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BMO Financial Group

March 01, 2012 13:00 ET

Canada Can Become an International Leader in Financial Literacy: Jacques Menard, Chairman of BMO Nesbitt Burns and Co-Chair of the Task Force on Financial Literacy

TORONTO, ONTARIO--(Marketwire - March 1, 2012) - "Canada can become an international leader in financial literacy if governments succeed in creating a collaborative framework through policy and action, in cooperation with the private and voluntary sectors," said L. Jacques Ménard, Chairman of BMO Nesbitt Burns and Co-Chair of the Task Force on Financial Literacy, at the Conference Board of Canada Pension Summit 2012 held today in Toronto.

Defining financial literacy as having the knowledge, skills and confidence to make responsible financial decisions, Mr. Ménard emphasized that immediate action is required to boost financial literacy in Canada. The aging of the Canadian population makes the need even more pressing, as approximately 5 million additional Canadians will be over 65 within the next five years.

Pointing to the results of the Canadian Financial Capability Survey conducted by Statistics Canada, Mr. Ménard noted that 49 per cent of all Canadian adults do not have a budget, and more than half of younger Canadians - 57 per cent of those between the ages of 18 and 29 - do not have a budget and must face financial decisions that are more complex and numerous than previous generations.

"Clearly, there is a massive audience in need of financial literacy and education," said Mr. Ménard.

At the other end of the demographic spectrum, Canadian seniors are doing comparatively well; only 4 per cent of retirees in Canada are considered low income compared to 13 per cent among OECD countries, according to the BMO Retirement Institute. However, Mr. Ménard indicated that future generations of retirees in Canada will not fare as well, with the shift from defined benefit pension plans to defined contribution pension plans making Canadians more and more responsible for their own retirement well-being and choices.

"With Canadian household debt at 153 per cent of disposable income, up from 148.3 per cent a year ago and for the first time at a level similar to that of the U.S., there are warning signs that Canadians may be heading for trouble," added Mr.Ménard.

In his address, Mr. Ménard pointed to many interesting and encouraging developments in the financial literacy landscape in Canada, including that financial instruction is making its way into the school curriculum across the country. Also, a national Financial Literacy Leader is expected to be appointed shortly following the introduction of Bill C-28 by the Federal Government.

According to Mr. Ménard, financial literacy makes good business sense for the private sector and the financial services industry; informed customers are more likely to take retirement planning seriously and invest in their financial future, and informed consumers are also likely to be more satisfied customers.

"Action is required to boost financial literacy in Canada, and we must all play a role," concluded Mr. Ménard.

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