The long or short road to retirement
In our June 2016 blog, we highlighted how the pensions file at ONN grew out of our decent work agenda and why nonprofit workers deserve to retire with a pension plan. In the nonprofit sector, a lot of people do not have a workplace pension plan but wish they did, while others do not know where to begin on retirement planning, especially workers at the beginning of their careers!
If you aren’t deliberately putting savings aside or even thinking about it, then fast forward to your retirement and the combined government supports (Canada Pension Plan, Old Age Security and Guaranteed Income Supplement) will not likely be enough income to maintain your standard of living.
According to a recent report by the Broadbent Institute, about 47% of Canadians currently have no employer pension plans especially young workers and many have not saved enough for retirement. At ONN, we’ve heard several stories from people who are surprised to realize that their organization does not provide anything for them in retirement, and that government supports will not be enough.
Enter ONN’s roadmap for a pension plan for Ontario’s nonprofit sector report. Our Pensions Task Force released this report in March and provided key recommendations on essential criteria for a sector wide plan that would suit the needs of nonprofit workers and employers. We’re now on our way to taking these findings and implementing them to get a sector-wide plan.
What you should know about retirement savings
I’ll be the first to admit that I am the last person to talk about retirement or pensions (until now!), and I imagine many are like me. But just like my student loans, the time to face it and do something will come sooner, rather than later.
And there have been some on-point articles in the media lately disputing myths about typical retirement savings vehicles, and ample research shows there are three main problems relying on registered retirement savings plans (RRSPs), making them the least efficient way to support our sector’s workers.
In the short term, there are a few things that can help
It’s widely believed that pre-retirement savings should equal approximately 70% of your earnings before you retire (this includes government supports). However, the average worker will receive only 44% of pre-retirement earnings from the enhanced Canada Pension Plan, Old Age Security and the Guaranteed Income Supplement. That’s a big gap!
Get comfortable with pensions lingo, pension plan structures available and more
Many workers find there’s an overwhelming amount of information related to financial planning and retirement. So, how do you sift through?
A cheat sheet on the different types of pension plans and what are the pros and cons
Watch our webinar and have Michael Kainer, our Task Force Co-Chair who really knows his stuff, get you up to speed
Dig into our technical report to get informed. Trust us- it’s worth the time.
Check out our Pensions Glossary.
Do you know if your organization has a pension or retirement savings plan set up? How is it structured? If you don’t know the answer, then the time to ask is now!
Let’s talk about it! Share what works for you, or your pain points
Pensions literacy is something we can do together as a sector. What would be helpful tools or resources to help you and your organization talking more about pensions? What are some common questions or challenges when discussing retirement savings? We want to hear from you to find out what barriers you face.
Stay connected as we continue our work on a pension plan for the Ontario nonprofit sector. Stay tuned for more information and in the meantime, let’s get started on spreading the word on pensions literacy!
More helpful resources
- ONN’s Pensions Backgrounder (the basics)
- Retirement Planning (Government of Canada)
- Canadian Retirement Income Calculator (Government of Canada)
- An American resource on retirement fund fees – with some great questions to ask about your investments