Transcript: DIY Pensions: A Good Idea? | Feb 05, 2020

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 checkered blue tie.

A caption on screen reads "D.I.Y. pensions: A good idea? @spaikin, @theagenda."

Steve says FOR MORE THAN SIXTY YEARS, RRSPS, THAT'S REGISTERED RETIREMENT SAVINGS PLANS, HAVE OFFERED CANADIANS A WAY TO SAVE FOR THE GOLDEN YEARS, AND SAVE SOME TAX DOLLARS AT THE SAME TIME. OTHER SAVINGS VEHICLES ALSO EXIST, SUCH AS THE TAX FREE SAVINGS ACCOUNT. BUT UNLIKE DEFINED-BENEFIT PENSION PLANS, SUCH PLANS MAKE NO GUARANTEES AND LEAVE MUCH OF THE STRATEGIZING UP TO THE INDIVIDUAL. WITH US NOW TO CONSIDER HOW WELL THIS SERVES PEOPLE TRYING TO PLOT THEIR POST-WORK FINANCES, WE WELCOME: ALEX MAZER, CO-FOUNDER AND RETIREMENT PLAN PROVIDER AT COMMON WEALTH...

Alex is in his late thirties, clean-shaven, with short brown hair. He's wearing a blue suit, white shirt and black tie.

Steve continues CAROLINE CAKEBREAD, PENSION CONSULTANT AND THE FOUNDER OF THE CANADIAN LEADERSHIP CONGRESS...

Caroline is in her forties, with long wavy brown hair. She's wearing glasses, a blue sweater and a pendant necklace.

Steve continues JACKIE PORTER, CERTIFIED FINANCIAL PLANNER WITH CARTE WEALTH MANAGEMENT...

Jackie is in her early forties, with long straight dark brown hair. She's wearing glasses, a black blazer and an aubergine turtleneck.

Steve continues HUGH O'REILLY, EXECUTIVE-IN-RESIDENCE AT THE GLOBAL RISK INSTITUTE, AND A SENIOR FELLOW AT THE C.D. HOWE INSTITUTE...

Hugh is in his fifties, clean-shaven, with short gray hair. He's wearing glasses, a gray suit, pale blue shirt and spotted gray tie.

Steve continues AND MICHAEL NICIN, EXECUTIVE DIRECTOR OF RYERSON UNIVERSITY'S NATIONAL INSTITUTE OF AGEING, AND CO-AUTHOR OF THE FORTHCOMING REPORT, "IMPROVING CANADA'S RETIREMENT INCOME SYSTEM."

Michael is in his late thirties, with short brown hair and a short beard. He's wearing a gray suit, pale blue shirt and striped green tie.

Steve continues THERE WE GO. SORRY WE HAVE NO TIME LEFT FOR THE SHOW. NO, GOOD TO HAVE EVERYBODY HERE. LET US START, BUZZ THE CONUNDRUM WE'RE GOING TO TALK ABOUT TODAY IS ACTUALLY SUMMED UP IN YOUR REPORT, MICHAEL, SO WE'LL READ AN EXCERPT FROM THAT.

A quote appears on screen, under the title "The changing variables." The quote reads "We have an older population with different sets of needs and priorities than we had when much of our retirement income security system was established. We're living longer, spending more time in older age than ever before without working income, and investment return prospects are not what they have been historically. Yet, our retirement income system in broad strokes still functions on many of the assumptions -good and bad- that we had decades ago. This is not meant to ignore the many earnest and effective changes introduced in recent years, such as an enhanced CPP, the relatively new and popular TFSAs, and the rebounding sustainability of many major public-sector pension plans. It does mean, however, that we need to continue to work to adapt the system to 21st century realities."
Quoted from M. Nicin and K. Ambachtsheer, "Improving Canada's Retirement Income System."

Steve says OKAY, MICHAEL, START US OFF HERE. WHAT ARE THE OLD ASSUMPTIONS THAT OUR RETIREMENT INCOMES ARE BASED UPON TODAY?

The caption changes to "Michael Nicin. Co-Author, 'Improving Canada's Retirement Income System."

Michael says I WOULD SAY THE FIRST ONE IS HOW LONG WE LIVE, AND ESPECIALLY HOW LONG WE LIVE AFTER RETIREMENT. I'M SURE EVERYONE HERE KNOWS THE STORY, APOCRYPHAL OR NOT, WHEN SUSPENSIONS WERE INTRODUCED IN... PENSIONS WERE INTRODUCED IN BUSINESSMARK, GERMANY. THAT WAS THE ORIGINAL CONCEPTION OF PENSION PLANS. EVEN AS RECENTLY AS THE 1960S, 70S IN CANADA, WE WERE LIVING HALF AS LONG IN RETIREMENT AS WE ARE TODAY. RIGHT NOW WE'RE LIVING 20 YEARS PAST 65 ON AVERAGE AND WE SEE THAT NUMBER INCREASING. OVER THE NEXT 30 YEARS, WE EXPECT THE NUMBER OF PEOPLE OVER THE AGE OF 80 TO TRIPLE IN CANADA. THAT'S THE BIGGEST ASSUMPTION WE'RE NOT ADJUSTING FOR QUICKLY ENOUGH IS LONGEVITY GAINS.

Steve says AS LONG AS YOU WERE ONLY GOING TO LIVE AND COLLECT FOR TWO YEARS, IT'S FINE. NOW WE'RE LIVING 30 YEARS BEYOND AND IT'S MORE COMPLICATED.

Michael says AND AS YOU ADD ON LAYERS OF LOWER INTEREST RATES, HOUSING PRICES ESPECIALLY IN MAJOR CITIES IN CANADA COMPETE FOR THOSE RESOURCES WE MIGHT HAVE PUT ASIDE FOR RETIREMENT LATER ON, RAISING FAMILIES, EDUCATION DEBT, THERE'S A LOT OF COMPETITION FOR EVERY SINGLE DOLLAR WE MAKE, AND FEWER OF THEM ARE LANDING IN RETIREMENT ACCOUNTS, AND WE NEED TO STRETCH THEM OVER A LONGER PERIOD OF TIME, AND WE'RE NOT DOING THAT VERY WELL EITHER.

Steve says HUGH, JUMP IN.

The caption changes to "Hugh O'Reilly. Global Risk Institute."

Hugh says STEVE, I THINK THE MOST FUNDAMENTAL IMPLICIT ASSUMPTION THAT THE RETIREMENT INCOME SYSTEM IS BASED UPON, WHETHER IT'S RSPS OR WHETHER IT'S DEFINED BENEFIT PLANS OR ANY OTHER KIND OF VEHICLE IS THIS: THERE'S AN ASSUMPTION THAT INTEREST RATES ARE GOING TO BE AT A CERTAIN LEVEL, AND WHEN INTEREST RATES ARE AT A CERTAIN HIGHER LEVEL THAN THEY'VE BEEN OVER THE LAST REALLY 20 YEARS, BUT CERTAINLY THE LAST 10 YEARS, THAT CREATES A REAL SET OF ISSUES FOR PEOPLE, MAKES IT A LOT HARDER, WHETHER IT'S A MAJOR PENSION PLAN, BUT CERTAINLY FOR INDIVIDUALS TO INVEST IN ORDER TO MAKE SURE THAT THEY'RE GOING TO EARN WHAT THEY NEED TO EARN TO HAVE A SECURE RETIREMENT. IT ALSO THEN I THINK HAS PSYCHOLOGICAL EFFECTS. PEOPLE START TO FEEL INSECURE. THEY WORRY ABOUT OUTLIVING THEIR MONEY. THEY WONDER HOW THEY'RE GOING TO INVEST THEIR MONEY TO EARN AND RETURN, AND WITH THAT FUNDAMENTAL BUILDING BLOCK NOT THERE, I THINK IT'S A REAL PROBLEM. ANOTHER ISSUE I WOULD SAY IS, YOU KNOW, PEOPLE HAVE TALKED ABOUT THAT THE INTEREST RATES ARE GOING TO RETURN TO HISTORICAL NORMS. NOW PEOPLE ARE NOT SAYING THAT ANYMORE.

The caption changes to "Options for income."

Steve says RIGHT.

Hugh says SO WE'RE IN THIS LOW FOR LONG IT'S CALLED A FINANCIAL OPPRESSION, BUT THIS ENVIRONMENT IS GOING TO MAKE IT REALLY I THINK A LOT HARDER FOR PEOPLE.

Steve says CAROLINE?

The caption changes to "Caroline Cakebread. Cakebread Inc."

Caroline says I WOULD ALSO ADD THAT PEOPLE DON'T WORK THE WAY THEY USED TO. YOU KNOW, IN THE 1960S, '70S AND EVEN THE '80S, PEOPLE WOULD STAY AT A COMPANY FOR THEIR ENTIRE CAREER, IN WHICH CASE A DB PENSION SPONSORED BY THAT COMPANY MADE A LOT OF SENSE.

Steve says DEFINED BENEFIT PENSION.

Caroline says YES, A DEFINED BENEFIT PENSION. AND NOWADAYS PEOPLE CHANGE JOBS FREQUENTLY. WE'RE IN THE MIDST OF THE GIG ECONOMY WHERE PEOPLE AREN'T NECESSARILY EVEN WORKING FOR A SPECIFIC EMPLOYER. THEY ARE SELF-EMPLOYED, AND THE OPTIONS FOR THOSE PEOPLE ARE FEW AND FAR BETWEEN, AND THE PENSION SYSTEM ITSELF WITHIN WORKPLACE SPONSORED PENSIONS HASN'T REALLY EVOLVED ALONG WITH THAT IN TERMS OF CREATING SOMETHING THAT'S PORTABLE AS PEOPLE MOVE FROM JOB TO JOB.

Steve says WELL, LET ME ASK JACKIE ABOUT THAT. IF WE CONSIDER THAT THE GOOD OLD FASHIONED RSP HAS BEEN AROUND FOR A LITTLE OVER SIX DECADES, HOW WELL DO YOU THINK IT STILL SERVES U.S. AS A SAVINGS VEHICLE TO LOOK OUT FOR OUR GOLDEN YEARS?

The caption changes to "Jackie Porter. Carte Wealth Management Inc."

Jackie says I THINK THAT IT'S ONE OF MANY, AND I WANTED TO JUST TOUCH ON SOME OF THE THINGS YOU WERE TALKING ABOUT, THAT YOU KNOW, PEOPLE ARE LIVING LONGER. AND THE TRUTH IS, THE PEOPLE WHO ARE LIVING THE LONGEST, WE NEED TO IDENTIFY THEM. THEY ARE FEMALE. WE LIVE FOUR YEARS LONGER, AND SO TYPICALLY WE ARE ACTUALLY RETIRING INTO POVERTY. WE ARE AT A GREATER RISK OF RETIRING INTO POVERTY THAN MEN, SO THE PEOPLE WHO TRULY ARE AT RISK WHEN IT COMES TO WORRYING ABOUT RETIREMENT ARE WOMEN.

Steve says OLDER WOMEN.

Jackie says OLDER WOMEN, PARTICULARLY SINGLE WOMEN.

Steve says AND THEREFORE WHAT.

Jackie says AND THEREFORE WE NEED TO PAY ATTENTION TO WHAT WE'RE DOING FOR RETIREMENT THE MOST. WE NEED TO PAY ATTENTION TO HOW WE'RE SAVING FOR RETIREMENT, REALLY CONSIDER THE VEHICLES AVAILABLE TO US MORE THAN ANY OTHER GROUP.

Steve says SO, ALEX, IS THE OLD FASHIONED RRSP STILL CUT IT?

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

Alex says WELL, I THINK THE PANEL SUMMED IT UP NICELY IN TERMS OF SOME OF THE TRENDS THAT HAPPENED MOVING AWAY FROM COLLECTIVE WORK-BASED RETIREMENT PLANS BECAUSE OF THE CHANGING NATURE OF WORK AND AGING. THAT HAS LEFT PEOPLE EFFECTIVELY IN THE RETAIL FINANCIAL SERVICES INDUSTRY FOR RETIREMENT, I WOULD SAY THAT SYSTEM TO DATE HAS SERVED CANADIANS VERY POORLY. WE PAY SOME OF THE HIGHEST FEES IN THE WORLD. PEOPLE STRUGGLE WITH SAVING. THERE ARE NO VEHICLES OR VERY FEW VEHICLES TO HELP PEOPLE POOL THEIR RISK AND GUARANTEE THEIR INCOME AS THEY GET OLDER. THERE IS NO REAL FIDUCIARY STANDARD FOR PEOPLE. THAT HAS LED TO AN EXPENSIVE SYSTEM FOR PEOPLE. RETIREMENT IS ONE OF THE MOST EXPENSIVE THINGS THAT PEOPLE PURCHASE IF YOU THINK ABOUT IT THAT WAY OVER THE COURSE OF THEIR LIFETIME AND IT'S NOT GETTING ANY CHEAPER WITH THE AGING POPULATION. I THINK THE CHALLENGE AHEAD OF ALL OF US IS TO FIND WAYS TO MAKE RETIREMENT EASIER AND AFFORDABLE ESPECIALLY FOR PEOPLE WHO DON'T HAVE ACCESS TO WORKPLACE PENSIONS.

Steve says IF THAT'S THE CHALLENGE, WHAT ARE YOU OFFERING UP AS A SOLUTION?

Alex says OUR WHOLE VIEW IS WE HAVE TO RE-THINK THE MODEL FOR THOSE 10 MILLION CANADIANS NOT COVERED BY A TRADITIONAL PENSION. WE NEED PORTABLE... AS GOOD AS POSSIBLE, BUT ALSO HAVE THE FLEXIBILITY THAT IS ADAPTED TO A WORLD WHERE A LOT OF PEOPLE ARE SELF-EMPLOYED, WHERE PEOPLE CHANGE JOBS MORE FREQUENTLY, AND WHERE PEOPLE NEED SOMETHING THEY CAN TAKE WITH THEM FROM WORKING SITUATION TO WORKING SITUATION. SO THAT'S THE MODEL THAT WE WORK WITH WITH A VARIETY OF DIFFERENT PARTNERS.

The caption changes to "Hugh O'Reilly. C.D. Howe Institute."

Hugh says BUT I THINK THESE FACTS, WHEN YOU COMBINE THEM ALSO WITH THE FACT THAT I THINK THE CANADIAN FINANCIAL SERVICES INDUSTRY IS AMONGST THE BEST AND STRONGEST IN THE WORLD, THERE'S CERTAIN OTHER FACTS THAT I THINK ARE GOING TO CREATE A DEMAND FOR PRODUCTS, AND I THINK WE WILL SEE INNOVATION, BUT IT'S A MATTER OF SPURRING IT ON. I MEAN, FOR EXAMPLE, HEALTHCARE OF ONTARIO PENSION PLAN DID A STUDY, AND THEIR STUDY WAS AVE. CUS, AND THEIR STUDY DEMONSTRATED THAT INDIVIDUALS ARE WILLING TO GIVE UP CHUNKS OF SOVEREIGNTY FOR A BETTER RETIREMENT. THE OTHER THING WE KNOW IS PEOPLE HATE MAKING INVESTMENT DECISIONS. THEY HATE IT. AND THEY DON'T KNOW HOW TO DO IT. THEY FEEL REALLY UNCOMFORTABLE. IT MAKES THEM FEEL STUPID. THERE'S A LACK OF LITERACY, BUT I'M NOT SURE LITERACY, PER SE, IS GOING TO ANSWER THE QUESTION. AND THEN LASTLY I THINK WE HAVE TO... WE'VE HAD SOME SIGNIFICANT ACHIEVEMENTS. THE EXPANSION OF CPP LED BY THE PROVINCE OF ONTARIO, BUT ULTIMATELY ADOPTED NATIONALLY I THINK IS GOING TO MAKE THINGS BETTER, BUT THAT'S 40 YEARS OUT. BUT WE NOW HAVE TO START THINKING ABOUT PRODUCTS THAT WILL ALLOW PEOPLE TO GET A STEADY INCOME. RIGHT NOW THOSE ARE VERY EXPENSIVE, BUT THAT'S THE KIND OF THING PEOPLE ARE LOOKING FOR. WE DO HAVE AN INNOVATIVE INDUSTRY. WE JUST HAVE TO SPUR IT ON.

Steve says I KNOW YOU WANT TO GET IN HERE. JUST FOR THE RECORD, YOU SAY LED BY THE PROVINCE OF ONTARIO. IT WAS PREMIER KATHLEEN WYNNE WHO LED THAT.

Hugh says YES.

Steve says YES, JUST POINTING IT OUT THERE FOR THE RECORD. IF YOU LIKE YOUR CPP THE WAY IT IS, IMPROVED, YOU CAN THANK HER FOR IT.

Hugh says PRIOR...
[INDISCERNIBLE]
PENSION PLAN WE SUPPORTED THE INITIATIVE. I'VE SPOKEN AT BROOKINGS... ACTUALLY, ALEX AND I WERE ON THE PANEL, AND WE MADE IT CLEAR THAT PREMIER WYNNE, THEN PREMIER WYNNE, MADE THIS HAPPEN. AND IT SHOWS THE... BUT THAT'S INNOVATION FROM THE PUBLIC SECTOR TOO. AND WE NEED TO HAVE THESE INNOVATION... INNOVATIVE ACTIVITIES UNDER WAY, AND WE NEED TO FIGURE OUT A WAY TO SPUR THEM.

Steve says CAROLINE?

The caption changes to "Caroline Cakebread. Canadian Leadership Congress."

Caroline says STEVE, I'D LIKE TO GET BACK TO YOUR ORIGINAL QUESTION OR NOT WHETHER OR NOT THE TYPICAL RRSP IS KIND OF A BROKEN SYSTEM, AND I'D LIKE TO STEP BACK AND LOOK AT THE WHOLE ALPHABET SOUP OF OPTIONS THAT THE AVERAGE CANADIAN IS FACED WITH COBBLING TOGETHER FOR THEIR RETIREMENT, WHETHER IT'S AN RRSP OR A TFSA. YOU KNOW, STUDY AFTER STUDY...

Steve says OH, THERE'S MORE, GIC, CPP. YOU GUYS LOVE YOUR ACRONYMS, I GOTTA SAY?

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

Caroline says OH, EXACTLY. AND I THINK STUDY AFTER STUDY AND SURVEY AFTER SURVEY HAS SHOWN THAT, FIRST OF ALL, PEOPLE AREN'T CONTRIBUTING ON A REGULAR BASIS TO ANY OF THESE PROGRAMS.

A voice says THAT'S CORRECT.

Caroline says WHICH IS REALLY CRITICAL. PEOPLE NEED TO START SAVING IN THE FIRST PLACE. AND SECONDLY, YOU KNOW, PEOPLE NEED TO START UNDERSTANDING THAT, YOU KNOW, THESE VEHICLES AREN'T JUST INVESTMENT VEHICLES. THEY ARE VEHICLES THAT ALSO REQUIRE TAX ADVICE AS WELL AND REAL FINANCIAL PLANNING AROUND IT, BEYOND I THINK WHAT SOME OF THE OTHER PANELLISTS HAVE TALKED ABOUT, WHICH IS SIMPLY JUST INVESTMENT ADVICE.

The caption changes to "Jackie Porter, @askjackieporter."

Jackie says RIGHT, AND TRUTHFULLY, THE REALITY IS EVEN WHEN PEOPLE ARE PUTTING MONEY IN INVESTMENT VEHICLES LIKE RRSP, AND THIS IS SOMETHING THAT PEOPLE DON'T PAY ATTENTION OR SPEND TIME TALKING ENOUGH ABOUT, THEY ARE PUTTING IT IN INVESTMENT VEHICLES. THEY ARE NOT PUTTING IT IN INVESTMENT VEHICLES. THEY ARE PUTTING IT IN SAVINGS PLANS. LET'S SAY HIGH INTEREST SAVINGS ACCOUNTS ARE A MISNOMER. IF THEY ARE EARNING 1 percent IT'S A LOT, AND THEN THEY WILL PUT IT IN THERE AND NOT THINK ABOUT IT FOR ANOTHER YEAR. 60 percent OF CANADIANS ARE PUTTING THEIR MONEY IN A HIGH INTEREST ACCOUNT OR A GIC AND NOT INVESTING THE MONEY, EVEN WHEN IT'S ACTUALLY IN AN INVESTMENT ACCOUNT, LIKE AN RRSP.

Steve says MICHAEL, I KNOW YOU TEND TO... AS THE NAME OF YOUR ORGANIZATION WOULD SUGGEST, YOU KNOW, THE NATIONAL INSTITUTE OF AGEING, YOU TEND TO TAKE CARE OF PEOPLE AT THE CLOSER TO THE END OF THEIR LIVES THAN THE BEGINNING OF THEIR LIVES.

The caption changes to "Michael Nicin. National Institute on Aging. @RyersonNIA."

Michael says WELL, THAT'S WHERE WE START LOOKING AT IT, BUT ALL THOSE PROBLEMS, IF YOU HAVE THEM, SAVING FOR RETIREMENT, YOUR HEALTH CARE, YOUR PERSONAL WELL-BEING, IT ALL STARTS MUCH EARLIER. SO WHILE WE MIGHT BE DEALING WITH A BULGE OF OLDER PEOPLE NOW, THAT BULGE, FOR EXAMPLE, WON'T STOP. IT'S NOT GOING TO END WITH THE BABY BOOMER GENERATION. WE'RE HAVING FEWER CHILDREN. PEOPLE ARE LIVING LONGER. WE CAN EXPECT AN AGING POPULATION TO PERSIST IN CANADA. AND SO I THINK THE MESSAGE HAS TO RICOCHET DOWN TO YOUNGER CANADIANS.

Steve says HAVING SAID THAT, HOW DO YOU CONVINCE SOMEBODY WHO'S IN THEIR 20S WHO WILL HAVE A DIFFICULT TIME SAVING UP ENOUGH MONEY FOR RENT OR TO BUY A HOME OR MAY HAVE DIFFICULTY GETTING THAT FIRST JOB, THAT NOW IS ACTUALLY THE TIME TO START SAVING FOR YOUR RETIREMENT?

The caption changes to "Avoiding old-age poverty."

Michael says I THINK WE HAVE TO GO BACK TO HIGH SCHOOL AND THE LESSONS OF COMPOUND INTEREST, IF NOTHING ELSE, SET ASIDE MONEY. I THINK THERE'S A LOT OF DISCUSSION NOW, AND YOU KNOW, I THINK IN THIS CONTEXT OF BREAKING APART THE RETIREMENT INCOME SYSTEM IN CANADA, WE HAVE TO REMEMBER THAT WE'RE ACTUALLY PRETTY GOOD AS A NATION IN BEING PRUDENT AND MINDING OUR FINANCES. WE WEATHER THE RECESSION BETTER THAN MOST, AND SO I THINK WE HAVE THAT ETHIC IN CANADA. AND ONE OF THOSE IS AUTOMATIC SAVINGS. YOU'RE STARTING TO HEAR MORE DISCUSSIONS ABOUT THAT. CAN WE SET UP SYSTEMS, AND GOVERNMENT MIGHT HAVE A ROLE TO PLAY IN HERE, WHERE WE COULD HAVE OPT-IN SYSTEMS OR OPT-OUT SYSTEMS BUT WHERE WE DEVELOP A CULTURE WHERE SAVING AUTOMATICALLY FOR RETIREMENT BECOMES THE NORM.

Jackie says THAT HAS TO HAPPEN, AND I DISAGREE WITH YOU. I DON'T THINK WE'RE AS PRUDENT AS WE USED TO BE WHEN IT COMES TO SAVING NOT FOR WHERE EVERY DOLLAR CANADIANS ARE EARNING THEY ARE LOSING 1 dollar 70 TO DEBT. I DON'T THINK WE HAVE THE DISCIPLINE THAT WE ONCE HAD. I THINK WE'RE BECOMING VERY, VERY COMFORTABLE WITH DEBT, AND GOING BACK TO WHAT YOU WERE SAYING, I THINK MANDATORY, LIKE, WORKPLACE FINANCIAL LITERACY PROGRAMS I THINK WOULD BE A REALLY GREAT PLACE, BECAUSE THAT'S ONE OF THE PLACES THAT PEOPLE GATHER AND THEY TYPICALLY HAVE... IF THEY ARE IN A WORKPLACE ENVIRONMENT WHERE THEY HAVE A SAVINGS PLAN SET UP ALREADY, SOMETIMES WHAT'S HAPPENING IS IT GETS SET UP BUT THE PROVIDER NEVER COMES BACK AND GIVES FINANCIAL LITERACY ASSESSMENTS.

Steve says CAN I JUST UNDERSTAND THAT? WE'RE HEARING A LOT ABOUT HIGH SCHOOL LITERACY TESTS RIGHT NOW. YOU WANT SOMETHING IN THE WORKPLACE?

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Jackie says RIGHT, BECAUSE THERE'S MANY... THERE ARE COMPANIES OUT THERE THAT HAVE EMPLOYER SPONSORED PLANS, RETIREMENT PLANS. THE CLIENT... FACEBOOK MAKING DECISIONS ABOUT WHERE TO INVEST THEIR MONEY. THEY HAVE NO IDEA. THEY ARE NOT GETTING A LOT OF GUIDANCE FROM THE SUPPLIERS ON WHAT THEY SHOULD BE PUTTING THEIR MONEY IN, AND MAYBE AFTER THESE PLANS ARE SET UP, THEY ARE KIND OF LEFT TO THEIR OWN DEVICES.

Steve says ALEX, I HEAR ALL THE TIME PEOPLE ARE TALKING ABOUT... WE JOKED ABOUT IT A SECOND GO. ALL THESE ACRONYMS AND IT'S ALL VERY COMPLICATED. HOW DO YOU WANT TO GET THROUGH ALL THAT?

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

Alex says WELL, THERE'S ONE NOBEL PRIZE WINNER THAT CALLED RETIREMENT THE HARDEST NASTIEST PROBLEM IN FINANCE, AND YET WE HAVE A SYSTEM WHERE WE EXPECT PEOPLE TO NAVIGATE A LOT OF THAT ON THEIR OWN. ONE OF THE COMMON THEMES IS WE NEED TO SET UP AUTOMATIC PATHWAYS FOR PEOPLE WHERE A LOT OF DECISIONS ARE MADE FOR THEM IN A WAY THAT PUTS THEIR INTEREST FIRST. THAT WAY IS REALLY IMPORTANT AS WELL.

Hugh says I THINK IT... I DON'T WANT TO BE...

Steve says NO, NO, GO AHEAD.

The caption changes to "Hugh O'Reilly, @globalriskfs."

Hugh says I THINK IT HAS TO EXTEND BEYOND JUST THE SAVINGS ASPECT, BECAUSE I THINK WHERE THIS FAILS, AND I THINK THE BEHAVIOURAL FINANCE LITERATURE ON THIS IS OVERWHELMING, PEOPLE DON'T WANT TO MAKE THE CHOICES. AND OUR FINANCIAL SERVICES INDUSTRY IS CAPABLE, EVEN IN A DEFINED CONTRIBUTION ENVIRONMENT, WHERE YOU'RE JUST PUTTING MONEY AWAY, WE CAN DEVELOP PRODUCTS WHERE PEOPLE DON'T HAVE TO MAKE THOSE DECISIONS. SO WE CAN HAVE...

Steve says WHAT DOES THAT LOOK LIKE?

Hugh says WELL, WHAT IT COULD LOOK LIKE, FOR EXAMPLE, IS... I KNOW MANULIFE HAS PRODUCTS ON THE DEFINED CONTRIBUTION SIDE WHERE THEY HAVE LIABILITY-DRIVEN INVESTING. THAT'S WHAT THE MAJOR PENSION PLANS DO.

Steve says LIABLE DRIVEN INVESTING.

Hugh says PRODUCTS FOR INDIVIDUALS.

Steve says WHICH MEANS?

Hugh says MEANS WHAT IT DOES IS IT MAKES SURE THAT YOUR RISK OF LOSS IS REDUCED. IT REDUCES THE INTEREST RATE SENSITIVITY, AND IT PROTECTS YOU. AND WHAT WE NEED TO DO, I THINK, IS CHANGE THE REGULATORY ENVIRONMENT BECAUSE WHAT SPONSORS WORRY ABOUT IS IF I PUT YOU IN A PRODUCT AND YOU LOSE MONEY, YOU'RE GOING TO COME BACK AT ME. SO WE NEED AN ENVIRONMENT, A REGULATORY ENVIRONMENT THAT SAYS THESE TWO, THREE, FOUR KINDS OF PRODUCTS, THESE ARE FINE. AND IF YOU DO THESE, THIS WILL WORK BECAUSE THERE'S NO GUARANTEES IN ANY OF THESE INVESTMENTS.

Steve says YEAH, CAROLINE?

Caroline says YEAH, I AGREE THAT PRODUCT INNOVATION AND POLICY CHANGE IS REALLY NEEDED. I THINK WE PUT A LOT OF WEIGHT ON TO FINANCIAL LITERACY TO KIND OF FIX THIS PROBLEM, BUT AT THE END OF THE DAY, THE SYSTEM IS... CAN BE CONFUSING. ACCESS TO GOOD ADVICE CAN BE HARD TO COME BY FOR A LOT OF CANADIANS, AND YOU KNOW, THE SAVINGS PATTERNS JUST AREN'T THERE. SO I THINK ANYTHING WE CAN DO TO CREATE A SYSTEM THAT ACTUALLY FACILITATES THIS A BIT MORE EASILY FOR PEOPLE, THE BETTER.

Steve says WHOSE RESPONSIBILITY IS IT TO DO THAT?

Caroline says WELL, YOU KNOW, I THINK TO HUGH'S POINT, THE INDUSTRY COULD BE READY WITH BETTER PRODUCTS TO KIND OF TAKE THAT INVESTMENT DECISION MAKING OUT OF THE HANDS OF PEOPLE THAT DON'T WANT TO MAKE THOSE DECISIONS. AND I THINK THAT WOULD BE A GREAT FIRST START. BUT YOU KNOW, ON A POLICY LEVEL AS WELL, YOU KNOW, RRSPS, TFSAS, WE'VE BEEN THROUGH ALL THE ACRONYMS. THOSE ARE DRIVEN BY POLICYMAKERS, FOR THE MOST PART. SO YOU KNOW, WHAT ARE POLICY-MAKERS GOING TO DO TO PERHAPS CREATE A MORE COHESIVE SYSTEM.

Steve says AND TO THAT I GO TO MICHAEL AND ASK HIM TO WHAT DEGREE DO YOU THINK THE POLICY-MAKERS IN, FOR EXAMPLE, THE GOVERNMENT OF ONTARIO ARE EITHER DOING ADEQUATELY OR INADEQUATELY TO ENSURE SOME OF THE THINGS THAT WE'VE BEEN TALKING ABOUT HERE ARE HAPPENING OR NOT?

Michael says WHAT KEITH AND I SAY IN OUR PAPER IS WE'VE HAD SOMETHING OF AN AD HOC APPROACH TO THIS IN CANADA. I WOULDN'T SAY ACROSS THE BOARD THE GOVERNMENTS HASN'T LISTENED. IT TOOK DECADES TO GET CPP ENHANCEMENT, BUT EVENTUALLY WE CROSSED THAT THRESHOLD, AND IT'S A BIG THRESHOLD, TWO THIRDS OF THE PROVINCES AND TWO THIRDS OF THE POPULATION PLUS THE FEDERAL GOVERNMENT. THAT'S WHERE KATHLEEN WYNNE'S GOVERNMENT WAS INSTRUMENTAL, BUT WE GOT THERE. I THINK WE NEED MORE COORDINATED WILL ACROSS GOVERNMENTS, MORE COORDINATION ACROSS THE PROVINCES, SO I THINK ONE OF THE MORE RECENT CASES IS THAT ONTARIO IS THE STANDOUT IN NOT ELIMINATING DEFERRED FEES ON CERTAIN PRODUCTS, RIGHT? THE ONLY PROVINCE THAT DIDN'T FOLLOW THROUGH THERE, AND I THINK THAT KIND OF SORT OF OMISSION ACROSS THE COUNTRY STICKS OUT AND IT PUTS ONTARIO AT JEOPARDY.

Steve says LET ME FOLLOW UP ON THAT. JACKIE, THE ISSUE OF FEES.
I'M NOT EVEN GOING TO ASK A QUESTION. GO. WHAT DO YOU THINK? I DID ASK A QUESTION, BUT THERE YOU GO.

Jackie says I THINK FEES ARE DEFINITELY SOMETHING THAT... FIRST OF ALL, THERE'S LOTS OF LITERATURE THAT SAYS CANADIANS ARE PAYING MORE FOR FEES THAN THEY SHOULD BE VERSUS WHAT OTHER COUNTRIES ARE PAYING, SO PEOPLE CAN DO THEIR OWN MATH AND DETERMINE, YOU KNOW, WHAT THEY SHOULD PAY, BUT THE REALITY IS, YOU KNOW, ULTIMATELY WHAT YOU'RE GOING TO PAY HAS A LOT TO DO WITH WHAT YOU'RE... WHAT'S AVAILABLE TO YOU AND WHAT INVESTMENT OPTIONS ARE AVAILABLE TO YOU, AND AS I MENTIONED, CANADIANS ARE BUYING 60 percent OF THEM ARE BUYING PRODUCTS WHERE THEY ARE MAKING HARDLY ANY MONEY. SO FEES ARE IMPORTANT, AND YOU SHOULD KNOW HOW MUCH YOU'RE PAYING AND THE INDUSTRY HAS GOTTEN BETTER AT GIVING TRANSPARENCY TO FEES, SO THAT CLIENTS CAN HAVE A BETTER UNDERSTANDING. WHAT AM I PAYING FOR WHAT AM I SUPPOSED TO RECEIVE IN TERMS OF A RETURN? FINANCIAL PLANS HELP BECAUSE TYPICALLY WHEN YOU DO FINANCIAL PLANS YOU HAVE AN AMOUNT THAT... A RETURN THAT YOU'RE LOOKING AT THAT WILL GIVE YOU A SENSE OF AM I ON TRACK, AM I... IS THE RETURN I'M RECEIVING ON MY STATEMENTS GOING TO GIVE ME... PUT ME ON TRACK FOR THE RETIREMENT PLAN THAT I CREATED? SO I THINK FEES ARE IMPORTANT. PEOPLE SHOULDN'T PAY MORE THAN THEY... THEY SHOULDN'T PAY MORE THAN IS... THEY SHOULDN'T PAY MORE THAN THEY NEED TO FOR FEES. AND THERE IS ALL DIFFERENT TYPES OF PRODUCTS OUT THERE.

Steve says BUT PEOPLE DON'T KNOW.

Caroline says THAT'S TRUE.

The caption changes to "Watch us anytime: tvo.org, Twitter: @theagenda, Facebook Live, YouTube."

Steve says THEY DON'T KNOW WHAT THE PRODUCTS ARE, THEY DON'T KNOW WHAT A REASONABLE FEE IS. THEY DON'T KNOW WHAT'S TOO HIGH. OBVIOUSLY THEY WOULD LIKE TO PAY NOTHING, BUT THAT'S NOT FAIR TO YOU FOLKS, SO WHAT'S REASONABLE?

Caroline says I THINK A REASONABLE FEE... LIKE, FEES IS... VALUE. FEES WITHOUT UNDERSTANDING WHAT YOU'RE BUYING FOR THOSE FEES IS A REALLY HARD CONVERSATION TO DISCUSS BECAUSE YOU HAVE NO IDEA. SO EVERY PARTICULAR... EVERY CLIENT SHOULD LOOK AT... HAVE A CONVERSATION WITH THEIR ADVISOR AND SAY, OKAY, WHAT ARE MY FEES? WHAT AM I PAYING? AND WHAT AM I GETTING FOR THOSE FEES.

Steve says OKAY, LET'S PLAY IT OUT. I'M YOUR CLIENT. WHAT AM I PAYING YOU AND WHAT AM I GETTING FOR THAT?

Caroline says MY CLIENTS PAY ANYWHERE FROM 0.85 TO 1 percent DEPENDING ON THE SIZE OF THEIR ACCOUNT.

Steve says AND WHAT'S TYPICAL IN THE BUSINESS?

Caroline says WHAT COULD BE TYPICAL COULD BE UP TO 2 percent, MAYBE 2.5 percent FOR ADVICE.

Steve says IS THAT REASONABLE?

Caroline says WELL, I THINK THE KEY IS TO... AS JACKIE SAID, TO SHOW THEM HOW THAT PLAYS OUT OVER TIME, RIGHT? SO THE AVERAGE MUTUAL FUND FEE HERE IN CANADA IS 2 TO 3 percent, RIGHT? AND WHILE THAT MIGHT NOT SEEM VERY MUCH OFF THE TOP OF YOUR HEAD, OVER TIME AND THROUGH COMPOUNDING OVER THE YEARS, THAT REALLY DOES ADD UP AND EAT INTO YOUR RETURN OVER TIME.

Steve says IS THAT UNREASONABLE, 2 TO 3 percent?

Caroline says YOU KNOW WHAT, IT IS HIGH, BUT AT THE END OF THE DAY I THINK YOU HAVE TO... TO JACKIE'S POINT, KIND OF UNDERSTAND WHAT YOU'RE GETTING FOR THAT. BECAUSE WHAT ARE WE GETTING? WHAT SHOULD WE EXPECT IN EXCHANGE FOR THE FEES WE PAY? WELL, ADVICE, HOLISTIC ADVICE. THE... OUR ACCOUNT, SOME LEVEL OF, YOU KNOW, WHATEVER TRANSACTIONS ARE INVOLVED.

Jackie says I WOULD SAY SO TYPICALLY WHEN PEOPLE ARE PAYING... BECAUSE THERE'S FEES FOR INVESTMENTS AND THE RETURN YOU ARE RECEIVING, AND TYPICALLY STATEMENTS WILL SAY HERE IS MY RETURN NET OF FEES. SO HAVE A SENSE OF HOW THAT COMPARES TO WHAT THE MARKET IS CHARGING. SO IF I'M BUYING AN INDEX FUND AND I'M PAYING NO FEE, HOW DOES THE FEE THAT I'M PAYING RELATE TO WHAT THE INDEX, IF I PAID NO FEES.

Steve says WHY ARE YOU CHARGING LESS THAN THE AVERAGE.

Jackie says SORRY, SAY THAT AGAIN.
BECAUSE I WANT TO DEMONSTRATE VALUE. MY JOB AS AN INVESTMENT ADVISOR IS IF I'M GOING TO HELP CLIENTS MANAGE... NAVIGATE AND MAKE THESE DECISIONS, I SHOULD BE ABLE TO CHARGE A FEE THAT'S EITHER LOWER OR AT PAR WITH THE FEE THEY WOULD PAY IN THE MARKETPLACE, AND DO IT SMOOTHER SO THAT THEY DON'T HAVE TO GO THROUGH ALL THE UPS AND DOWNS OF THE VOLATILITY THEY FACE IF THEY JUST BOUGHT AN INDEX.

Steve says WHAT'S YOUR THOUGHTS ON THIS, ALEX?

Alex says I THINK IT'S UNREASONABLE, THE FEES THAT OUR FINANCIAL SERVICE CHARGES. 2 TO 3 percent IS OUT OF LINE WITH THE REST OF THE WORLD.

Steve says GIVEN WHAT INTEREST RATES ARE AT?

Alex says THERE'S JUST NO VALUE THERE THAT RELATES TO THE FEE. AT THE END OF THE DAY, YOU KNOW, TRYING TO BRING FEES CLOSER TO WHAT A LARGE PENSION PLAN OR LARGE COLLECTIVE PLAN WOULD CHARGE IS WHAT WE AIM FOR. I THINK AT THE END OF THE DAY IT'S ABOUT VALUE, BUT IF YOU LOOK AT, YOU KNOW... AND MICHAEL'S ORGANIZATION AND OURS AND THE HOOP PLAN THAT HUGH MENTIONED THAT DID A STUDY TOGETHER FOUND THAT AN AVERAGE WORKER COULD SAVE ALMOST A MILLION DOLLARS IN SAVING A MORE EFFICIENT WAY. IT DEPENDS ON HOW YOU DO IT. IF WE WANT TO MAKE THIS ISSUE INTERESTING FOR YOUNGER PEOPLE, WE HAVE TO PUT IT MORE IN AN AFFORDABILITY LENS. IF YOU'RE CONCERNED ABOUT THE AFFORDABILITY OF HOUSING, EDUCATION, OTHER THINGS LIKE THAT, THIS IS A MAJOR LIFE PURCHASE THAT WE CAN MAKE WAY CHEAPER FOR CANADIANS.

Hugh says BUT CONTEXT IS IMPORTANT. SO INCREASINGLY WE HAVE PEOPLE POURING INTO ETFS.

Jackie says CORRECT.

Hugh says AND THE FEE PRESSURE.

Steve says POURING INTO WHAT?

Hugh says EXCHANGE TRADED FUNDS, WHICH ARE... IT'S ANOTHER ACRONYM. PEOPLE ARE GOING INTO THEM. THE FEES ARE VIRTUALLY NOTHING, AND THE FEES FOR A LOT OF MANAGERS ARE GOING DOWN, DOWN, DOWN. BUT THERE IS A VALUE PROPOSITION. THERE ARE DIFFERENT KINDS OF INVESTMENTS THAT HAVE HIGHER FEES. THERE ARE DIFFERENT KIND OF INVESTORS WHERE YOU ACTUALLY WANT TO PURCHASE THEIR EXPERTISE. THIS IS A COMPLICATED ISSUE, AND A CONCERN I HAVE AND IT RELATES TO LITERACY IS IF PEOPLE ARE GONNA JUST POUR INTO NO-FEE EFTS AND THE REST OF IT WITHOUT UNDERSTANDING LIQUIDITY OR UNDERSTANDING THE RISK THEY ARE TAKING ON, IT'S WHAT YOU GET FOR THAT. AND THEN IT'S... THEN BECOMES THE ISSUE OF REASONABLENESS.

Steve says BUT WE DO PAY AMONG THE HIGHEST FEES IN THE WORLD, APPARENTLY, IF YOU COMPARE OUR COUNTRY TO OTHER COUNTRIES.

Hugh says BUT THE MARKET IS DRIVING THAT DOWN.

Caroline says THAT'S CORRECT.

Hugh says AND THAT MARKET DRIVES IT DOWN EVERY DAY, AND I AM NOT NECESSARILY JUSTIFYING HIGH FEES, BUT WHAT I'M SAYING IS IT'S A CONVERSATION, AND WHEN WE SEE ADS ON TV, WHICH PEOPLE ARE TOTALLY... YOU KNOW, THEY ARE ENTITLED TO PUT ON, WE GOT TO UNDERSTAND WHAT ARE ALL THE THINGS THAT GO INTO THE FEE, AND THEN DOES IT MAKE SENSE.

Steve says CAROLINE?

Caroline says I THINK, YOU KNOW, WE'RE LOOKING... WE'RE TALKING ABOUT THE FEES, WE'RE TALKING ABOUT THE PRODUCTS, BUT AT THE END OF THE DAY I THINK FOR AVERAGE SAVERS, THE FOCUS IS OUTCOME, RIGHT? SO FOR THAT FEE, WOW, I WOULD TOTALLY PAY 2 TO 3 percent IF I KNOW THAT AT THE END OF THE DAY I'M GOING TO HAVE SOME KIND OF CERTAINTY OF WHAT MY INCOME'S GOING TO BE WHEN I RETIRE. ABSOLUTELY. BUT RIGHT NOW, GIVEN THE OPTIONS IN FRONT OF US, WE DON'T HAVE THAT. AS HUGH POINTED OUT, WE'RE AT THE MERCY OF INTEREST RATES. WE'RE AT THE MERCY OF MARKET VOLATILITY, AND AT THE END OF THE DAY, YOU KNOW, PEOPLE ARE HOPING, FINGERS CROSSED, THAT THEY ARE... THE ADVICE THEY'RE GETTING IS GOING TO HELP THEM NAVIGATE THAT, BUT THERE'S REALLY NO GUARANTEES, AND I THINK THAT'S SOMEWHAT PROBLEMATIC.

Jackie says AND I THINK THE REALITY IS IS IF WE ARE, AGAIN, TALKING ABOUT SEEING THE ABSENCE OF VALUE, THERE'S A LOT OF FINANCIAL DECISIONS THAT HAVE TO BE MADE OVER AND ABOVE RETURN THAT WILL COST THE CLIENTS MONEY, AND THAT HAS TO DO WITH TAX PLANNING. IT'S MY... WHAT'S MY RETIREMENT NAVIGATION PLAN? HOW AM I GOING TO WITHDRAW MONEY OUT OF ALL MY DIFFERENT ACCOUNTS AND PAY THE LEAST AMOUNT OF TAX? AM I ON TRACK TO RETIRE BASED ON THE RATE OF RETURN THAT WE SET, A REASONABLE RATE OF RETURN OR 4 OR 5 OR 6 percent. MY CLIENTS WILL PAY FOR THAT BECAUSE THEY ACTUALLY DON'T WANT TO JUST BUY AN EFT, AN EXCHANGE TRADED FUND, GO WITH ALL THE UPS AND DOWNS OF THE MARKETS AND HAVE NO IDEA IF THAT'S GOING TO BE ENOUGH FOR THEM TO LIVE ON WHEN THEY ARE READY TO RETIRE BASED ON THEIR LIFESTYLE. THOSE ARE THE CONVERSATIONS THAT WE'RE HAVING OUTSIDE OF JUST FEES WITH OUR CLIENTS. IT'S NOT JUST ABOUT HOW MUCH DID I PAY FOR THAT, BECAUSE EASILY YOU COULD GO TO A COMPUTER AND HAVE A COMPUTER GENERATE THE INVESTMENTS FOR YOU IN THIS WORLD NOW THAT WE COULD DO THAT. BUT TRUTHFULLY PEOPLE ACTUALLY WANT A HUMAN APPROACH WHERE THEY ARE TALKING TO SOMEBODY AND ACTUALLY HAVING SOMEBODY GUIDE THEM THROUGH THAT WHOLE RETIREMENT CONVERSATION. IT'S CONFUSING.

Alex says WELL, THE BEHAVIOURAL PIECE IS HUGE, RIGHT? THE SAVINGS BEHAVIOUR PIECE YOU POINTED OUT EARLIER JACKIE THE TAX PIECE AND TURNING YOUR NEST EGG INTO A STREAM OF INCOME. THESE ARE REALLY TOUGH THINGS TO DO. THERE'S DEFINITELY A ROLE FOR PLANNERS, ESPECIALLY PLANNERS THAT HAVE A DUTY TO PUT PEOPLE'S INTEREST FIRST, AND THAT ARE CHARGING A REASONABLE PRICE, AND THERE'S A ROLE FOR TECHNOLOGY AS WELL. TECHNOLOGY INNOVATION TO HELP WITH SOME OF THESE COMPLEX DECISIONS, WHICH THE AVERAGE PERSON, YOU KNOW, HAS A HARD TIME...

Steve says I AM GOING TO RHETORICALLY ASK OUR VIEWERS AND LISTENERS ON PODCAST OUT THERE HOW WELL THEY THINK CANADA FARES IN THE WORLD ON THIS. AND YOU MIGHT THINK BECAUSE WE'VE GOT A PRETTY SOLID, ESTABLISHED FINANCIAL SERVICES INDUSTRY IN THIS COUNTRY THAT WE'RE RIGHT UP THERE IN THE TOP. AND YOU'D BE WRONG. BECAUSE WE GOT SOMETHING HERE CALLED THE MEL BURN MERCER GLOBAL PENSION INDEX WHICH RANKS COUNTRIES FROM A TO D WITH A LETTER GRADE, ALL THROUGHOUT THE WORLD. THEN I'M GOING TO READ A BIT OF THIS OUT LOUD...

A slate appears on screen, with the title "Melbourne Mercer Global Pension Index."

A list of countries appears grouped into grades corresponding to index values. A, over 80, for Denmark and Netherlands. B plus, 75 to 80, for Australia. B, 65 to 75, for Canada, Chile and others. C plus, 60 to 65, for France, Hong Kong, U.S.A., and others. C, 50 to 60, for Austria, Brazil and others. And D, 35 to 50, for Argentina, China, India, Japan and others.

Steve reads data from the slate and says
BUT THOSE WHO GET A GRADE A, BETTER THAN 80 INDEX VALUE, ONLY DENMARK AND NETHERLANDS. AUSTRALIA COMES SECOND WITH A B PLUS. THEN CANADA IS IN WITH CHILE, FINLAND, GERMANY, IRELAND, NEW ZEALAND, NORWAY, SINGAPORE, SWITZERLAND, WE GOT A B, 65 TO 75. C PLUS, FRANCE. HONG KONG, MALAYSIA, THE U.K., THE U.S.A. C, AUSTRIA, BRAZIL, COLOMBIA, PERU, SOUTH AFRICA AND SPAIN, AND THEN DS, DON'T GIVE THESE FOLKS YOUR MONEY, ONLY 35 TO 50, ARGENTINA, CHINA, INDIA, JAPAN... JAPAN? KOREA, MEXICO, PHILIPPINES, THAILAND AND TURKEY. JAPAN. G7 COUNTRY, RICH, WHAT ARE THEY DOING ON THAT LIST? OKAY, NEVER MIND JAPAN, MICHAEL, WHAT ARE WE DOING OUT THERE WITH A B? WHY ARE WE ONLY A B?

The caption changes to "Room for improvement."

Michael says THERE'S A NUMBER OF FACTORS AND WE GET INTO IT IN THE REPORT THAT WE'RE RELEASING, AND I THINK IT'S IMPORTANT TO REMEMBER, AND THIS MIGHT RELATE TO JAPAN, THERE I'M NOT AN EXPERT ON JAPANESE RETIREMENT INCOME SYSTEMS, IS THE SUSTAINABILITY OF OUR SYSTEM FACTORS HEAVILY INTO HOW THAT INDEX IS CREATED. WE KNOW, FOR EXAMPLE, JAPAN HAS A BALLOONING AGING POPULATION AND THEY ARE DOING VERY LITTLE TO EFFECT CHANGE THERE, TO DRIVE IT DOWN. NOTORIOUSLY RESISTANT TO IMMIGRATION AND SUCH. IN CANADA'S CASE, THE THREE RECOMMENDATIONS OF IMPROVING IT IS LET'S PROTECT EXISTING PENSION PLANS AND VEHICLES THAT EXIST TODAY, MAKE SURE THAT THEY ARE SAFE AND SOUND AND CAN BE SUSTAINED FOR THE FUTURE. AND THEN BUILDING ON THAT, HOW DO YOU GIVE CANADIANS WHO DON'T BELONG TO A PENSION PLAN ACCESS TO EFFICIENT VEHICLES FOR SAVINGS. THAT COULD BE RRSPS AND OTHERS, BUT IT'S REALLY ABOUT ACCOMPLISHING THE MISSION OF DRIVING UP THAT SAVINGS RATE. THAT'S ALSO THE THIRD PART, JUST SAVING MORE... THE SECOND PART, SAVING MORE IN GENERAL. AND THEN THE LAST PART RELATES SPECIFICALLY TO AN AGING POPULATION, WHICH IS GETTING CANADIANS TO WORK LONGER IF THEY CAN.
STAY IN THE WORKFORCE, EARN MORE INCOME FOR LONGER, DELAY RETIREMENT. THAT'S ONE WAY OF PREVENTING...

Steve says ALEX FURIOUSLY TAKING NOTES THERE. DO YOU HAVE SOMETHING TO ADD ON THAT?

Alex says I WAS JUST GOING TO SAY, IN MY VIEW, IT'S REALLY THE SECOND ONE THAT'S THE BIG OPPORTUNITY FOR IMPROVEMENT IN OUR SYSTEM. WE HAVE SOME GOOD PUBLIC SECTOR PLANS. HUGH USED TO RUN ONE OF THOSE. BUT WE HAVE 10 MILLION PEOPLE THAT DON'T HAVE ACCESS TO A WORKPLACE PLAN, AND SO THAT'S THE PROBLEM WE NEED TO SOLVE. THERE'S A ROLE FOR GOVERNMENT IN THAT. YOU ASKED EARLIER WHO BEARS THE RESPONSIBILITY. EMPLOYERS DID A LOT TO PROVIDE PEOPLE ACCESS TO PENSIONS DURING THE FIRST PART OF THE 20TH CENTURY, AND THAT'S STARTED TO DECLINE SINCE THE '70S. WE HAVE TO THINK ABOUT WHO ARE THE NEW GROUPS THAT MIGHT SPONSOR PLANS. ONE EXAMPLE IS WE JUST WORKED WITH THE ONTARIO MEDICAL ASSOCIATION TO CREATE A PLAN FOR PHYSICIANS WHO ARE SELF-EMPLOYED AND MOST OF THEM DON'T HAVE ACCESS TO A PENSION. THAT'S AN EXAMPLE OF AN ASSOCIATION, A PROFESSIONAL ASSOCIATION THAT PEOPLE REMAIN ATTACHED TO THROUGHOUT THEIR PROFESSIONAL CAREER TRYING TO DO THE RIGHT THING FOR THEIR MEMBERS, WHICH IS REALLY A COMBINATION OF HUMAN TOUCH AND A GROUP PLAN THAT'S AT LOW COST. THERE'S ROOM FOR MORE SOLUTIONS LIKE THAT TO PLAY A BIT OF THE ROLE OF THE EMPLOYER, BUT TO TAKE INTO CONSIDERATION AS CAROLINE WAS SAYING AT THE BEGINNING ABOUT PEOPLE CHANGING JOBS MORE OFTEN.

Steve says DOCTORS DO WELL, THEY EARN WELL, BUT THERE AREN'T THAT MANY OF THEM IN THE PROVINCE OF ONTARIO. ARE THERE ENOUGH OF THEM TO CREATE A CRITICAL MASS?

Alex says THEY'VE GOT 40,000 MEMBERS, I THINK THAT DOCTORS, YOU KNOW, STRUGGLE WITH SOME OF THE SAME FINANCIAL ISSUES AS MANY OTHER CANADIANS. THEY ARE VERY, VERY BUSY AND THEY ARE VERY GOOD AT WHAT THEY DO, BUT THEY ALSO NEED HELP LIKE OTHERS IN PREPARING FOR WHAT IS A FAIRLY SIGNIFICANT FINANCIAL ISSUE IN THEIR FINANCIAL LIFE.

Steve says HMM. HUGH, WHAT WOULD YOU CHANGE?

Hugh says I THINK THERE'S A FEW THINGS. I THINK ONE IS WE SHOULD CREATE A REGULATORY ENVIRONMENT THAT ALLOWS FOR THE CREATION OF NOVEL KIND OF PENSION SOLUTIONS, SO OP TRUST, FOR EXAMPLE, FOR THE NOT-FOR-PROFIT SECTOR HAS ESTABLISHED A PLAN CALLED OP TRUST, AND IT'S MODEST CONTRIBUTION RATES, 3 percent FROM THE EMPLOYER, 3 percent FROM THE EMPLOYEE, BUT WHEN COMBINED WITH CPP, OAS, SOME ARE MAKING 50,000, GIVES THEM A SUM CERTAIN THAT THEY'RE GOING TO RECEIVE, MAKES LIFE BETTER. THE COLLEGES OF APPLIED ARTS AND TECHNOLOGY, THEY'VE PUT TOGETHER SOME NOVEL SOLUTIONS AROUND PENSION PLANS AS WELL. AND THE PROVINCE OF ONTARIO IN THE LAST BUDGET PASSED LEGISLATION THAT WOULD ALLOW IN THE NOT-FOR-PROFIT SECTOR TO SET UP THESE JOINTLY SPONSORED PLANS THAT WOULD HAVE THESE FEATURES. ANOTHER ISSUE I THINK WE HAVE TO THINK ABOUT IS ESTABLISHED PENSION PLANS HAVE RICH BENEFITS IN TERMS OF EARLY RETIREMENT, THINGS LIKE THAT. THAT ISN'T A REALITY THAT PEOPLE LIVE ANYMORE. SO IF WE SET UP PENSION PLANS THAT PROVIDE FOR A BASE LEVEL OF INCOME IN RETIREMENT, I THINK THAT... THOSE KIND OF... GOING BACK TO EXPECTING LESS BUT GETTING WHAT YOU NEED MIGHT BE A GOOD BEGINNING POINT.

Steve says CAROLINE, WHY ARE WE A B?

Caroline says WELL, I THINK AGE DOES HAVE... DOES PLAY A ROLE IN THAT, AS WAS MENTIONED EARLIER. BUT AT THE SAME TIME, YOU KNOW, I THINK WHAT IS IT, THE AVERAGE PAYMENT, THE MONTHLY AVERAGE PAYMENT FROM CPP IS 600 dollars. THAT'S NOT QUITE ENOUGH TO CUT IT WHEN YOU'RE IN RETIREMENT. AND AGAIN, WE DO HAVE A NUMBER OF PRODUCTS OUT THERE TO CHOOSE FROM. IT'S KIND OF HARD TO PUT TOGETHER. BUT YOU KNOW, ULTIMATELY I REALLY AGREE WITH YOU, THAT YOU KNOW, WE NEED TO START THINKING ABOUT REALLY MAYBE SOMEWHAT OF A ONE-STOP SHOP FOR PEOPLE WHEN THEY ARE THINKING OF SAVING FOR RETIREMENT, TO GIVE THEM SOMETHING EASY TO DO BECAUSE, AS JACKIE MENTIONED EARLIER, YOU KNOW, PEOPLE ARE... THEY ARE CARRYING RECORD DEBT LOADS, YOU KNOW, WAGE GROWTH ISN'T WHERE IT NEEDS TO BE IN CANADA. WE CAN AGREE THAT THERE'S BEEN A LEVEL OF STAGNATION ON WAGE GROWTH, SO YOU KNOW, HELP PEOPLE OUT A LITTLE BIT. MAKE THIS EASIER FOR THEM, GIVE THEM A PLACE TO PUT THEIR MONEY ONCE THEY'VE BEEN ABLE TO PUT IT TOGETHER AND GIVE THEM JUST SORT OF THROW THEM A BONE WITH A LITTLE BIT MORE CERTAINTY ABOUT WHAT THEY CAN RECEIVE IN RETIREMENT THAT IS A LITTLE BIT BEYOND 600 BUCKS.

Steve says ALEX, DO THE PUBLIC PENSION PLANS OUTPERFORM INDIVIDUAL'S PLANS?

Alex says BY A LONG SHOT IF YOU LOOK AT A TYPICAL INDIVIDUAL AND HOW THEY FARE AND A PUBLIC PLAN. THIS WAS A STUDY I MENTIONED EARLIER THAT WE WORKED ON TOGETHER WITH HOOP. THEY JUST HAVE MANY ADVANTAGES THAT AN INDIVIDUAL DOESN'T HAVE, SO I THINK THE QUESTION IS REALLY HOW DO YOU BRING SOME OF THOSE ADVANTAGES... IT'S LOW COST, YES, BUT I AGREE WITH YOU, JACKIE, IT'S NOT JUST ABOUT LOW COST. IT'S ABOUT POOLING THE RISK, INVESTMENT EXPERTISE TO MAKE THE RIGHT CHOICES FOR RETIREMENT, AND IT'S ABOUT HELPING PEOPLE PLAN FOR A PREDICTABLE INCOME IN RETIREMENT AS WELL, WHICH IS REALLY THE END GOAL WE'RE TALKING ABOUT HERE.

Steve says WHAT WOULD YOU CHANGE, JACKIE, TO MAKE THINGS BETTER?

Jackie says I WOULD ACTUALLY LOVE TO SEE... AGAIN, I THINK THAT THE REALITY IS THE NARRATIVE FOR WOMEN IN THIS COUNTRY ISN'T GREAT, AND WOMEN GET PENALIZED IN THE PENSION SYSTEM BECAUSE WE'RE USUALLY GOING IN AND OUT OF THE PENSION SYSTEM BECAUSE WE'RE TAKING CARE OF OUR CHILDREN AND WE'RE TAKING CARE OF AGING PARENTS, AND WE OFTEN DON'T MAKE AS MUCH. SO HOW DO WE CREATE A SYSTEM THAT'S NOT JUST EQUITABLE FOR EVERYONE BUT THAT TAKES INTO ACCOUNT THE DIFFERENCES, JUST THE DIFFERENCES IN WHAT WE'RE GOING TO LIKELY END UP WITH AS A PENSIONER.

Steve says LET ME PUT THIS QUESTION TO MICHAEL WITH THIS: DO YOU THINK WE CAN OBLIGATE ALL BUSINESSES WHO WANT TO DO BUSINESS IN THE PROVINCE OF ONTARIO TO PROVIDE A PENSION TO THEIR EMPLOYEES?

Michael says OBLIGATE IS A STRONG WORD IN CANADA. THE RESISTANCE WE SAW TO THE CPP ENHANCEMENTS IS A CASE STUDY IN ITSELF. SO ANYONE WHO WAS OPPOSED TO ITS, AND THERE WAS EMPLOYER GROUPS, TAX FEDERATIONS AND SUCH, CALLED IT A PAYROLL TAX ON CANADIAN EMPLOYERS, THAT IT WILL TAKE MONEY OUT OF YOUR POCKET. I THINK OBLIGATING IS A THRESHOLD PROBABLY TOO FAR FOR US TO CROSS HERE. WHAT I WOULD LIKE TO SEE IS INCENTIVES TO DO SO.

Jackie says BUT THINK ABOUT, THOUGH, THE OMERS, THE HOOP PENSION, THESE ARE ALL PENSIONS THAT PEOPLE HAVE TO CONTRIBUTE TO, SO IT'S INTERESTING THAT OBLIGATING IS SUCH A WORD.

Michael says WELL, IT'S NOT THAT. IT'S FORCING PRIVATE SECTOR BUSINESSES INTO PROVIDING A VEHICLE... I THINK... YOU KNOW, I DON'T KNOW THAT THAT'S REASONABLE IN THE SHORT TERM.

Steve says HAS AUSTRALIA DONE IT?

Michael says AUSTRALIA HAS DONE IT, BUT THEY'VE DONE IT... I MEAN, IT'S MORE SIMILAR OR IT'S A HYBRID BETWEEN WHAT OUR CPP IS AND AN EMPLOYER-BASED PLAN. IT'S ACROSS THE BOARD. I THINK IT'S A WORTHY CONVERSATION, I JUST DON'T EXPECT THAT TO HAPPEN IN SHORT ORDER. I THINK IT'S A CONVERSATION THAT NEEDS TO HAPPEN, THOUGH.

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

Steve says GOTCHA. WELL, I'M GLAD WE HAD SOME OF IT ON TVO TONIGHT. MR. DIRECTOR, CAN I HAVE A WIDE SHOT PLEASE TO THANK EVERYBODY FOR COMING ON THIS PROGRAM AND TALKING ABOUT PENSIONS AND MAKING IT INTERESTING. WELL DONE, EVERYBODY. THANKS FOR COMING IN TONIGHT.

The caption changes to "Subscribe to The Agenda Podcast: tvo.org/theagenda."

All the guests say THANK YOU.

Watch: DIY Pensions: A Good Idea?