does a person need to save for retirement; and how much have Canadians saved?
Government benefits cannot be expected to provide an individual with more than about $15,000 to $20,000 a year in lifetime retirement income. That's income from the Canada Pension Plan, the old age security program, and the guaranteed income supplement, and the allowance, if you get it. In most parts of Canada, $15,000 to $20,000 is not enough to have saved for a comfortable retirement.
Pension plan membership in Canada is heavily weighted towards the public sector, where about 2.8 million workers, or 85% of all public sector workers, are members of a defined benefit pension plan. In the private sector, it's under 20% of workers who have a defined benefit pension plan, and those plans typically tend to be much less generous. As for private sector employees, 75% of them—over 11 million people—do not belong to a pension plan and they rely heavily on RRSP savings. In the public sector, a slight majority of women belong to pension plans; but in the private sector, among those who actually have pension plans, it's about 58% to 60% male.
In terms of the retirement income that people need, the question is how much do you have to save during your lifetime? I'm just going to put some numbers out here so that you have an idea of how expensive it is to provide for a good retirement income at typical retirement ages. When I say “typical”, I mean an age of 58 in the public sector, which is the median retirement age. In the private sector, it's 62. And for self-employed people, it's a bit higher than that.
So if you want a pension, payable at age 60, and you want that pension indexed and with a spousal survivor benefit, every dollar of pension is going to cost you $21. If you want that pension at age 65, it'll cost you a bit less, or about $18.50. What that means in practice is that if you want to have a $20,000, $40,000, $60,000, or $80,000 pension, it is going to cost you a minimum—for the $20,000 pension at age 60—of $420,000. If you want a $40,000 pension, it will cost you $845,000. And if you want a $60,000 to $80,000 pension, it's going to cost you $1.2 million to $1.7 million.
I think it's fairly obvious to everyone here that people are not saving this much, particularly in the private sector. In the public sector, saving rates are very good, but in the private sector they do not approach that. According to Statistics Canada, median family retirement savings are $55,000 in families where the major income recipient is between the age of 55 and 64 and where they only have an RRSP; $225,00 for those families who have a pension plan only; and about $250,000 for those families with a pension plan and an RRSP. That $250,000 isn't even enough to buy you a pension of $20,000 a year. It's important to remember that these numbers I've quoted are for family retirement savings.
Now, there are other sources of income that you can receive in retirement. There are non-sheltered savings, home equity, etc., but many people rely heavily on their sheltered savings.
The conclusions that we draw from this are that if you rely on pension benefits from government sources, you're going to be poor; that Canadians are not well prepared for retirement; and that more Canadians need to be in better pension arrangements.
Some other facts to keep in mind are that women live longer than men, three to four years longer on average, which means they need to save more; that men outnumber women overall in pension coverage; that women earn less per hour worked than men do; that twice as many women as men are in part-time employment; that women, obviously, participate in the labour force at lower rates: women take time off for child care.
Women receive less in Canada Pension Plan benefits than men. Women in Canada are saving less than men, even though they need to save more. They cannot save as much as men because they don't make as much, as a proportion of income. This means that women are more likely to experience poverty in retirement than men are.
There was a University of Waterloo study that suggested that by 2030, two-thirds of Canadian retirees will not have enough to live on. That's the picture globally between men and women that we're looking forward to. We know, based on women's income and their participation in the labour force, etc., that they will be in an even worse position than men.