Transcript: Creating Retirement Security | 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 gray suit, white shirt, and spotted purple tie.

A caption on screen reads "Creating retirement security. @spaikin, @theagenda."

Steve says CANADIAN PUBLIC
PENSIONS GARNER HIGH PRAISE BY
INTERNATIONAL STANDARDS, SETTING
A STABLE PATH FOR THE FUNDS AND
THE RETIREES WHO RELY ON THEM.
THAT'S GREAT, AS FAR AS IT GOES,
BUT IT DOESN'T TELL THE WHOLE
STORY OF HOW WELL CANADIANS
OVERALL ARE SET UP FOR CREATING
SECURE RETIREMENT INCOMES.
JOINING US NOW FOR A FULLER
SENSE OF THAT:
HUGH O'REILLY, PRESIDENT AND CEO
OF OPTrust, ONE OF CANADA'S
LEADING DEFINED BENEFIT PENSION PLANS...

Hugh is in his sixties, clean-shaven, with short gray hair. He's wearing rounded glasses, a gray suit, white shirt, and striped blue tie.

Steve continues MARLENE PUFFER, PARTNER AT
ALIGNVEST INVESTMENT MANAGEMENT
AND BOARD TRUSTEE AT THE
HEALTHCARE OF ONTARIO PENSION
PLAN.
THAT'S HOOPP FOR SHORT.

Marlene is in her late forties, with shoulder-length wavy chestnut hair. She's wearing a gray blazer over a blue blouse.

Steve continues KEITH AMBACHTSHEER, DIRECTOR
EMERITUS OF THE INTERNATIONAL
CENTRE FOR PENSION MANAGEMENT AT
THE ROTMAN SCHOOL OF MANAGEMENT
AT U OF T AND PRESIDENT OF KPA
ADVISORY SERVICES...

Keith is in his seventies, clean-shaven, with short white hair. He's wearing glasses, a gray plaid suit and a blue shirt.

Steve continues AND CAROLINE CAKEBREAD, EDITOR,
CANADIAN INVESTMENT REVIEW AND A
FINANCIAL LITERACY EXPERT.

Caroline is in her forties, with long wavy blond hair. She's wearing glasses, a blue blouse and a gold chain necklace.

Steve continues WE'RE DELIGHTED TO WELCOME ALL
OF YOU TO TVO TONIGHT.
HUGH, FOR THE FIRST TIME IN 20
YEARS.
IT'S REALLY 20 YEARS SINCE YOU
WERE LAST YEAR?

Hugh says YEAH.

Steve says MY GOODNESS.
THAT'S NO INDICATION WE THOUGHT
YOU WERE LOUSY LAST TIME.
JUST SO YOU KNOW.

Hugh says A GENERATIONAL PHENOMENON?

Steve says THERE YOU GO.
KEITH YOU'VE BEEN HERE BEFORE.
LET'S PUT THIS UP, SHALL WE,
SHELDON?
THIS IS THE RETIREMENT PICTURE
FOR CANADIANS FROM COAST TO
COAST TO COAST THAT HAVE
RETIREMENT SAVINGS.

A slate appears on screen, with the title "Where's the money? Canadians' retirement picture."

Steve reads data from the slate and says
65 percent OF US APPARENTLY HAVE
RETIREMENT SAVINGS.
LET'S BREAK THIS DOWN.
30 percent HAVE A REGISTERED PENSION
PLAN.
THAT IS A PLAN AT WORK OR
THROUGH A UNION.
IT'S EITHER A DEFINED BENEFIT OR
A DEFINED CONTRIBUTION PLAN.
THOSE ARE DIFFERENT.
WE CAN GET INTO THAT.
35 percent HAVE SOME MONEY SOCKED AWAY
IN A RETIREMENT SAVINGS PLAN, AN
RRSP.
40 percent HAVE MONEY SOCKED AWAY IN A
SAX-FREE SAVINGS ACCOUNT, A
TFSA, AND 35 percent HAVE LITTLE TO
NOTHING SAVED ON THEIR OWN.
OF COURSE, WHEN THEY TURN 65,
THEY'LL GET OLD AGE SECURITY AND
BE ELIGIBLE FOR CANADA PENSION
PLAN.
I'M NOT THERE YET, BUT PEOPLE
TELL ME, THAT'S NOT ENOUGH TO
LIVE ON AND THAT'S WHY YOU'VE
GOT TO START DOING YOUR OWN THING.
SO WITH THOSE NUMBERS IN PLACE,
MARLENE, GET US STARTED HERE,
WHAT JUMPS OUT AT YOU AS
SOMETHING WE HAVE TO PAY ATTENTION TO?

The caption changes to "Marlene Puffer. Alignvest Investment Management."
Then, it changes again to "The landscape."

Marlene says I THINK WE
REALLY HAVE TO PAY ATTENTION TO
THOSE NUMBERS AT THE BOTTOM OF
THAT LIST.
THAT'S THE NUMBERS FOR PEOPLE
WHO ARE IN THE LOWER INCOME
BRACKET ARE GOING TO BE
STRUGGLING THROUGH THEIR
RETIREMENT.
WE COVER OFF THE VERY, VERY
BASICS WITH OLD AGE SECURITY AND
THE CANADA PENSION PLAN, AND
YOU'RE RIGHT, IT REALLY IS NOT
ENOUGH TO LIVE ON.
AND THEN WHEN YOU GO UP THE
LADDER A LITTLE BIT, WHERE
PEOPLE ARE ACTUALLY SAVING, I
THINK ONE OF THE KEY THINGS IS
THAT THEY'RE SAVING IN A WAY
THAT THEY'RE LOSING OUT ON
POTENTIAL RETURNS.
SO THEY'RE NOT INVESTING IN THE
BEST WAY POSSIBLE NECESSARILY.
THEY ARE INVESTING IN KIND OF AN
OLD-FASHIONED WAY.
THEY'RE INVESTING IN A WAY THAT
IS NOT GOING TO GIVE THE RETURNS
GOING FORWARD THAT THEY'VE
GOTTEN IN THE PAST FROM A
STANDARD KIND OF 60 percent STOCKS AND
40 percent BONDS KIND OF RULE OF THUMB.
THAT'S DONE FINE OVER THE PAST
20 YEARS.
BUT WITH INTEREST RATES AT 2 OR
2.5 percent, THE STOCK MARKET EXPECTED
RETURNS MAY BE 5 AND CHANGE,
YOU'RE NOT GOING TO BE EARNING
ENOUGH WITH A PORTFOLIO LIKE
THAT.

Steve says YOU NEED A NEW WAY
OF DOING BUSINESS.

Marlene says THAT'S RIGHT.

Steve says HUGH?

The caption changes to "Hugh O'Reilly. Optrust."

Hugh says I THINK WHAT
THOSE NUMBERS TELL US IS THE
STORY FOR THE NEXT 20 YEARS WE
HAVE A RETIREMENT INCOME CRISIS
IN CANADA.
WE NEED TO ADDRESS IT.
WE NEED TO ADDRESS IT NOW.
THERE ARE FEARS THAT PEOPLE HAVE
ABOUT INTERGENERATIONAL EQUITY,
THE BILLS THE MILLENNIALS ARE
GOING TO GET STUCK WITH.
IF WE DON'T START DEALING WITH
THIS ISSUE NOW, THE BILLS
THEY'LL GET STUCK WITH 20, 30
YEARS DOWN THE LINE ARE GOING TO
BE UNBELIEVABLE.
WE'RE NOT A SOCIETY THAT'S GOING
TO LET PEOPLE LIVE IN POVERTY.
IT'S ONE OF THOSE... IT'S LIKE
THE OLD FRAM AIR FILTER.
YOU PAY IT NOW OR PAY IT LATER.
I THINK WE HAVE TO GET ON THIS
ISSUE NOW.

Steve says CAROLINE?

The caption changes to "Caroline Cakebread. Canadian Investment Review."

Caroline says I WAS
GOING TO ADD BY SAYING, THERE
ARE A LOT OF DIFFERENT WAYS
PEOPLE ARE SAVING AND A LOT OF
WAYS THEY SHOULD BE SAVING,
WHETHER IT'S 60-40 OR SOME OF
THOSE TOOLS THAT MARLENE ALLUDED
TO, BUT AT THE SAME TIME, WHEN
YOU LOOK AT THE BIG NUMBER THAT
THE MEDIAN RETIREMENT SAVINGS OF
THE AVERAGE CANADIAN OF THE AGE
BETWEEN 55 TO 64, IT'S ACTUALLY
JUST 3,000 dollars.
SO EVEN...

Steve says THAT'S THE MEDIAN?

Caroline says YEAH.

Steve says AMOUNT OF SAVINGS
PER YEAR?

Caroline says IN TOTAL.
IN TOTAL.

Steve says IN TOTAL?

Caroline says IT'S 3,000 dollars ACCORDING TO THE
BROADBENT INSTITUTE.
AND BEYOND THAT, EVEN FOR
INDIVIDUALS WHO ARE EARNING
BETWEEN 50,000 AND 100,000 dollars A
YEAR, YOU CAN KICK THAT UP TO
21,000 dollars AS THEIR TOTAL
RETIREMENT SAVINGS THAT THEY
HAVE IN THE BANK BETWEEN THE
AGES OF 55 AND 64.
SO WE'RE JUST GETTING UP TO
RETIREMENT.
SO OUT OF THE GATE, WE HAVE A
PROBLEM THAT ISN'T LOOMING 20
YEARS DOWN THE ROAD, IT'S
ACTUALLY AROUND THE CORNER.
I FIND IT INTERESTING THAT THERE
IS A SPECTRUM OF SAVINGS
VEHICLES OUT THERE, BUT I REALLY
QUESTION HOW MUCH PEOPLE ARE
ACTUALLY SOCKING AWAY IN THOSE
VEHICLES.

Steve says KEITH?

The caption changes to "Keith Ambachtsheer. Rotman School of Management,"

Keith says NOT AS BAD AS WHAT I'M HEARING.
NUMBER ONE, CANADA ACTUALLY
RANKS HIGHEST IN THE WORLD IN
TERMS OF INCOME REPLACEMENT FOR
LOW INCOME WORKERS.
IN FACT, IN MANY CASES THEY GET
MORE IN RETIREMENT THAN THEY DID
WHEN THEY WERE WORKING.
SO IMMEDIATELY THE ISSUE FOR
CANADA, OTHER THAN JUST RAISING
INCOMES GENERALLY, THE LOW END
OF THE SPECTRUM, ACTUALLY WE'RE
DOING VERY WELL ON A RELATIVE
BASIS.
SO IF YOU MOVE UP THE INCOME
LADDER AND THE MIDDLE INCOME
GROUP, IMMEDIATELY YOU HAVE A
HUGE SPLIT BETWEEN PEOPLE THAT
HAVE WORKPLACE PENSIONS AND
THOSE THAT DON'T.
IN THE BROAD PUBLIC SECTOR,
THESE PENSIONS DO EXIST, SO
AGAIN, THERE'S NO ISSUE THERE.
IT'S GOING TO BE SIGNIFICANT
INCOME REPLACEMENT ON TOP OF OAS
AND CPP.
THAT'S NOT AN ISSUE.
NOW WE'RE GETTING DOWN TO THE
GROUP THAT I THINK WE NEED TO
LOOK AT MOST CAREFULLY, WHICH
ARE MIDDLE INCOME WORKERS
WITHOUT PENSION PLANS THAT WOULD
LIKE TO MAINTAIN THEIR STANDARD
OF LIVING AFTER THEY STOP
WORKING.
THAT'S A SPECIFIC GROUP RATHER
THAN A BROAD GENERAL PROBLEM.

Steve says I'M GOING TO GO BACK
TO HUGH RIGHT NOW.
ON THE ONE HAND YOU SAY WE'RE
DOING BETTER THAN IS BEING
SUGGESTED OUT HERE AND I HEAR
YOU SAYING WE'RE IN A CRISIS.
WHICH IS IT?

Hugh says A FEW THINGS I'D POINT OUT.
FIRST OF ALL, WHEN WE LOOK AT
HISTORY AND WE TALK ABOUT THE
POSITION OF SENIORS, THAT'S IN A
PERIOD OF TIME WHERE WE HAD
FEWER SENIORS THAN ARE ABOUT TO
RETIRE.
THE LEADING EDGE OF THE BABY
BOOM IS COMING.
THE PRESSURE THAT THAT'S GOING
TO PUT ON GOVERNMENT FROM A
FISCAL PERSPECTIVE, OAS, GIS,
THOSE SUPPORTS, PLUS HEALTH CARE
COSTS, THIS IS A BIG BURDEN.
AND WE ALSO HAVE TO BE AWARE OF
THE FACT THAT WE'VE HAD...
STEVE, YOU HAIL FROM HAMILTON.
WE'VE SEEN THE DEMISE OF
INDUSTRY.
WE'VE SEEN THE DEMISE OF DEFINED
BENEFIT PLANS.
WHAT'S COMING IS DIFFERENT THAN
WHAT HAS BEEN.
WE CAN TRY AND ISOLATE IT DOWN
TO THE MIDDLE CLASS, BUT I THINK
IT'S MORE THAN THAT.
AND I THINK THAT THE OTHER ISSUE
WE HAVE IS WE HAVE TO KEEP THIS
ISSUE FRONT OF MIND, WE HAVE TO
CONTINUE TO PROMOTE THESE,
WHETHER IT'S FINANCIAL LITERACY,
WHETHER IT'S INDIVIDUAL SAVINGS,
OR WHETHER IT'S EXPANDING
PENSION PLANS TO MEET THE NEEDS.
AND THEN WHEN YOU ADD IN WHAT
MARLENE WAS TALKING ABOUT WHERE
THE YIELDS AREN'T THERE FOR
PEOPLE TO RETIRE ON, THEY'RE
GOING TO TAKE MORE RISK WITH
THEIR INVESTMENTS.
WE HAVE BIG PROBLEMS COMING.

Keith says THIS IS THE MATH AGAIN, VERY
SIMPLE MATH.
LET'S TALK ABOUT FOLKS IN
TODAY'S NUMBERS.
OAS, ABOUT 7,000 dollars A YEAR.
IF YOU LOOK AT THE EXPANDED CPP
BENEFITS... IT'S GOING TO TAKE A
FEW DECADES FOR THEM TO ROLL IN.
ESSENTIALLY NOW WHAT WE'RE
TARGETING IS TO REPLACE
ONE-THIRD OF EARNED INCOME UP TO
A MAXIMUM IN TODAY'S DOLLARS
ABOUT 65,000 dollars.
SO THAT'S ROUGHLY 20,000 dollars.
20,000 dollars PLUS 7,000 dollars, 27,000 dollars.
YOU NOW HAVE A TWO-INCOME
FAMILY, WE'RE NOW UP TO 54,000 dollars.
I'M SORRY, BUT I DON'T SEE WHERE
THIS CRISIS IS COMING FROM.
THERE ARE POCKETS WHERE WE NEED
TO DO THINGS, BUT WE DON'T HAVE
A RETIREMENT INCOME CRISIS IN
CANADA.

Steve says LET ME GET YOU ON
THAT.
YOU HAVEN'T WEIGHED IN ON THE
CRISIS ASPECT OF IT YET.

The caption changes to "Marlene Puffer. Healthcare of Ontario Pension Plan."

Marlene says I THINK THERE'S SOME VALIDITY
TO WHAT KEITH IS SAYING, AT THE
LOWER END, THERE IS A
COMBINATION.
BUT I THINK A LOT OF THAT IS
PREMISED UPON PEOPLE BEING IN
COUPLES.
I'M SORRY, THE FAMILY STRUCTURE
HAS BROKEN DOWN, AND THERE'S A
WHOLE LOT OF PEOPLE LIVING IN
RETIREMENT NOT IN A COUPLE
SITUATION.
SO I THINK THAT'S NOT A FAIR
COMMENT.
YOU KNOW, THE VAST MAJORITY OF
RETIREES WHO ARE IN THE OLDER
AGE RANGE ARE FEMALE.
SO FEMALE POVERTY IS A REALITY,
AND IF ALL YOU'RE LIVING ON IS
THAT 21,000 dollars OR 25,000 dollars OR
WHATEVER IT IS THAT YOU GET IN
THAT COMBINATION, YOU MAY NOT BE
EATING CAT FOOD BUT YOU'RE
CERTAINLY NOT ABLE TO AFFORD
SUPPORTIVE LIVING IF YOU NEED
THAT...

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

Steve says IS THERE THE
ASSUMPTION YOUR KIDS ARE GOING
TO TAKE CARE OF YOU AS WELL,
ASSUMING YOU HAVE KIDS.

Marlene says I'M SORRY, MY KIDS ARE
LOOKING AT TRYING TO LIVE THEIR
LIVES AND IT'S A HECK OF A LOT
HARDER FOR THEM TO DO WHAT WE
DID IN OUR GENERATION, SAVING
FOR ANY KIND OF HOUSE PURCHASE
AND PAYING FOR THEIR EDUCATION.
MY KIDS ARE PRIVILEGED.
THEY'RE GETTING THEIR EDUCATION
PAID FOR.
NOT EVERYBODY DOES.

Steve says CAROLINE?

Caroline says I WANT
TO PICK UP ON THAT POINT.
I THINK IT IS PARTICULARLY
DIFFICULT FOR WOMEN AND
INDIVIDUALS WHO HAVE COME IN AND
OUT OF THE WORK FORCE.
PERHAPS THEY HAVE THE BURDEN OF
CARE-GIVING AT HOME.
PERHAPS THEY HAVE NOT BEEN IN
THE WORK FORCE CONSISTENTLY
THROUGH TIME.
AND IN ADDITION, WOMEN LIVE
LONGER THAN MEN, TWO TO THREE
YEARS LONGER THAN MEN.
THEY HAVE TO SAVE MORE.
AND THEY HAVE MORE BARRIERS AND
CHALLENGES TO SAVING, GIVEN
THEIR ROLE AS A CARE-GIVER OFTEN
IN THE HOME, AND GIVEN THE FACT
THAT A HIGH PERCENTAGE OF SENIOR
WOMEN ARE LIVING ALONE AND NOT
WITHIN AN ECONOMIC FAMILY.

Marlene says MORE AND
MORE ARE SELF-EMPLOYED.
SO THEY DON'T HAVE THE LUXURY OF
CPP AND EVEN IF THEY ARE WORKING
AND SELF-EMPLOYED AND THEN WE'VE
GOT THE TAX STRUCTURE THAT'S
SHIFTED NOW THAT'S MADE IT EVEN
MORE DIFFICULT TO TAKE ADVANTAGE
OF WHAT USED TO BE, YOU KNOW,
FACILITATED SAVING THROUGH YOUR
PERSONAL CORPORATION.

Steve says KEITH, WE HEARD SOME
KIND OF SHOCKING NUMBERS HERE
FROM CAROLINE A MOMENT AGO,
WHICH CLEARLY YOU DON'T THINK IS
WHAT PEOPLE OUGHT TO BE DOING.
THAT'S WHAT THEY ARE DOING.
IN YOUR JUDGMENT, HOW MUCH MONEY
SHOULD PEOPLE... NOT ARE THEY...
BUT SHOULD PEOPLE BE PUTTING
ASIDE EVERY MONTH, EVERY YEAR,
WHATEVER, TO ACCOUNT FOR THEIR
RETIREMENT YEARS?

Keith says THE END
IS TO MAINTAIN YOUR STANDARD OF
LIVING, RIGHT?
THAT'S WHAT WE'D LIKE TO BE ABLE
TO DO AFTER WE STOP WORKING.
THEN THE QUESTION IS: WHAT'S
THAT AMOUNT?
THERE ARE ACTUALLY SOME VERY
INTERESTING CALCULATIONS.
BROADLY WE USED TO SAY IT'S 70 percent
OF YOUR FINAL EARNINGS.
THAT'S THE NUMBER, TO MAINTAIN
YOUR STANDARD OF LIVING.
THERE'S NOW MORE DETAILED
RESEARCH ON THAT.
BONNIE JEAN McDONALD AT
DALHOUSIE HAS DONE A FAIR AMOUNT
OF WORK, THAT IN FACT DEPENDING
ON YOUR CIRCUMSTANCES, THAT
NUMBER MIGHT BE ANYWHERE
BETWEEN... AT THE LOW INCOME AT
100, YOU NEED 100 percent INCOME
REPLACEMENT OR MORE.
ONCE YOU GO UP THE SCALE, PEOPLE
HAVE GOT THEIR HOUSE, THE KIDS
ARE GONE, THEN IT'S MORE LIKE
50 percent.
NOT 70 percent.

Steve says SO TO GET 50 percent OF,
SAY, YOUR... CLOSE TO YOUR LAST
SALARY OR THREE-QUARTERS, WHAT
ARE YOU LOOKING AT?

Keith says LET'S PICK A NUMBER.
80,000 dollars, 50 percent IS 40,000 dollars A YEAR.
YOU'VE GOT TWO-THIRDS OF THAT
COMING FROM OAS AND CPP AND
YOU'RE NOW DOWN TO A MANAGEABLE
NUMBER.
I DO AGREE IN MANY CASES THEY
HAVEN'T DONE THAT MATH AND SAID,
OH, MY GOSH, I HAVE TO SAVE 6, T
ADDITIONAL INCOME.
I AGREE THAT'S A PROBLEM.

Steve says NOT A PERCENTAGE.
GIVE ME A REAL NUMBER.
EVERY PAYCHEQUE I HAVE TO PUT
ASIDE WHAT?

Keith says 80,000.
LET'S DO A HIGH NUMBER I THINK
IS 10 percent OF PAY.
10 percent OF 80,000, 8,000 A YEAR.

Steve says EIGHT GRAND A YEAR
AFTER TAXES?

Keith says THAT'S BEFORE TAX BECAUSE
IT'S TAX DEFERRED, RIGHT?

Hugh says WHAT WE'RE LEAVING OUT IS
WHEN YOU PUT THE 8,000 dollars A MONTH,
AND YOU'RE INVESTING THAT MONEY
ON YOUR OWN, THAT'S HARD TO DO
AND IT'S HARD TO DO FOR A BUNCH
OF REASONS.
INVESTING IS NOT SIMPLE.
IT'S A DIFFICULT ACT.
SECOND, IT USED TO BE A TIME
WHERE BONDS WOULD EARN YOU A
SAFE 4 OR 5 OR 6 PERCENT.
THAT DOESN'T HAPPEN ANYMORE.
SO NOW WHAT'S HAPPENED, IN ORDER
TO GET TO THE RIGHT NUMBER,
PEOPLE ARE CHASING RETURNS.
AS YOU CHASE RETURNS, THERE'S
POTENTIAL THAT YOU WILL GO INTO
RISKIER ASSETS.
THAT ALL WORKS UNTIL IT DOESN'T.
BECAUSE THE REALITIES OF
FINANCIAL MARKETS ARE CRUEL.
AND WHEN THOSE SLIDE OFF THE
TABLE, THEY WILL, AND WE'RE
GOING TO HAVE... THERE ARE OTHER
ISSUES THERE.
I THINK WE HAVE A LOT TO
CONSIDER.
I THINK WE HAVE TO VIEW THIS NOT
JUST IN TERMS OF A POINT IN TIME
RIGHT NOW.
WE HAVE TO VIEW THIS FROM A
POINT OF SUSTAINABILITY, WHAT
MAKES SENSE AND WHAT'S FAIR
OVERALL, AND GETTING THE RIGHT
MECHANISMS ESTABLISHED NOW TO
AVOID PROBLEMS I THINK MAKES
SENSE.

Steve says MARLENE?

Marlene says I THINK
HUGH'S POINTS ARE ACCURATE IN
TERMS OF THE DIFFICULTY OF
INVESTING ON YOUR OWN, BUT
THERE'S A LOT OF INNOVATION IN
THE MARKETPLACE SINCE THE LAST
DECADE OR SO.

Steve says MEANING WHAT?

Marlene says AMONG OTHER THINGS, THERE ARE
SIMPLE PLATFORMS THAT
MILLENNIALS ARE ENJOYING THAT
ARE ROBO ADVISOR KIND OF
INVESTMENT PLATFORMS.
SO YOU CAN HAVE... IT'S NOT
CHEAP, BUT IT'S CHEAPER THAN
INVESTING IN AN OLD-FASHIONED
MUTUAL FUND WHERE WE HAVE THE
HIGHEST FEES ON MUTUAL FUNDS IN
THE WORLD AT TWO-PLUS PERCENT A
YEAR, THAT'S OFF THE TOP, WHEN
ALL YOU'LL EARN IS 6 percent MAYBE IF
YOU'RE LUCKY.
SO MUTUAL FUNDS ARE JUST A
TERRIBLE INSTRUMENT FOR
INDIVIDUAL INVESTORS.
BUT THERE ARE ALTERNATIVES
TODAY.
AMONG THEM ARE THINGS LIKE THE
ROBO ADVISORS, IT MAY BE A HALF
A PERCENT OR EMBEDDED FEES
UNDERNEATH.
YOU GET A WELL DIVERSIFIED
PORTFOLIO.
THAT'S NOT JUST CANADIAN STOCKS
AND BONDS ANYMORE.
THAT GIVES YOU ACCESS TO GLOBAL
MARKETS.
THEN THERE ARE OTHER LAYERS.
AT MY FIRM AT ALIGNVEST, WE HAVE
A FUND THAT ALLOWS INDIVIDUALS
TO ACCESS THE SAME SOPHISTICATED
KINDS OF INVESTMENTS THAT THE
PENSION PLANS MAKE.
HUGH MENTIONED HE THOUGHT YOU
HAVE TO GO INTO RISKIER
INVESTMENTS.
YOU DON'T, NECESSARILY.
THERE'S THE FREE LUNCHEON IN
INVESTING THAT IS CALLED
DIVERSIFICATION.
THE VAST MAJORITY OF INDIVIDUAL
INVESTORS ARE VERY
UNDERDIVERSIFIED, AND WITH THE
KINDS OF INSTRUMENTS AND THE
FUNDS THAT WE HAVE CREATED, THIS
HAS ALLOWED INDIVIDUALS TO
ACCESS THE STRATEGIC THINGS THAT
PENSION PLANS DO THAT ARE
GETTING OUT OF FIXED INCOME AND
INTO OTHER ASSET CLASSES,
ALTERNATIVE ASSET CLASSES, THAT
HAVE LOW CORRELATION TO THE
STOCK MARKET.
SO YOU GET PROTECTION FROM THE
DOWNSIDE AND THE WHOLE PORTFOLIO
IS ACTUALLY NOT RISKIER TAKEN
ALTOGETHER.

Steve says CAROLINE?

The caption changes to "Caroline Cakebread, @ccakebread."

Caroline says I THINK
IN INDIVIDUAL TERMS, THAT'S
GREAT, AND I THINK IT'S
IMPORTANT TO HAVE ACCESS TO
INVESTMENTS LIKE THAT.
I THINK FOR THE LAYPERSON OR
INDIVIDUAL, EVEN GETTING OUT OF
THE GATE AND MAKING A PLAN TO
SAVE AND UNDERSTANDING HOW MUCH
THEY HAVE TO SAVE AND HOW MUCH
THEY SHOULD BE ALLOCATING OUT OF
THEIR PAYCHEQUE, EVEN WHETHER
IT'S BEFORE OR AFTER TAX IS
TAKEN OFF, IS A HUGE HURDLE AND
I THINK WE'RE NOT THERE YET.
AND MILLENNIALS THEMSELVES ARE
AMONG THE MOST RISK-AVERSE
INVESTORS IN HISTORY.
THEY LIVED THROUGH THE FINANCIAL
CRISIS.
THEY'RE HIGHLY MISTRUSTFUL OF
MARKETS.
THEY HAVE NO JOB SECURITY.
AND I THINK THOSE ARE REALITIES
WE REALLY HAVE TO DEAL WITH.
AND EVEN AMONG SENIORS TODAY,
YOU KNOW, SENIORS NOW ARE
ACCUMULATING DEBT AT RECORD
LEVELS.
STEVE, YOU MENTIONED SENIORS
TALLY UP ALL THEIR SAVINGS AND
THEIR HOME AND ALL THE
ADDITIONAL ASSETS THAT THEY HAD,
BUT, YOU KNOW, AT THE SAME TIME,
THEY'RE OFTEN CARRYING A
MORTGAGE WELL INTO RETIREMENT OR
A SECOND MORTGAGE OR TRYING TO
HELP THEIR KIDS.
THERE ARE A LOT OF ISSUES HERE
THAT I THINK NEED TO BE
ADDRESSED AND ARE CONTRIBUTING
TO A CRISIS.

Keith says I LOOK
AT THE STUFF INTERNATIONALLY AND
YOU LOOK AT THE COUNTRIES WHERE
THAT'S NOT AN ISSUE, THE KIND OF
STUFF THAT WE'RE DESCRIBING, AND
IT'S COUNTRIES WHERE
PARTICIPATION IN A WORKPLACE
PENSION PLAN IS COMPULSORY.
AUSTRALIA DOES IT.
MOST OF NORTHERN EUROPEAN
COUNTRIES DO IT.
SO IF THAT ADDITIONAL PIECE THAT
WE'RE TALKING ABOUT, IF IT'S
JUST PART OF YOUR EMPLOYER MUST
OFFER THIS TO YOU, THEN WE'RE IN
A DIFFERENT BALL GAME.
WE'RE NO LONGER TALKING ABOUT,
OH, MY GOSH, HOW DO WE GET
PEOPLE TO ACTUALLY DO THIS, TO
THE MORE CREATIVE PART, WHICH IS
GIVEN THAT PEOPLE AND THEIR
EMPLOYERS HAVE TO DO THIS, WHAT
SHOULD THE DESIGN LOOK LIKE.

Steve says WE DON'T HAVE THAT
HERE, THOUGH.
SHOULD WE?

Keith says WE HAVE IT UP TO A POINT WITH
THE INCREASE IN THE CANADA
PENSION PLAN.
BUT, AGAIN, ARGUABLY, FOR MIDDLE
INCOME WORKERS, WE JUST DID
SIMPLE ARITHMETIC TO SAY IT'S
NOT ENOUGH FOR MOST PEOPLE IN
TERMS OF MAINTAINING THEIR
STANDARD OF LIVING.

Steve says JUST TO BE CLEAR FOR
A SECOND.
IF YOU'RE IN THE PUBLIC SECTOR,
CHANCES ARE YOU HAVE A PENSION.
IF YOU ARE IN THE PRIVATE
SECTOR, CHANCES ARE YOU WON'T
INCREASINGLY GOING FORWARD.

Marlene says OR YOU WILL NOT HAVE AN
ADEQUATE ONE.

Steve says DO WE NEED A NEW
LEGAL FRAMEWORK TO SAY EVERYBODY
IN THIS PROVINCE HAS TO BE IN A
PENSION PLAN?

Keith says WE WERE ON THE WAY TO DOING
THAT WITH THE OPP AND IT GOT
DROPPED AS SOON AS THERE WAS THE
NATIONAL DEAL ON EXPANDING THE
CPP.
I THINK WE SHOULD REVISIT THE
CONCEPT AND THINK ABOUT... AND
THE OTHER PART THAT I KEEP
POUNDING THE TABLE ON IS, WHERE
IS THE COMMERCIAL PRIVATE
SECTOR?
MARLENE TALKS ABOUT HER FIRM
DOING SOME THINGS, BUT WHERE ARE
THE BIG BROAD-REACH INSURANCE
COMPANIES, SUN LIFE, MANULIFE?
THEY HAVE ALL THE WHEREWITHAL TO
CREATE THE KIND OF PLAN WE'RE
TALKING ABOUT AND THEY'RE NOT
DOING IT.

Steve says BECAUSE...

Marlene says BECAUSE A
DEFINED CONTRIBUTION PLATFORM.

Steve says WE'RE INTO JARGON
HERE THAT NOT EVERYBODY IS GOING
TO UNDERSTAND.
BASICALLY TWO DIFFERENT KINDS OF
PENSIONS, RIGHT: DEFINED
BENEFIT, DEFINED CONTRIBUTION.
MARLENE, GO.

Marlene says DEFINED
CONTRIBUTION PLANS ARE THOSE
WHERE THE EMPLOYEE AND THE
EMPLOYER WILL CONTRIBUTE,
USUALLY IN AN EQUAL AMOUNT, INTO
A FUND, AND WHATEVER THAT FUND
INVESTMENT GROW TO AT THE DATE
OF RETIREMENT BECOMES THE POT
THAT'S AVAILABLE FOR RETIREMENT.
SO THERE'S A LOT OF UNCERTAINTY
AND WHAT THE INVESTMENT
STRUCTURE IS.
IN FACT, THE INDIVIDUALS GET TO
CHOOSE WHAT THEIR INVESTMENT
STRUCTURE IS.
AND IT'S NOT NECESSARILY
DECISION-MAKING THAT'S IN THEIR
BEST HANDS AS PEOPLE DON'T
NECESSARILY CHOOSE AN ASSET MIX
THAT'S GOING TO MEET THEIR NEEDS.

Steve says HIGH RISK.

Marlene says AND THEY DON'T HAVE ACCESS TO
THE MORE SOPHISTICATED KINDS OF
INVESTMENT STRATEGIES.
IT'S 60 percent EQUITIES, 40 percent BONDS.

Steve says AND COMPARED THAT TO
DEFINED BENEFIT?

Marlene says THE BULK OF THE PUBLIC
PENSION PLANS AND PRIVATE
PENSION PLANS ARE DEFINED
BENEFIT.
YOU PUT THE MONEY IN THE POT AND
THE POT GROWS OVER TIME, BUT THE
RESPONSIBILITY FOR PAYING THE
AMOUNT THAT HAS BEEN PROMISED,
VIA THE PENSION, SO A
PERCENTAGE, USUALLY A PERCENTAGE
OF THE LAST FIVE YEARS OF INCOME
OR THE LAST THREE YEARS OF
INCOME, THERE'S A TARGET
PERCENTAGE, THAT'S THE PENSION
PROMISE AND THAT PENSION PROMISE
MUST BE MET BY THE PENSION PLAN.

Steve says IT IS GUARANTEED.

Hugh says WHOA, WHOA.
HANG ON.

[SPEAKING SIMULTANEOUSLY]

Marlene says THAT'S THE PROMISE THAT THE
PENSION ORGANIZATION IS OBLIGED
TO MEET.
ARE THERE RISKS AROUND IT?
YES.

Steve says BECAUSE IF YOUR
COMPANY GOES OUT OF BUSINESS,
NICE TALKING TO YOU.

Hugh says A COUPLE OF THINGS.
WHEN WE TALK ABOUT DB AND DC, I
THINK WHAT'S REALLY IMPORTANT IS
WHEN YOU LOOK AT SOME OF THE
RESEARCH THAT'S DONE, THIS IS
NOT AN ACADEMIC CONVERSATION.
PEOPLE WHO RETIRE ON DEFINED
CONTRIBUTION PLANS WORRY ABOUT
OUTLIVING THEIR MONEY.
THEY MAKE DECISIONS TO PRESERVE
THEIR CAPITAL.
WHAT IT MEANS IS, AND THE
RESEARCH, FOR EXAMPLE, I BELIEVE
THAT HOOPP HAS DONE, SHOW THOSE
PEOPLE DON'T EAT WELL, THEY
SOMETIMES SCRIMP ON
PRESCRIPTIONS, THEY DON'T LIVE
THEIR DREAM OF TRAVELLING, NONE
OF THAT HAPPENED.
THE DEFINED BENEFIT SIDE, THOSE
PEOPLE UNDERSTAND WHAT THEY'RE
GETTING EVERY MONTH.
BECAUSE OF THAT THEY MAKE PLANS.
THEY DON'T WORRY ABOUT OUTLIVING
THEIR MONEY.

Steve says YOU WOULD AGREE THE
DEFINED BENEFIT IS A BETTER WAY TO GO.

Hugh says YES.

Keith says YOU
HAVE TO TAKE THE SPECTRUM.
THE ONLY PEOPLE WITH PURE
DEFINED BENEFIT PLANS IN THIS
COUNTRY ARE FEDERAL CIVIL
SERVANTS.
THEY HAVE AN ABSOLUTE GUARANTEE
ACCORDING TO SOME FORMULA,
THAT'S WHAT THEY'RE GOING TO GET
PAID, INFLATION INDEX... THERE
ARE OTHER ONES BUT MOST PLANS...
MOST PUBLIC SERVICE PLANS ARE
STARTING TO GO TOWARDS TARGET
BENEFIT WHERE THERE ARE... THERE
ARE CONTINGENCIES UNDER WHICH
YOU DON'T GET THE FULL BENEFIT.
INFLATION INDEXATION IS BECOMING
AD HOC.
ONTARIO TEACHERS HAS HAD IT FOR
TEN YEARS.
SO WE'RE GOING AWAY FROM THE
PURE DEFINED BENEFIT TOWARDS
VARIOUS KINDS OF RISK-SHARING
ARRANGEMENTS THAT MAKE MORE
SENSE AND ARE MORE SUSTAINABLE.
BUT WE HAVE TO PUT THAT ON THE
TABLE.
THERE IS NO SUCH THING ANYMORE
AS THE BOOKENDS OF DB AND DC.
WE'RE MOVING TOWARDS THE MIDDLE.
IN AUSTRALIA YOU HAVE DC PLANS
WHERE PEOPLE HAVE BEEN IN A DC
PLAN FOR 30 YEARS, THEY HAVE
ACCUMULATED CAPITAL OF 300,
400,000.
THE CONVERSATION IS HOW DO WE
BOOKEND OUR ACCUMULATION PLANS?
THE WHOLE THING IS CONVERGING
TOWARDS SOMETHING THAT'S HALFWAY
BETWEEN DB AND DC FROM A DESIGN
POINT OF VIEW.
I'M SORRY, BUT I'VE LOOKED AT
THE WHOLE WORLD AND I'VE BEEN IN
THESE COUNTRIES AND SEEN IT HAPPEN.

Hugh says THERE ARE DIFFERENT
APPROACHES THAT HAVE BEEN
ADOPTED AND I THINK THAT'S ONE
OF THE GREAT THINGS ABOUT
PENSIONS AS A RULE, PENSIONS IN
TORONTO, SOME PEOPLE CALL
TORONTO THE SILICON VALLEY OF
THE PENSION WORLD.
THERE'S DIFFERENT WAYS OF DOING
THINGS, DIFFERENT EXPERIMENTS.
BUT AT THE END OF THE DAY A
DEFINED BENEFIT PENSION PLAN
WHERE YOU KNOW WHAT YOU'RE GOING
TO GET IS THE COMMON MODEL IN
THE PUBLIC SECTOR IN ONTARIO.
THERE IS RISK-SHARING, SHARING
OF DEFICITS, SHARING OF
SURPLUSES, HOW THEY'RE USED.
BUT THE REALITY IS,
PROFESSIONALLY RUN PLANS THAT
PAY ATTENTION AND FOCUS ON WHAT
THE MEMBER INTEREST...

Steve says I HEAR YOU.
LET ME DO A FOLLOW-UP QUESTION
HERE.
WHO KNEW PENSIONS COULD BE SUCH
AN INTENSE TOPIC FOR DEBATE
HERE.
BUT HERE'S THE THING.

Hugh says PENSION PASSIONS.

Steve says I REMEMBER WHEN THE
FORMER CONSERVATIVE PARTY LEADER
TIM HUDAK RAISED THIS.
HE SAID IT'S ALL WELL AND GOOD
FOR SOME LUCKY PEOPLE TO HAVE
DEFINED BENEFIT PLANS,
PARTICULARLY IF THEY'RE PUBLIC
SERVANTS, FUNDED BY THE
CONTRIBUTIONS OF PEOPLE IN THE
PRIVATE SECTOR WHO DON'T HAVE
THOSE KINDS OF GOOD PENSIONS AND
MAY HAVE DC PENSIONS, MAY HAVE
NO PENSIONS AT ALL, AND THEY'RE
FUNDING THESE CADILLAC PENSIONS
FOR PUBLIC SERVANTS.
HOW MUCH PENSION ENVY IS OUT
THERE, IS MY QUESTION?

The caption changes to "Pension envy."

Hugh says BASED ON RESEARCH WE'VE DONE
IN, ONTARIO THERE ISN'T PENSION
ENVY ANYMORE.
WHAT PEOPLE UNDERSTAND NOW...
THIS IS RESEARCH WE'VE DONE
ABOUT A YEAR AGO.
PEOPLE IN ONTARIO, THEY BELIEVE
THAT IT'S FAIR THAT PUBLIC
SERVANTS HAVE THESE PENSION
PLANS AND WHAT THEY WANT...

Steve says REALLY?

Hugh says YES.
KEITH, WE'VE DONE THE RESEARCH.
WE HAVE THE... CAN I FINISH,
KEITH?
CAN I FINISH?
DO YOU MIND IF I FINISH?
IT'S ALL RIGHT.

Steve says FINISH AND THEN KEITH.

Keith says I THINK THIS IS THE CRITICAL
POINT AND WHERE WE'VE EVOLVED TO
AS A SOCIETY.
PENSION ENVY HAS DISAPPEARED IN
THE SENSE THAT PEOPLE BEGRUDGING
PUBLIC SERVANTS A PENSION.
WHAT THEY WANT IS RETIREMENT
INCOME SECURITY FOR THEMSELVES.
THEY SUPPORTED KATHLEEN WYNNE
AND VOTED FOR HER ON ORPP, THE
MAJOR PLANK.
KATHLEEN WYNNE'S EFFORTS, THE
EFFORTS OF THE CANADIAN LABOUR
CONGRESS LED TO AN EXPANSION OF
CPP WHICH WOULD HAVE BEEN
UNTHINKABLE...

Steve says WE DON'T MIND IF YOU
GET IT AS LONG AS WE GET IT TOO.
KEITH AND THEN CAROLINE.

Keith says PART OF
THIS WHOLE PROCESS IS
UNDERSTANDING THE COST OF THESE
ARRANGEMENTS.
YOU KNOW, IT'S FINE TO SAY, OH,
THIS IS NICE TO HAVE THIS.
ONE OF THE THING THAT'S GONE
WRONG ON THE ACCOUNTING SIDE IS
WE HAVEN'T BEEN PROPERLY VALUING
THE COST OF THESE GUARANTEED
PROMISES.
THAT'S NOT AN ISSUE.

Hugh says THAT'S NOT
AN ACCURATE STATEMENT.
WHAT YOU'RE DOING IS TAKING AN
ACADEMIC'S VIEW.
THERE'S DIFFERENT WAYS OF
LOOKING AT THIS... NO, THERE'S
THE REALITY OF FUNDING THESE
PLANS, THERE'S THE FIDUCIARY
OBLIGATION TO INVEST IN ASSETS
THAT ARE GOING TO EARN RETURNS
OVER TIME AND ESTABLISH A
DISCOUNT RATE AS OPPOSED TO
GOING OFF THE REAL...

Keith says AND THE THE...

[SPEAKING SIMULTANEOUSLY]

Caroline says I WANT
TO COME BACK TO YOUR POINT ABOUT
PENSION ENVY.
SOME SURVEYS HAVE SHOWN THAT IT
DOESN'T EXIST AND I TAKE THAT
POINT.
I THINK THERE'S A GREAT DEAL OF
ROOM FOR PENSION ENVY TO EMERGE
AS A HUGE ISSUE GIVEN THAT, YOU
KNOW, A SMALL PERCENTAGE OF
CANADIANS HAVE ACCESS TO A DB
PLAN AT ALL.
MANY CANADIANS DON'T EVEN KNOW
WHETHER THEY HAVE A DC OR A DB
PLAN OR WHAT THEY'VE GOT, AND
ONE IN THREE CANADIANS FEEL
COMPLETELY UNPREPARED AND
STRESSED OUT ABOUT THEIR
RETIREMENT INCOME SECURITY.

Steve says THIS SPEAKS TO
FINANCIAL LITERACY.

Caroline says IT SPEAKS TO FINANCIAL
LITERACY AND A BASIC FUNDAMENTAL
UNDERSTANDING OF WHAT'S BEING
SPOKEN ABOUT HERE BY THE
PANELISTS, WHICH ARE MANY OF THE
REAL ISSUES.
I THINK FOR THE INDIVIDUAL IT
KIND OF BOILS DOWN TO, I'M
REALLY WORRIED.
I DON'T HAVE ENOUGH.
I HAVE THIS HUGE MORTGAGE I'M
HAULING AROUND.
I HAVE A LOT OF DEBT.
I DON'T KNOW WHERE MY RETIREMENT
INCOME IS GOING TO COME FROM.
AND, WOW, MY GOVERNMENT... MY
NEIGHBOUR THAT WORKS FOR THE
GOVERNMENT, YOU KNOW, ISN'T
WORRIED ABOUT THAT AND IS BUYING
A COTTAGE BECAUSE THEY HAVE A
PENSION PLAN AND THEY'RE NOT WORRIED.

Marlene says THEY MAY
NOT BE BUYING A COTTAGE, BUT
THEY ARE ABLE TO SPEND THEIR
PENSION IN THE COMMUNITY AND
HELP TO SUPPORT THE ECONOMY THAT
THEY LIVE IN.
SO THERE ARE VERY POSITIVE
EXTERNALITIES FROM HAVING
THIS KIND OF DB PENSION PLAN.
FOR EXAMPLE, 330,000 HEALTH CARE
WORKERS OF THE PROVINCE, THE
RESEARCH THAT HOOPP HAS DONE HAS
SHOWN THAT THERE'S A SUBSTANTIAL
IMPACT ON A NUMBER OF
COMMUNITIES IN ONTARIO THAT IS
VERY POSITIVE AND IT MEANS THAT
THOSE PEOPLE WHO ARE IN
RETIREMENT AND DRAWING ON THIS
PENSION ARE NOT DEPENDENT ON
SOCIAL ASSISTANCE AND THEY'RE
NOT...

Steve says THEY'RE CONTRIBUTING
TO THE ECONOMY.

Marlene says THEY'RE CONTRIBUTING BACK TO
THE ECONOMY.
YOU ADD IT ALL UP...

Hugh says I THINK
PENSION PLANS, LIKE OURS, LIKE
HOOPP, WE HAVE PENSION
CITIZENSHIP.
NOT ONLY DO WE HAVE TO ADVOCATE
FOR THE DEFINED PENSION PLAN AND
OUR MEMBERS ADVOCATE FOR IT, WE
HAVE TO THINK OF CREATIVE WAYS
WHERE COVERAGE UNDER OUR PLAN
CAN BE EXPANDED WHERE OUR
INVESTMENT OFFERINGS CAN BE
OFFERED TO SMALLER PLANS SO WE
CAN HELP.
WE DON'T BELIEVE IN A SITUATION
WHERE WE'RE GOING TO BE THE LAST
PERSON STANDING, SO WE THINK
THIS CONCEPT OF PENSION
CITIZENSHIP MATTERS AND I THINK
IT'S SOMETHING THAT WE WANT TO
DO MORE THAN TALK ABOUT THESE
ISSUES, WE WANT TO ACT ON THEM
AND HELP CONTRIBUTE TO THE
SOLUTIONS TO THIS PROBLEM.

Steve says IS ONE OF THE
SOLUTIONS, AND, KEITH, I'LL JUST
PUT THE PLATFORM TOWARDS YOU,
TIM HUDAK, WHEN HE WAS RUNNING
FOR THE ELECTION, LAST ELECTION,
SAID, WE CAN'T, AS A PROVINCE,
AFFORD TO GIVE EVERYBODY A
DEFINED BENEFIT PENSION ANYMORE,
SO NEW PUBLIC SERVANTS THAT GET
HIRED AFTER WE FORM THE
GOVERNMENT, THEY'RE ONLY GOING
TO GET DEFINED PENSION PLANS.

The caption changes to "Keith ."

Keith says WE'RE
TALKING ABOUT SEPARATE THINGS.
I TOTALLY AGREE WITH HUGH THAT
THE FACT THAT WE IN CANADA HAVE
CREATED INFRASTRUCTURE IN TERMS
OF THE KIND OF ORGANIZATIONS
THAT MANAGE PENSION ARRANGEMENTS
ARE THE BEST IN THE WORLD.
THERE'S SOMETHING CALLED THE
CANADA MODEL.

Marlene says AND MOST OF THE COST EFFECTIVE.

The caption changes to "Reversing inequity."

Keith says AND MOST OF THE COST
EFFECTIVE AS WELL.
THAT'S REGARDLESS OF WHAT THE
FORMULA IS FOR THE PENSION.
THAT'S TRUE REGARDLESS.
THE QUESTION OF HOW AND UNDER
WHAT CIRCUMSTANCES, WHO BEARS
WHAT RISK, WHAT THE SIZE OF THE
PENSION IS, IS A SEPARATE
DISCUSSION.
AND AGAIN, SO IF YOU TAKE
100,000 dollars, JUST TO MAKE IT EASY,
RIGHT?
I CAN DO ONE OF TWO THINGS WITH
MY 100,000 dollars.
I CAN SPEND IT ALL OR I CAN SAVE
25 percent OF IT AND PUT IT... IF I DO
THAT, I WILL HAVE A GREAT
PENSION.
AND IN A LOT OF CASES, THAT'S
WHAT'S HAPPENING WITH PUBLIC
SECTOR, IS THAT SIGNIFICANT
PIECES ARE BEING SCRAPED OFF THE
TOTAL COMPENSATION AND PUT INTO
A PENSION PLAN.
THERE'S NOTHING WRONG WITH THAT.

Steve says CAN I JUST
UNDERSTAND THIS, THOUGH.
IN ORDER TO SAVE MONEY GOING
FORWARD, WOULD IT BE A GOOD IDEA
THAT ANY PUBLIC SERVANTS, AND
I'M TALKING ABOUT TEACHERS,
EVERYBODY, ANYBODY PAID BY THE
BROADER PUBLIC SECTOR, GOING
FORWARD, NO MORE CADILLAC
PENSION PLANS, ONLY THE CHEVY
PENSION PLAN?

Keith says LET'S
TAKE THE CURRENT TEACHERS,
HAPPEN TO KNOW THE NUMBERS, IT'S
12 percent AND 12 percent.
IT'S 24 percent OF PAY GOING INTO THOSE
PENSION PLANS.
AND MY POINT SIMPLY IS, IF YOU
PUT IN 24 percent OF PAY INTO A PENSION
PLAN AND YOU MANAGE IT PROPERLY
OVER TIME, YOU'RE GOING TO HAVE
A TON OF MONEY, RIGHT?

Hugh says I THINK THAT
WHAT HAPPENED TO MR. HUDAK'S
PARTY IN THE 2014 ELECTION BEARS
OUT THE POINT I WAS MAKING.
IT NEVER CAUGHT FIRE.
PEOPLE DIDN'T ACT ON THEIR
PENSION ENVY TO VOTE OUT
KATHLEEN WYNNE, AND WHEN YOU
COST OUT THESE ISSUES FROM THE
POINT OF VIEW OF DEFINED
CONTRIBUTION PLANS, WHETHER IT
WOULD SAVE THE GOVERNMENT MONEY,
IT DOESN'T.
THE ONLY PROVINCE IN
CONFEDERATION THAT HAS A DEFINED
CONTRIBUTION PLAN FOR ITS CIVIL
SERVICE IS THE PROVINCE I GREW
UP IN, SASKATCHEWAN.
THEY SET THAT UP IN 1978.
THEY NEVER SET IT UP TO BE
CHEAPER.
THE CONTRIBUTIONS INTO THAT PLAN
IN SOME AREAS ARE 9, 10, 11, 12 percent
OF PAY AND MATCH.
THE ISSUE IS NOT PENSIONS BEING
EXPENSIVE, RETIREMENT IS
EXPENSIVE.
YOU'RE GOING TO LIVE A LONG TIME
WITHOUT BRINGING IN MONEY.
THAT'S WHY WE HAVE TO DEAL WITH
THIS ISSUE.

Marlene says THE OTHER
IS GETTING INVESTMENT STRATEGY
RIGHT.
IF YOU DON'T GET THAT RIGHT,
YOU'RE LEAVING A TON OF MONEY ON
THE TABLE AND PUTTING THAT
PENSION AT RISK.
THEN THE QUESTION BECOMES: WHO
BEARS THAT RISK?
THE DC PLAN, THE INDIVIDUAL
BEARS THE RISK.
IN THE DB PLAN, THE RISK IS THE
RESPONSIBILITY...

Keith says THAT 2 percent
HAIRCUT GETS TAKEN OUT OF THE
MUTUAL FUND APPROACH TO RRSPs.
YOU DON'T HAVE THAT 2 percent PER YEAR
FOR 40 YEARS.
IT COSTS YOU HALF YOUR PENSION.
THE OTHER HUGE PROBLEM WE'VE GOT
IS THE INFRASTRUCTURE IN THIS
COUNTRY THROUGH WHICH PEOPLE
HAVE OPPORTUNITIES TO SAVE FOR
RETIREMENT.

Steve says IN WHICH CASE,
CAROLINE, DO WE NEED ROOM IN OUR
RRSPs FOR PEOPLE TO SAVE?

Caroline says I THINK
WE NEED TO LOOK AT THE ENTIRE
SPECTRUM OF SAVINGS VEHICLES AND
NOT MAKE IT A ONE-SHOT POLICY
DECISION BASED ON WHATEVER
GOVERNMENT IS IN POWER.
IT'S PATCHWORK.
I THINK THE OPPORTUNITY...
KEITH, YOU ALLUDED TO THIS, AND
YOU ALLUDED TO THIS AS WELL,
HUGH, IS TO TAKE BEST PRACTICES
FROM OUR WORLD-LEADING PUBLIC
PENSION PLANS THAT ARE, YOU
KNOW, THAT HAVE A SMALL
MEMBERSHIP RELATIVE TO THE
CANADIAN POPULATION, AND COME UP
WITH IDEAS AND BIGGER PICTURE
TOOLS FOR INDIVIDUAL CANADIAN
SAVERS TO BE PART OF A PENSION.

Marlene says THERE ARE
ALSO TOOLS THAT PEOPLE DON'T
HAVE ANY AWARENESS OF.

Steve says SUCH AS...

Marlene says THE INDIVIDUAL PENSION PLAN.
FOR BUSINESS OWNERS WHO ARE
SELF-EMPLOYED, THE INDIVIDUAL
PENSION PLAN IS A FANTASTIC
TOOL, BUT IT'S FULL OF
CUMBERSOME LAYERS THAT HAVE MADE
IT DIFFICULT FOR PEOPLE TO
IMPLEMENT.
ONLY 11,000 OR 12,000 OF THESE
INDIVIDUAL PENSION PLANS HAVE
BEEN STARTED.
THEY'RE A FANTASTIC SAVING
VEHICLE.
THEY ALLOW INDIVIDUALS WHO ARE
SELF-EMPLOYED TO SAVE AT A
HIGHER RATE THAN THROUGH THEIR
RSP TO ACCUMULATE MORE
RETIREMENT ASSETS AND YET THEY
NEED AN ACTUARY, THEY NEED A
MONEY MANAGER, AND THEY'RE
CHALLENGING TO SET UP.

Steve says CAROLINE, I HAVE 20
SECONDS LEFT FOR MY FINANCIAL
LITERACY EXPERT HERE.
WE NEED TO START TALKING TO
ELEMENTARY SCHOOL KIDS ABOUT
PENSIONS, DON'T WE?

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

Caroline says WE DO.
THAT IS UNDERWAY.
THERE IS SORT OF OFFICIALLY
FINANCIAL LITERACY IN THE
CLASSROOM.
WHETHER OR NOT IT'S BEING DONE
WELL OR EFFECTIVELY IS UP FOR
DEBATE, AND I'M SURE THERE ARE A
LOT OF PEOPLE WHO ARE DOING A
GREAT JOB, BUT I THINK WE NEED
TO DO MORE.
BUT I DO THINK IT HAS TO BE
THROUGHOUT THE LIFE SPAN.
I MEAN, HOW DO YOU COME UP WITH
PENSION SAVINGS DISCUSSIONS IN A
GRADE 3 OR 4 OR 5 CLASS, RIGHT?
YOU KNOW, THIS IS SOMETHING THAT
HAS TO BE DONE THROUGHOUT THE
LIFE CYCLE OF A PERSON.
AND AT THE MOMENT WHEN THEY NEED
THIS INFORMATION, WHETHER IT'S
WHEN THEY FIRST SIGN UP WITH AN
EMPLOYER AND MAYBE HAVE ACCESS
TO A SAVINGS VEHICLE, WHEN THEY
BUY THEIR FIRST CAR, WHEN THEY
BUY THEIR FIRST HOME, THESE ARE
THE POINTS WITHIN LIFE WHERE
YOU'RE LOOKING FOR THIS
INFORMATION.

The caption changes to "Producer: Liane Kotler, @LianeKotler."

Steve says GOTCHA.
THAT'S OUR TIME, FRIENDS.
HUGH, SEE YOU IN 20 YEARS?
IT'S A DEAL.
CAN I THANK HUGH O'REILLY, THE
PRESIDENT AND CEO OF OPTrust,
AND CAROLINE CAKEBREAD, THE
INDEPENDENT FINANCIAL LITERACY
CONSULTANT; ALSO THE EDITOR OF
CANADIAN INVESTMENT REVIEW.
ON ONE SIDE OF THE TABLE.
AND MARLENE PUFFER, THE PARTNER
AT ALIGNVEST INVESTMENT
MANAGEMENT; SHE'S ALSO A
TRUSTEE WITH HOOPP AND
KEITH AMBACHTSHEER, ROTMAN
INTERNATIONAL CENTRE FOR PENSION
MANAGEMENT AT U OF T.
GREAT TO HAVE YOU ALL ON TVO
TONIGHT. THANKS SO MUCH.

All the guests say THANK YOU.

Watch: Creating Retirement Security