Canada Needs New Savings Vehicle To Enable The Baby-Boomers' Retirement

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Doug Andrews, Canada
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Summary:
Over the past fifty years, the relative size of the baby-boom generation has created a demographic wave changing markets and adding cost burdens. As the baby-boomers begin to retire, other markets are likely to be affected and cost burdens will arise in different areas.This paper examines three areas where the retirement of the Canadian baby-boom generation is likely to bring about change and add additional costs in privately-delivered retirement and benefit plans:• reduction in the equity risk premium and the implications for pension and retirement savings plans• elimination of mandatory retirement age and the implications for group insurance and benefit programs• increasing longevity and pressure on health care costs.The paper suggests that to manage costs for privately-delivered plans, and to accommodate social changes likely to be demanded by the baby-boomers, pension and benefit delivery will move increasingly toward a defined contribution approach. Such an approach will shift some of the risks created by the baby-boom generation’s retirement, back to the baby-boomers.It is argued that an appropriate policy response is the development of a multi-purpose, tax-prepaid savings vehicle to be used to pay for health care expenditures in retirement or to provide retirement income.
 
Date: 30 May - Time: 10:30 to 12:00 - Room: 253
Theme: 3.A. Actuarial problems related to the retirement of the baby-boom