Transcript: The Evolution of Canada's Pensions | Dec 07, 2017

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a blue suit, white shirt, and patterned purple tie.

A caption reads "The evolution of Canada’s pensions."

The caption changes to "Twitter: @spaikin, @the agenda."

Steve says A RECENT REPORT BY THE
WORLD BANK LAUDED CANADA'S
PUBLIC PENSION ORGANIZATIONS AS
"SOME OF THE MOST ADMIRED
AND SUCCESSFUL" IN THE WORLD.
THEY HAVE NOT ALWAYS BEEN THUS,
AND INDEED THE FACT THAT THEY'VE
ACHIEVED THIS EXCELLENCE IN JUST
OVER A GENERATION IS PART OF
WHAT'S NOTEWORTHY.
JOINING US NOW FOR MORE ON
WHAT'S KNOWN AS THE CANADIAN
MODEL:
ALEX MAZER, FOUNDER OF THE
RETIREMENT SECURITY FIRM COMMON
WEALTH, AND CO-AUTHOR OF THE
WORLD BANK REPORT, "THE
EVOLUTION OF THE CANADIAN
PENSION MODEL: PRACTICAL LESSONS
FOR BUILDING WORLD CLASS PENSION
ORGANIZATIONS."
AND THAT'S WHAT WE'RE GOING TO
GET OUT OF YOU TODAY, SOME
PRACTICAL LESSONS AND
INFORMATION.
ALEX, THANKS FOR BEING HERE.

Alex is in his late thirties, clean-shaven and with short straight light brown hair. He wears a blue gray suit, white shirt and black tie.

Alex says THANKS FOR
HAVING ME.

Steve says LET'S GET THE
PENSIONS 101 LESSON ON HOW WE
BECAME, IN MANY RESPECTS, THE
ENVY OF THE WORLD BECAUSE OF THE
WAY WE DO PENSIONS.
HOW DID IT HAPPEN?

The caption changes to "The Evolution of Canada’s pensions. Reform and Success."

The caption changes to "Alex Mazer. Co-author of ‘The Evolution of the Canadian Pension Model.'"

Alex says THIS IS A STORY, AS YOU SAY,
THAT TOOK PLACE OVER A COUPLE OF
DECADES THAT REALLY STARTED,
SOME WOULD SAY, IN THE MID
'90s AND IT STARTED WITH A
FORM OF A CRISIS.

Steve says WHAT WAS THE CRISIS?

Alex says WELL, THERE WAS A MAJOR
UNDERFUNDING CRISIS OF A LOT OF
OUR PENSION PLANS.
THE CPP HAD A MAJOR FUNDING
CRISIS.
IT WAS SET TO RUN OUT OF MONEY.
A LOT OF THE PROVINCIAL PLANS
WERE SEVERELY UNDERFUNDED, THEY
WERE POORLY GOVERNED, THEY
WEREN'T INVESTED IN MARKETS AT
ALL.
THEY WERE BASICALLY JUST
INVESTED IN THESE NON-MARKETABLE
GOVERNMENT BONDS.
IT WAS A CHIEF SOURCE OF WORRY
FOR THE PROVINCE.
AND A LOT OF THE MEMBERS OF
THESE PLANS WERE WORRIED ABOUT
WHAT WAS GOING TO HAPPEN WITH
THEIR PENSION.
THEY WEREN'T SATISFIED WITH
THEM.

Steve says SO WHO STEPPED IN TO
DO WHAT?

Alex says WELL, IT WAS A COMBINATION OF
EFFORTS FROM, YOU KNOW, LABOUR
LEADERS, FROM GOVERNMENT
OFFICIALS, FROM PEOPLE WHO CAME
FROM THE BUSINESS SECTOR TO SAY,
HEY, WE WANT TO START TO CREATE
THESE WORLD CLASS PENSION
ORGANIZATIONS.
AND OVER ABOUT TWO DECADES, THEY
TURNED TO WHAT WERE VERY POORLY
RUN PENSION PLANS INTO SOME OF
THE BEST-RUN AND BEST-GOVERNED
PENSION ORGANIZATIONS IN THE
WORLD.

Steve says THOSE THREE GROUPS
YOU MENTIONED... BUSINESS,
LABOUR, GOVERNMENT... THEY DON'T
OFTEN GET TOGETHER ON VERY MUCH.

Alex says THAT'S TRUE.

Steve says HOW DID THEY FIND
THE SWEET SPOT ON THIS?

Alex says I'M GLAD YOU POINTED THAT
OUT.
THAT IS ONE OF THE KEY SUCCESS
FACTORS OF THESE PLANS IS
WORKING TOGETHER TO SERVE THE
BEST INTERESTS OF THE MEMBERS.
THERE'S REAL ALIGNMENT IN THESE
PLANS ABOUT GETTING THE BEST
RESULTS FOR THE MEMBER OF THE
PENSION PLAN, GETTING VALUE FOR
EVERY DOLLAR THAT GOES IN.
AND WHEN YOU SEE PEOPLE IN THESE
ORGANIZATIONS, WHETHER THEY'RE
LABOUR LEADERS AT THE BOARD
LEVEL, MANAGERS, INVESTMENT
PEOPLE WORKING WITHIN THE
ORGANIZATION, THEY ALL FEEL A
REAL STRONG SENSE OF MISSION
AROUND THAT.
IT'S NOT ABOUT SHAREHOLDER
VALUE, IT'S ABOUT VALUE FOR THE
MEMBER.

Steve says YOU MENTIONED
GOVERNANCE ISSUES AS WELL.

The caption changes to "Alex Mazer. Common Wealth."

Alex says THEY DIDN'T FOLLOW THE BEST
PRACTICES IN TERMS OF THE PEOPLE
WHO ARE THE ABILITY TO SEE
COMPLEX PENSION ORGANIZATIONS.
ONE OF THE KEY FACTORS OF THESE
PLANS IS THEY'RE VERY
WELL-GOVERNED, THEY'RE VERY
CAREFUL IN WHO THEY PUT ON THE
BOARDS, THEY TRY TO BE
SKILL-BASED IN WHO THEY PUT ON
THE BOARDS AND THEY'RE VERY
FOCUSED ON CONTINUOUSLY
IMPROVING THE PLANS FOR THE
BENEFIT OF THE BENEFICIARIES AND
OTHER STAKEHOLDERS INVOLVED.

Steve says WE SHOULD GIVE OUR
VIEWS A SENSE OF WHAT THE
NUMBERS WE'RE TALKING ABOUT
HERE.
THESE ARE PHENOMENALLY HUGE
POOLS OF MONEY.
FOR EXAMPLE, I DON'T KNOW IF YOU
HAVE THE FIGURE OFF THE TOP OF
YOUR HEAD, BUT THE TEACHERS
PENSION PLAN IS ONE WE HEAR
ABOUT ALL THE TIME.
HOW MUCH MONEY DO THEY HAVE?

Alex says NORTH OF 200 BILLION DOLLARS.
IF YOU LOOK AT THE TOP 10
PENSION PLANS IN THE COUNTRY,
THEY MANAGE 2 TRILLION DOLLARS, AND
THAT'S A LITTLE BIT MORE THAN A
THIRD OF THE TOTAL RETIREMENT
ASSETS IN THE COUNTRY.
BUT THEY HAVE GROWN QUITE LARGE.
THE CANADA PENSION PLAN
INVESTMENT BOARD IS NOW OVER
300 BILLION AND IS SET TO GROW
QUITE A BIT MORE WITH THE RECENT
ENHANCEMENT AS WELL.
THEY'RE INCREASINGLY IMPORTANT
NOT ONLY PLAYERS IN THE
RETIREMENT SYSTEM BUT THE
CAPITAL MARKETS AND OVERALL
ECONOMY.

Steve says BEING CRYSTAL CLEAR
ON THIS, FOR THE CANADA PENSION
PLAN WE'RE TALKING ABOUT
EVERYBODY, OF COURSE, RIGHT?
FOR TEACHERS WE'RE TALKING ONLY
ABOUT TEACHERS.

Alex says THAT'S CORRECT.

Steve says OR HOOPP, FOR
EXAMPLE, THE HEALTH CARE WORKERS
OF ONTARIO.
ARE WE TALKING ABOUT RSPs AS
WELL AND MUTUAL FUNDS AND ALL OF
THAT?

Alex says SO THE SUBJECT OF THE REPORT
IS REALLY FOCUSED ON PUBLIC
PENSION ORGANIZATIONS, AND AS
YOU SAY, THAT'S LARGELY PUBLIC
SECTOR PENSION PLANS FOR
GOVERNMENT AND PUBLIC SECTOR
EMPLOYEES, BUT IT WOULD ALSO
INCLUDE THE CPP AND THE CAISSE
DE DEPOT WHICH MANAGE BROADER
ASSETS.
SO WE'RE NOT TALKING ABOUT
PRIVATIZATION, TFSA, RSPs,
WHICH IS A DIFFERENT KIND OF
APPROACH THAN THESE COLLECTIVE
PENSION ARRANGEMENTS.

Steve says SO THE FOCUS OF YOUR
REPORT IS ON THE PUBLIC PENSION
PLANS THAT WE'VE JUST BEEN
TALKING ABOUT HERE.
DO WE NEED A CHANGE IN
GOVERNANCE IN THE WAY SOME OF
THESE OTHER PLANS, LIKE
RETIREMENT SAVINGS PLANS, ARE
ALSO ORGANIZED?

Alex says I THINK WE DO.
YOU KNOW, ONE OF THE FINDINGS
FROM THE REPORT IS THAT, IF YOU
DO CERTAIN THINGS RIGHT, WHICH
INCLUDE HAVING THE ADVANTAGE OF
SCALE, HAVING REALLY GOOD
GOVERNANCE, HAVING PROFESSIONAL
INVESTMENT TEAMS THAT ARE REALLY
DESIGNED TO SERVE THE MEMBER,
YOU GET MUCH BETTER RESULTS.
IN OTHER WORDS, YOU GET MUCH
BETTER RETIREMENT INCOME FOR
EVERY DOLLAR THAT YOU PUT IN.
AND WE FOUND, WHEN YOU LOOK AT
THE EVIDENCE, THAT THAT CAN BE
AS MUCH AS TWO TO FOUR TIMES
HIGHER THAN IF YOU TRY TO SAVE
ON YOUR OWN.
WHEN PEOPLE TRY TO SAVE ON THEIR
OWN THEY OFTEN END UP PAYING
HIGH FEES OR ENDING UP IN A
RELATIONSHIP WITH SOMEBODY THAT
DOESN'T HAVE A LEGAL DUTY TO
SERVE THEIR BEST INTERESTS AND
INVESTMENTS ON WHEN AND HOW TO
SAVE.
ALL THESE THINGS ARE THINGS THAT
A COLLECTIVE RETIREMENT
ARRANGEMENT LIKE A PENSION PLAN
CAN HELP TO ADDRESS.

Steve says I THINK EVERYBODY
UNDERSTANDS WHEN A STELCO GOES
UNDER OR WHEN A SEARS GOES UNDER
AND THEY'VE WORKED AT THOSE
COMPANIES FOR 20 OR 30 YEARS AND
THEIR PENSION PLAN MONEY IS
INVESTED THERE.
WE UNDERSTAND HOW THOSE PENSIONS
GET IN TROUBLE.

Alex says YES.

Steve says HOW DOES A
PROVINCIAL PENSION OR HOW DOES
THE CANADA PENSION PLAN, HOW DO
THEY GET IN TROUBLE?
BECAUSE THEY'RE NOT GOING OUT OF
BUSINESS ANY TIME SOON.
I MEAN, THE GOVERNMENT OF
ONTARIO AND THE GOVERNMENT OF
CANADA.
THEY'RE PROBABLY HERE FOR THE
LONG HAUL, DON'T YOU THINK?

Alex says WELL, A GOOD CAUTIONARY TALE
IS IF YOU LOOK AT THE U.S.
IF YOU COMPARE THE U.S. TO
CANADA, THE INVESTMENT RETURNS
ARE ABOUT 3 percent LOWER.
THE LEVEL OF FUNDING IS ABOUT
20 percent LOWER.
AND THE OVERALL PENSION DEFICIT
FOR U.S. STATE PENSION PLANS IS
ABOUT 350 BILLION DOLLARS.
SO WHY IS IT DIFFERENT?
WELL, THEY'VE HAD WORSE
GOVERNANCE, THEY HAVE A
POLITICIZED APPROACH TO
GOVERNANCE.

Steve says SORRY, POLITICIZED
APPROACH MEANS THE GOVERNOR PUTS
ALL HIS OR HER BEST FRIENDS ON
THE BOARD?

Alex says SOMETIMES ELECTED OFFICIALS
THEMSELVES CAN BE MAKING THE
PENSION DECISIONS AND THERE CAN
BE A CONFLICT.
THEY'RE NOT ARM'S LENGTH
ORGANIZATIONS THAT THE PENSION
PLANS HERE ARE.
THEY MAKE IRRESPONSIBLE
ASSUMPTIONS AROUND WHAT KINDS OF
INVESTMENT RETURNS THEY'RE GOING
TO SEE.
IN CANADA, EVEN THOUGH THE
PERFORMANCE HAS BEEN HIGHER, ARE
ABOUT 2 percent LOWER THAN WHAT U.S.
PLANS ASSUME.
THAT'S PARTLY WHAT ENDS UP
GETTING THESE INSTITUTIONS INTO
TROUBLE.
I SAY ONE OF THE THING THAT A
PUBLIC PLAN DOES WELL IS THEY'RE
NOT TIED TO ONE PARTICULAR
EMPLOYER.
WITH THE SEARS EXAMPLE, NORTEL,
G.M.
WHEN ONE COMPANY GOES DOWN, IT
CAN BE A PROBLEM FOR THEIR
PENSION PLAN.
THEY OFTEN HAVE UNIONS OR
ASSOCIATIONS INVOLVED THAT
OUTLAST THE LIFE SPAN OF ANY ONE
EMPLOYER AND THAT CAN BE A MORE
SUSTAINABLE APPROACH.

Steve says LET'S DO KIND OF A
STATE OF THE UNION FOR LACK OF A
BETTER EXPRESSION TODAY IN HOW
THIS WORKS.
I THINK WE KNOW NOW THAT THE
DAYS OF PEOPLE GETTING KIND OF,
YOU KNOW, ONE JOB WITH ONE
COMPANY FOR THEIR WHOLE LIFE
WHERE THEY'RE GOING TO, YOU
KNOW, HAVE A PENSION TO RELY ON
IN THEIR RETIREMENT, THOSE KINDS
OF JOBS ARE DISAPPEARING.
CAN YOU TALK TO US ABOUT WHAT
THE LONG-RANGE IMPLICATIONS ARE
THEN OF A SOCIETY WHERE FEWER
AND FEWER WORKPLACES OFFER THEIR
EMPLOYEES A PENSION?

The caption changes to "Alex Mazer. @alexmazer."

The caption changes to "The Evolution of Canada’s pensions. The Haves and the Have Nots."

The caption changes to "Connect with us: @theagenda, tvo.org, Facebook, YouTube, Periscope and Instagram."

Alex says THE IMPLICATION IS NOT GOOD.
I MEAN, WE'RE ON A TRACK
TOWARDS, OUTSIDE THE PUBLIC
SECTOR, A VERY DO-IT-YOURSELF
APPROACH TO RETIREMENT.
AND THE RESULTS THAT IT HAS
PRODUCED... WHEN YOU LOOK AT THE
KINDS OF SAVINGS LEVELS THAT
PEOPLE THAT DON'T HAVE A
WORKPLACE PENSION, THEY'RE VERY
LOW.
FOR EXAMPLE, FOR HOUSEHOLDS THAT
MAKE BETWEEN 25,000 DOLLARS AND 50,000
DOLLARS AND WITHIN TEN YEARS OF
RETIREMENT, THEY HAVE SAVINGS OF
ONLY 250 DOLLARS .
THEY HAVE SAVED VIRTUALLY
NOTHING.
IF WE CONTINUE ON THIS PATH
TOWARDS A DO IT YOURSELF
APPROACH.

Steve says BECAUSE THEY CAN'T?

Alex says I THINK IT'S BECAUSE IT'S
VERY COMPLEX TO DO ON YOUR OWN.
WHEN YOU LOOK AT THE NUMBER OF
DECISIONS THAT A PENSION PLAN
HAS TO MAKE ABOUT HOW THE ASSETS
ARE INVESTED, HOW MUCH YOU NEED
TO SAVE, HOW DECISIONS ARE MADE
AROUND WHAT YOU DO AFTER YOU
RETIRE IN TERMS OF GETTING THAT
STREAM OF PAYMENTS TO MAINTAIN
YOUR LIFESTYLE, IT'S A COMPLEX
SET OF THINGS TO DO.

Steve says NO, BUT, I MEAN, IF
YOU'RE 53 YEARS OLD AND YOU'RE
WORKING IN THE CAPITAL CITY OF
THIS PROVINCE, WHICH IS AN
EXPENSIVE PLACE TO LIVE, AND
YOU'RE MAKING 45,000 DOLLARS A YEAR,
HOW DO YOU PUT ANY MONEY AT ALL
ASIDE FOR A PENSION PLAN?

Alex says WELL, THERE'S THE BROADER
ISSUE OF, YOU KNOW, COMPRESSED
SALARIES, WHICH IS A REASON WHY
PEOPLE ARE HAVING TROUBLE
SAVING.
THERE'S THE ISSUE THAT PEOPLE
DON'T HAVE EFFICIENT WAYS TO
SAVE EITHER.
THEY DON'T NECESSARILY HAVE... A
LOT OF PENSION PLAN MEMBERS
TRUST THEIR PLAN.
A LOT OF PEOPLE ON THEIR OWN MAY
NOT TRUST THEIR FINANCIAL
INSTITUTION OR ADVISOR AND IN
SOME CASES THERE ARE GOOD
REASONS FOR THAT BECAUSE THEY
DON'T NECESSARILY HAVE THEIR
BEST INTERESTS IN MIND.

Steve says YOU POINTED OUT
THERE'S A DIFFERENCE BETWEEN THE
PUBLIC SECTOR AND THE PRIVATE
SECTOR WHICH WE'VE TALKED ABOUT
AND A DECLINING NUMBER OF
PENSIONS BEING OFFERED.
HOW IS IT IN THE PUBLIC SECTOR
TODAY?

Alex says I THINK GENERALLY WE'VE DONE
VERY WELL.
MOST OF OUR LARGE PUBLIC SECTOR
PLANS ARE VERY, VERY WELL-RUN.
WE STILL HAVE SOME SMALLER POOLS
OF PUBLIC SECTOR PENSIONS THAT
PROBABLY SHOULD BE MERGED
TOGETHER WITH SOME OF THE LARGER
ONES, BUT THEY TEND TO BE
WELL-FUNDED, THEY TEND TO HAVE
DELIVERED GOOD RETURNS, AND THEY
TEND TO BE IN GOOD FINANCIAL
SHAPE.
NOT TO SAY THEY DON'T FACE SOME
CHALLENGES GOING FORWARD.
SOME OF THEM HAVE CHANGING
DEMOGRAPHICS.
THEY'RE BECOMING MORE MATURE, IS
WHAT YOU CALL IT IN THE PENSION
WORLD.
AND AS THEY GET BIGGER THEY'RE
ALSO GOING TO FACE MORE
SCRUTINY.
THEY'RE GOING TO HAVE TO
CONTINUE TO SHOW THEY DELIVER
VALUE FOR MONEY.
IN THE PRIVATE SECTOR IT'S A
VERY DIFFERENT STORY.
EMPLOYERS ARE GETTING OUT OF THE
PENSION BUSINESS.
MANY OF THE PENSIONS ARE
UNDERFUNDED.
AND MANY PEOPLE... NEW EMPLOYERS
IN INDUSTRIES LIKE TECH AND
OTHER PLACES ARE NOT EVEN
LOOKING AT SETTING UP RETIREMENT
PLANS AT ALL.

Steve says LET'S GIVE PEOPLE
SOME ADVICE THEN.
IF YOU DO WORK IN THE PRIVATE
SECTOR AND YOU ARE AT ONE OF
THOSE PLACES THAT DOES NOT OFFER
A PENSION FOR THEIR EMPLOYEES
REGARDLESS OF HOW LONG YOU SPEND
THERE, WHAT SHOULD PEOPLE DO?

Alex says WELL, I THINK, YOU KNOW, YOU
CAN LOOK AT SOME OF THE LESSONS
FROM THE PUBLIC PENSION PLANS
AND DO SOME OF THE THINGS ON
YOUR OWN.
KEEPING FEES LOW IS VERY
IMPORTANT.
WE HAVE THE HIGHEST MUTUAL FUND
FEES IN THE WORLD HERE IN
CANADA.

Steve says WE DO, EH?

The caption changes to "The Evolution of Canada’s pensions. Public Lessons for Private Funds."

Alex says WE DO.
WE WERE RECENTLY RANKED LAST IN
A REPORT BY MORNINGSTAR.
HIGH FEES CAN EAT UP 30 OR
40 PERCENT OF YOUR SAVINGS.
IF YOU KEEP THE FEES LOW, THAT
DOES HELP.

Steve says LET ME INTERRUPT FOR
A SECOND.
HIGH FEES ARE ONE THING IF
YOU'RE GETTING FANTASTIC SERVICE
AND GREAT RETURNS.

Alex says RIGHT.

Steve says ARE WE?

Alex says THERE TENDS NOT TO BE A
CORRELATION BETWEEN HIGHER FEES
AND PERFORMANCE.
AND OFTEN WHAT PEOPLE PAY HIGH
FEES FOR, WHICH IS TRYING TO
BEAT THE MARKET, IF YOU INVEST
IN THE MOST ADVERTISED MUTUAL
FUNDS, THEY'RE OFTEN THE MOST
LIKELY TO UNDERPERFORM THE
MARKET BECAUSE THEY JUST HAD A
HOT RUN AND SO THEY GET
ADVERTISED AND SAY THEY HAVE
FIVE STARS AND GET FANTASTIC
RETURNS.
STATISTICALLY THEY UNDERPERFORM
THE MARKET.

Steve says ONCE EVERYBODY
KNOWS, THE HORSE IS OUT OF THE
BARN.

Alex says IT'S HARD TO BEAT THE MARKET
EVEN FOR A LARGE INSTITUTION
LIKE A PUBLIC PENSION PLAN.
KEEPING FEES LOW.
TRYING TO WORK WITH SOMEBODY
THAT ACTUALLY DOES HAVE A LEGAL
DUTY TO SERVE YOUR BEST
INTERESTS, A FIDUCIARY STANDARD.
AND TRYING TO START SAVING EARLY
AND CONSISTENTLY, AS YOU WOULD
DO THROUGH A PENSION PLAN.
THERE ARE THINGS THAT AN
INDIVIDUAL CAN DO FOR SURE.
WE THINK THE MORE IMPORTANT STEP
TO TAKE IS TO ACTUALLY EXPAND
ACCESS TO THESE COLLECTIVE
ARRANGEMENTS AND TO TRY TO BRING
THE PRINCIPLES FROM THE BETTER
PENSION PLANS TO THE PRIVATE
SECTOR, TO THE NON-STANDARD KIND
OF FREELANCE WORK FORCE AND
OTHER PARTS OF THE ECONOMY THAT
ARE NOT TYPICALLY COVERED BY A
PENSION.

Steve says I DON'T KNOW THIS
FOR SURE BUT MY HUNCH IS MOST
PEOPLE WHO HAVE A PENSION PLAN
WHO DON'T WORK... YOU KNOW, WHO
DON'T GET ONE FROM WOULD, AND
WHO DON'T WORK... THEY DON'T
WORK IN THE PUBLIC SECTOR AND
THEY DON'T GET ONE IN THE
PRIVATE SECTOR, THEY'RE DEALING
WITH THEIR BROTHER-IN-LAW,
THEY'RE DEALING WITH THEIR
COUSIN WHO IS IN THE BUSINESS.
THAT'S ALL THE DUE DILIGENCE
THEY DO.
HOW DO YOU GO BEYOND THAT?

Alex says WELL, YOU KNOW, PART OF WHAT
OUR BUSINESS IS ABOUT IS TO WORK
WITH GROUPS LIKE UNIONS,
ASSOCIATIONS, AND COMMUNITIES TO
SAY, CAN WE SET UP A RETIREMENT
ARRANGEMENT FOR YOUR MEMBERS
THAT AREN'T COVERED BY THEIR
EMPLOYER, AND TO GIVE PEOPLE
ACCESS TO A PLAN THAT IS SIMILAR
TO A HIGH QUALITY
EMPLOYER-SPONSORED PENSION PLAN.

Steve says CAN I ASK YOU A REAL
SMART ALEC QUESTION?
YOU WORK AT COMMONWEALTH.
DO YOU OFFER PENSIONS TO YOUR
EMPLOYEES THERE?

Alex says WE DON'T HAVE A PENSION PLAN.
OUR PLAN IS TO JOIN ONE OF THE
ONES WE'RE IN THE PROCESS OF
SETTING UP.
WE WANT TO BE VERY ALIGNED WITH
THE PEOPLE THAT WE'RE WORKING
WITH.
WE WANT TO BE PART OF A LARGER
COMMUNITY PLAN IN THE SAME SENSE
THAT WE THINK HAVING A UNION OR
ASSOCIATION OR A BROADER GROUP
SPONSOR A PLAN IS BETTER THAN
JUST HAVING A SINGLE EMPLOYER
GOING TO SET ONE UP.
BECAUSE A LOT OF EMPLOYERS DON'T
WANT TO GO TO THE TROUBLE OF
SETTING UP A PLAN.
THEY DON'T HAVE THE
SOPHISTICATION TO DO THAT.

Steve says THE THING THEY TOLD
ME AS A KID, YOU GET PAID.
PAY YOURSELF FIRST.
ARE YOU STILL DOING THAT?

Alex says GOOD ADVICE.

Steve says YOU'RE A YOUNG GUY.
DO YOU DO THIS?

Alex says I PROBABLY STARTED TOO LATE.
I LOOK BACK I MADE A LOT OF THE
MISTAKES PEOPLE MAKE.
I GOT A LAW DEGREE.
I'VE WORKED WITH PENSION PLANS.
I'VE MADE MISTAKES.
I THINK THE LIKELIHOOD OF AN
INDIVIDUAL DOING EVERY SINGLE
THING RIGHT FROM A YOUNG AGE AND
FINANCIAL LITERACY ALONE IS GONNA
GET PEOPLE MAKE THOSE RIGHT
DECISIONS IS JUST NOT SOMETHING
THAT’S GOING TO HAPPEN.

Steve says HOW DO YOU GET A
20-YEAR-OLD TO START THINKING
ABOUT A PENSION PLAN FOR THEIR
RETIREMENT?

Alex says IT'S DIFFICULT.
THAT'S WHY THINGS LIKE MANDATORY
RETIREMENT OR AUTOMATIC
ENROLMENT, USING BEHAVIOURAL
SCIENCE, THAT'S WHAT YOU HAVE TO
DO.
PEOPLE TEND NOT TO BE THINKING
AT THAT AGE.
PEOPLE OFTEN DEFER DECISIONS
LIKE THAT.
IF YOU USE A TECHNIQUE TO SAY
WE'RE GOING TO AUTOMATICALLY PUT
YOU IN THE PLAN, YOU'LL ALWAYS
HAVE THE OPTION TO OPT OUT,
PEOPLE TEND NOT TO OPT OUT, THEY
STICK WITH IT.
THIS HAS BEEN PROVEN IN THE
U.K., THE U.S.
IT WORKS WELL.
WE COULD BE DOING MORE OF IT
HERE IN CANADA.

Steve says ALEX, LAST QUESTION
FOR YOU.
HOW OLD IS YOUR KID?

Alex says HE'S 11.

Steve says ARE YOU CONFIDENT
WHEN HE'S 60-WHATEVER, FIVE,
MAYBE IT WILL BE OLDER BY THEN,
THE CANADA PENSION PLAN WILL BE
THERE FOR HIM?

Alex says I'M PRETTY CONFIDENT IN THE
CANADA PENSION PLAN.

Steve says PRETTY CONFIDENT?

Alex says YOU NEVER KNOW WHAT MARKETS
WILL DO IN THE FUTURE.
THE ACTUARIES PROJECT IT TO BE
SUSTAINABLE FOR THE NEXT 75
YEARS. SO I THINK THAT PLAN
IS IN SOLID SHAPE.
WHAT I'M MORE WORRIED ABOUT IS
WHAT IS HE GOING TO DO WITH THE
REST OF HIS RETIREMENT SAVINGS.
RIGHT NOW HE THINKS PENSIONS ARE
PRETTY BORING. I HAVE A FEW MORE
YEARS TO CONVINCE HIM.

Steve says IN THE LAST FEW
MINUTES, WE SAVE PEOPLE FROM
READING YOUR 80-PAGE REPORT,
THEY MAY PREFER THE WAY WE DID
IT.
ALEX, GOOD OF YOU TO COME AND
SHARE YOUR VIEWS TONIGHT HERE
ON TVO. THANKS SO MUCH.

Alex says THANKS FOR HAVING ME.

The caption changes to "The Evolution of Canada’s pensions. Producer: Liane Kotler. @LianeKotler."

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