Nearly 40% of Quebecers would not have contributed to their RRSPs in anticipation of retirement, according to a survey. Unsurprisingly, around 30% believe that they will not be safe from financial precariousness once they have left the labor market.
These worrying statistics emerge from a Léger survey conducted on behalf of the Observatory of Retirement and the Institute for Research in Contemporary Economics (IRÉC).
François L’Italien, coordinator of the Retirement Observatory, however, qualifies this observation. “RRSPs are indeed a component of retirement savings and supplement retirement income. But from the point of view of financial coverage, it is rather employer plans and public plans that provide the largest share,” he tempers.
No RRSP or private pension plan
Almost four in ten respondents (37%) indicated that they had not contributed to their RRSP in anticipation of retirement. People with an annual income of less than $40,000 are among those who contributed the least (69%). Those who say they are poorly informed about the financial aspects of retirement also represent a large proportion (54%), as do respondents with primary or secondary education (52%).
Moreover, 38% of Quebecers surveyed say they do not have access to a private pension plan, especially those with an income of less than $40,000 (67%).
“The fact remains that 59% will be able to benefit from an employer plan, which is good news. However, what the survey does not say is the quality of these plans and whether they will be able to provide a decent and viable income in retirement,” underlines François L’Italien.
Financial precariousness and fear for retirement
Three in ten respondents (29%) believe that they could find themselves in a financially precarious situation in retirement, particularly those with an income of less than $40,000 per year (51%), who are poorly informed about the financial aspects of retirement (45%), or who do not have a private pension plan (42%) or an RRSP (40%). Some could therefore be forced to stay longer in the labor market, which, in the opinion of Francis the Italian, is not a panacea.
Despite the dark clouds that are gathering, retirement still has a positive echo among the majority of respondents (55%), particularly among those who have access to a private pension plan, who have RRSPs and among the wealthiest. However, this perception could not pass the test of reality if incomes are not there and some retirees must finally resolve to remain in the labor market longer or to return to it.
“With the economic situation and the weight of inflation on retirement income, this could change the situation,” argues François L’Italien.
Situation of retirees
For their part, 84% of retirees questioned as part of this survey mention that they are in a good financial position. On the other hand, 13% point out that their situation is bad, in particular those with incomes of $40,000 or less (30%).
Regarding the main sources of income, 84% of them receive benefits from public pension schemes. In this bracket, retirees with an income of $40,000 to $59,000 are particularly represented (97%). In addition, 63% of retirees surveyed receive amounts from their personal investments, and they are more numerous (81%) among those whose income is $60,000 per year or more.
Rethinking tomorrow’s retirement
Seventy-three percent of respondents believe that pension plans must be reformed in depth in order to better support the vast majority of people who will leave the labor market in the coming years.
A revealing statistic according to François L’Italien, who underlines that a real social debate should be carried out on this subject.
“The current system has reached its limits. There is an urgent need to rethink this model, because the component of retirement income linked to the employers’ plan does not deliver the goods. This is a pivotal moment for making collective choices and having a concerted approach. Without this, in 2040, retirees will have to continue working before they can access the freedom they hope for,” he warns.
VERY CONCERNING DATA FOR THE FUTURE
►This survey was conducted by Léger with two samples totaling 1,200 respondents, during the month of July 2022.