Close X
Thursday, January 16, 2025
ADVT 
National

Retiree Spending Drops Off After 70, So No Need To Index Pensions: Study

Darpan News Desk The Canadian Press, 16 Jun, 2016 12:55 PM
    OTTAWA — A new study says automatically raising workplace pension contributions in tandem with the cost of living is unnecessary because Canadian retirees increasingly tighten their purse strings after they reach 70 years old.
     
    The report by the C.D. Howe Institute think tank also argues that tying up the extra funds in pension contributions is an inefficient use of scarce financial resources for Canadians.
     
    The research says lowering pension contributions for company plans — such as defined-benefit vehicles — would put more money in the pockets of families that are raising kids and paying down mortgages.
     
    The study is released a few days before federal Finance Minister Bill Morneau is scheduled to meet his provincial and territorial counterparts to continue quickly evolving discussions on how to boost the Canada Pension Plan.
     
    The federal Liberals have pledged to work with the provinces and territories to enhance CPP. They argue that expanding CPP across the country will ensure more Canadians have a secure retirement.
     
    The C.D.Howe paper's recommendations are mainly targeted at private pension plans — not the CPP.
     
    Study author Frederick Vettese writes that CPP contributions should not be subject to any contribution reductions since the public plan is designed to cover basic needs like food and shelter for middle-income workers after they retire.
     
    "Retirees in Canada and other developed countries demonstrate a strong tendency to reduce their out-of-pocket spending in real terms starting at around age 70 and accelerating at later ages," wrote Vettese, chief actuary for the Morneau Shepell human resources firm, which was founded by Morneau's father.
     
    "This decline can hardly be attributed to insufficient financial resources because older retirees save more on average than people who are still working."
     
    Given this, Vettese added that indexing pension contributions to the cost of living could be reeled back without sacrificing consumption later in life.
     
    The study pointed to a 2011 research paper that found the average Canadian household headed by someone aged 77 spent 40 per cent less than one headed by someone who was 54.
     
    A U.S. study, also cited by the C.D. Howe report, said that between the ages of 60 and 80 Americans spent at least 50 per cent less on purchases such as cigarettes, airline tickets and camping equipment. The same study found that between the same ages people spent at least 50 per cent more on items such as hearing aids, prescription drugs and funeral services.
     
    Until the election last fall, Bill Morneau was executive chairman of the company, which describes itself as Canada's largest provider of pension-administration technology and services.

    MORE National ARTICLES

    B.C. Man Who Sold Gun For $80 To Drug Dealer Argues Sentence Would Be Unconstitutional

    B.C. Man Who Sold Gun For $80 To Drug Dealer Argues Sentence Would Be Unconstitutional
    Rodney Boesel has pleaded guilty to trafficking a weapon in connection to his find on May 1, 2014.

    B.C. Man Who Sold Gun For $80 To Drug Dealer Argues Sentence Would Be Unconstitutional

    B.C. Auditor General Gives Thumbs Up To School Budget, Procurement Practices

    B.C. Auditor General Gives Thumbs Up To School Budget, Procurement Practices
      Bellringer says her reports found good budget management practices at British Columbia's school districts and sound procurement processes in buildings at colleges and universities.

    B.C. Auditor General Gives Thumbs Up To School Budget, Procurement Practices

    Police Use DNA Tactic With Tenants After Man's Beaten Body Found Under Stairwell

    Police Use DNA Tactic With Tenants After Man's Beaten Body Found Under Stairwell
    Police forces across Canada are increasingly using the tactic, which has helped crack crimes but has been described as "inherently coercive" by the Canadian Civil Liberties Association.

    Police Use DNA Tactic With Tenants After Man's Beaten Body Found Under Stairwell

    Troubled Muskrat Falls Hydro Megaproject Will Likely Go Ahead: CEO

    Troubled Muskrat Falls Hydro Megaproject Will Likely Go Ahead: CEO
    Still, Nalcor CEO Stan Marshall says he's keeping all options open as he assesses cost and schedule overruns.

    Troubled Muskrat Falls Hydro Megaproject Will Likely Go Ahead: CEO

    Teenager 'Gang Raped, Strangled To Death' In Pakistan

    A 12-year-old boy was killed in a southern district of Sindh province in Pakistan after reportedly being gang-raped, strangled and thrown into a water drain by two suspects, the police said on Friday.

    Teenager 'Gang Raped, Strangled To Death' In Pakistan

    Justin Trudeau's Wife Shouldn't Get Extra Staff, Say Conservatives And NDP

    Justin Trudeau's Wife Shouldn't Get Extra Staff, Say Conservatives And NDP
    Sophie Gregoire was quoted this week in the Quebec City newspaper Le Soleil as saying she is overwhelmed by the crush of requests from groups that either invite her to speak or ask her to help promote their causes.

    Justin Trudeau's Wife Shouldn't Get Extra Staff, Say Conservatives And NDP