At a time when the Canadian Federation of Independent Business (CFIB) is advocating an end to “defined benefit” (DB) pensions, the latest retirement index suggests that the alternate “defined contribution” (DC) pensions are struggling and will not produce the kind of income seniors need in their retirement years. DC plans on average presently replace 22.3 per cent of pre-retirement income. How many of us could successfully live our retirement years off less than a quarter of what we presently earn?
By contrast, a typical DB plan will replace between 50 and 70 per cent of pre-retirement income. Seventy per cent is considered by financial planners to be the target for Canadians wishing to maintain their existing lifestyle. That’s a big gap between 22.3 per cent and 70 per cent.
The CFIB believes making it more difficult for public sector workers to retire is the solution rather than improving retirement income for the two-thirds of private sector workers without a workplace plan. This is idiotic.
Unions have advocated for improvements in the DB Canada Pension Plan to better assist all workers, although the CFIB also opposes this. The CFIB would also have us do away with early retirement.