Public sector pension plans raise retirement savings in British Columbia VANCOUVER, Oct. 16, 2013 /CNW/ - British Columbia's public sector pension plans result in a higher rate of retirement savings for their members compared to other B.C. residents, according to a Conference Board of Canada report, Economic Impact of British Columbia's Public Sector Pension Plans, issued today. The required savings, part of the total compensation of pension plan members, mean that the public sector workers effectively put aside more for retirement than those using Registered Retirement Savings Plans to generate income for when they leave the workforce. "Our analysis compared the average person saving for retirement in the province with a typical member of a B.C. public sector pension plan. The key difference is that the pension plan member is covered by a comprehensive defined benefit plan, which requires employees and employers to fund the plan to cover promised future benefits," said Michael Bloom, Vice-President, Organizational Effectiveness and Learning, The Conference Board of Canada. _____________________________________________________________________ | HIGHLIGHTS | |_____________________________________________________________________| | -- The total contribution of employers and members in British | | Columbia ranged between 16 per cent and 27.5 per cent of an | | employee's total compensation. Workers contributing outside a| | defined benefit plan have significantly lower average savings| | rates. | | -- In addition to higher contributions to retirement savings, | | plan members are charged lower management fees. | | -- About 70 per cent of these additional savings are invested in| | the Canadian economy, which has an impact on investment and | | future economic growth. | |_____________________________________________________________________| According to data from the British Columbia Pension Corporation, the total contribution of employers and members ranged between 16 per cent and 27.5 per cent of an employee's total compensation. Only one-quarter of B.C. employees who do not have a trusteed pension plan contribute to RRSPs, and their average savings rate is 14.1 per cent. As a result of required savings in the form of pension plan contributions, B.C. public pension plan members accumulate about $2.2 billion more in savings every year than RRSP savers (in similar financial situations) in the province. A typical public pension plan member can expect to have an annual retirement income that is $35,000 (in inflation-adjusted or real dollars) higher than an individual using RRSPs to save for retirement. This estimate is based on the assumption that investment management at the B.C. public sector pension plans was no better or worse than retail mutual funds. More than 60 per cent of this amount is due to the higher level of saving through the public sector pension program; lower managerial fees accounts for the remainder of the additional retirement income. The terms of reference for the study did not evaluate whether the total compensation of public sector workers is fair when compared to private sector workers. In addition, the analysis did not compare the returns generated by B.C.'s public sector pension investments with those of other retirement vehicles such as mutual funds. Of the $2.2 billion in additional savings generated through pension contributions, the Conference Board estimates that about 70 per cent ($1.6 billion) finds its way into the capital stock. This ratio is consistent with other pension plan asset allocations that seek to manage risk through geographic diversification. The report was prepared with financial support from the British Columbia Municipal Pension Plan. It details five case studies of investments made by British Columbia Investment Management Corporation: Delta Hotels and Resorts, Puget Sound Energy, various real estate holdings, Broadway Tech Centre, and lululemon athletica inc. The report is publicly available at www.e-library.ca. SOURCE Conference Board of Canada Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448 E-mail:firstname.lastname@example.org The Conference Board of Canada Link to publication:http://www.conferenceboard.ca/e-library/abstract.aspx?did=5828 To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/October2013/16/c4329.html CO: Conference Board of Canada ST: British Columbia NI: ECO ECOSURV -0- Oct/16/2013 16:00 GMT
Public sector pension plans raise retirement savings in British Columbia
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