Nearly 40% of Quebecers would not have contributed to their RRSPs in anticipation of retirement, according to a survey. Unsurprisingly, around 30% believe they will not be safe from financial uncertainty after leaving the labor market.
These worrying statistics come from a Léger survey commissioned by the Observatory of Retirement and the Institute for Research in Contemporary Economics (IRÉC).
However, François L’Italy, coordinator of the Observatory for Retirement, puts this observation into perspective. “RRSPs are indeed a component of retirement planning and supplement retirement income. But from a financial security perspective, the employer plans and the public plans tend to be the biggest contributors,” he cautions.
No RRSP or private pension plans
Almost four in ten respondents (37%) said they had not contributed to their RRSP in anticipation of retirement. Those with annual incomes 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 make up a large proportion (54%), as do those with an elementary or secondary education (52%).
Additionally, 38% of Quebecers surveyed say they have no access to a private retirement plan, particularly those earning less than $40,000 (67%).
“The fact remains that 59% can 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 sustainable income in retirement,” stresses François L’Italy.
Financial insecurity and fear of retirement
Three in ten respondents (29%) believe they may find themselves in a financially precarious position in retirement, particularly those earning less than $40,000 per year (51%) who feel bad about the financial aspects of retirement are informed (45%) or who do not have private pension schemes (42%) or RRSP (40%). Some may therefore be forced to remain in the labor market longer, which Franz the Italian says is not a panacea.
Despite the dark clouds gathering, retirement still resonates positively with the majority of respondents (55%), particularly those who have access to private pension plans, who have RRSPs and the wealthiest. However, that perception may fail the reality test if incomes aren’t there and some retirees finally have to decide to stay longer or return to the labor market.
“Given the state of the economy and the burden of inflation on pensions, this could change the situation,” argues François L’Italy.
situation of pensioners
For their part, 84% of the retirees surveyed say they are in good financial shape. On the other hand, 13% indicate that their situation is bad, especially those with an income of $40,000 or less (30%).
Of the main sources of income, 84% of them receive benefits from public pension schemes. Retirees earning between $40,000 and $59,000 are particularly strong in this group (97%). In addition, 63% of the retirees surveyed receive amounts from their personal investments, and they are more numerous (81%) among those whose income is $60,000 a year or more.
Rethink tomorrow’s retirement
73 percent of respondents believe that pension systems need to be fundamentally reformed to better support the vast majority of people who will exit the labor market in the coming years.
A revealing statistic, according to François L’Italy, who stresses that there should be a real societal debate on this issue.
“The current system has reached its limits. This model urgently needs to be reconsidered, because the part of the retirement income linked to the employer plan does not apply. This is a crucial moment to make joint decisions and adopt a coordinated approach. Without this, pensioners will have to keep working in 2040 before they can achieve the freedom they hope for,” he warns.
VERY IMPORTANT DATA FOR THE FUTURE
►This survey was conducted by Léger with two samples from a total of 1,200 respondents in July 2022.