From Maple Leaf to Mutual Funds: Retirement Shift in Canada
Fred Langan,, The Christian Science Monitor
From Markham, Ontario - Canada's richest city - to impoverished Truro, Nova Scotia, Canadians hear a warning: Save for your own retirement, because the government won't do it for you.
"The government plans are going broke," financial reporter Brian Costello tells an audience of 600 at a Sheraton Hotel on the edge on Toronto.
In a nation long used to generous public benefits, such calls for action signal a shift that puts more of the retirement burden on the individual saver. It is a transition faced not only by Canada but also by industrialized and developing nations around the world. The debate over "saving" Social Security in the United States before the baby boom generation enters retirement is just one example. The World Bank has called it "a looming old-age crisis" and urges a mix of public and private systems as the solution. That's what is developing here in Canada. Canadians have been putting record amounts of money into mutual funds. In February alone they put more than $10-billion (Canadian; US$7.18 billion) into funds, the bulk of the cash flowing into equity-based mutual funds. While many would have saved anyway, others are concerned that two major government plans will not be there when they retire. And they are prodded by financial planners, who book meeting rooms every weekend at hotels across Canada. People are told the same message: "The only way to provide for your retirement is to save, preferably in equity-based mutual funds," says Mr. Costello. He is the warm-up act for professional planners, who line up customers after the speech has scared them into saving. It's a performance repeated year round, but it hits a peak in the first two months of the year, when Canadians put money into retirement savings plans, the equivalent of an individual retirement account in the US. …