Canadian Bankers Association

Canadian Bankers Association

April 27, 2010 13:00 ET

Canadian Bankers Association Recommends Governments Allow More Flexibility in Canada's Private Sector Retirement Savings System

TORONTO, ONTARIO--(Marketwire - April 27, 2010) - The Canadian Bankers Association has provided the federal government with a submission outlining its views on Canadians' savings and the adequacy of Canada's pension and retirement system. The submission, Enhancing Canadians Savings Options, provides suggestions on how governments can make Canada's retirement savings system more flexible, and underlines the importance of ensuring that Canadians have the tools and skills needed to manage their financial security throughout their life and into retirement. The submission elaborates on the CBA's November 2009 report, Modernizing Canada's Retirement Savings System.

"Canadians save in many different ways depending on their age and individual circumstances and Canada's retirement savings system should reflect this," said Nancy Hughes Anthony, President and Chief Executive Officer, Canadian Bankers Association. "While our current system is indeed strong, there are some adjustments needed to improve the flexibility of the system so that all Canadians have an opportunity to save for retirement."

The submission highlights the importance of looking at financial security at all stages of a family's lifecycle. Individuals' financial priorities change throughout their lives and public policy should reflect this fact. A one-size-fits-all public sector approach cannot effectively address the savings needs of all Canadians. Individuals should have a variety of savings options available to them and have the ability to use new and different tools as their needs evolve over time.

Open Access to Structured Pension Plans

One way to introduce more flexibility into the private sector retirement savings system is by de-linking pension plans from employment relationships. Currently, participation in a structured pension plan is only available to individuals through their employer, leaving many Canadians outside the structured plan system. As the CBA's submission notes, revising federal regulations to allow multi-employer and third party pension plans would enhance access to structured plans for many people currently shut out of structured plans, such as employees of small and medium sized businesses and self-employed individuals.

"One of the best ways to improve the current system is to give all Canadians the opportunity to participate in a structured pension plan," said Ms. Hughes Anthony. "This would not only encourage more people to save for their retirement, it would introduce new competition into the market and would lower costs for consumers through economies of scale."

Expert Advice

Understanding how to manage money and save for retirement is a key factor in achieving financial security and the banking industry believes that sound, professional advice is an extremely important part of the retirement planning process. Saving for retirement involves long-term planning that takes into account potential changes in income, expenses, personal tax status and risk tolerance, not to mention market fluctuations and other economic factors. Without adequate consideration of all these factors and more, individuals may find themselves financially unprepared for retirement.

Banks and other financial institutions employ thousands of trained experts who provide customers with sound financial advice and help individuals balance priorities, set realistic goals and manage debt so that they are able to sufficiently save for their retirement needs.

"In the public policy discussions now underway, it is important to recognize that financial planning and advice provided by the private sector are key components of an effective national retirement savings system," said Ms. Hughes Anthony.

The CBA's submission was provided to the government in response to its March 24th consultation paper, "Ensuring the Ongoing Strength of Canada's Retirement Income System". The full CBA submission can be found at the following link: http://www.cba.ca/en/component/content/publication/67-submission-reports-and-letters#y_2010.

The Canadian Bankers Association works on behalf of 51 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 263,400 employees. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada's economy. The Association also promotes financial literacy to help Canadians make informed financial decisions. www.cba.ca.

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