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  The Toronto Star Smart Money Story  
May 12, 2000
Ottawa gets user-friendly on pension data

[By Ellen Roseman] IF YOU pay into the Canada Pension Plan, you will soon get an annual statement showing your progress.

This initiative is long overdue.

While private pension plans must send statements to everyone once a year, the average CPP contributor gets statements only every four or five years.

The federal government didn't want to mail out 13.5 million letters a year, but it's had a remarkable change of heart.

Here's the story behind the annual statements you'll start receiving this fall:

Human Resources Development Canada (the plan's administrator) did a wide-ranging survey late last year.

It showed most people know little about the CPP - and what they do know they don't trust.

Knowledge of Old Age Security, the other federal retirement program, was only marginally better.

``Canadians don't know how these plans work and that's why they don't understand the plans will be there for them,'' says Catherine Drummond, the assistant deputy minister responsible for income security programs.

Drummond spoke at a recent Toronto symposium on aging, sponsored by the Canadian Institute of Actuaries, and gave highlights of the survey by Ekos Research Associates Inc.

I found her remarks so intriguing I later tracked down the full report and the government's conclusions.

The answers may surprise and shock you, as they did me.

  • ``Can you name the Government of Canada public pension programs?'' Almost half (41 per cent) could not name even one without assistance.

  • ``Are all Canadians currently entitled to CPP when they retire?'' More people gave the wrong answer than the right answer: 45 per cent said everyone is entitled to CPP, while only 38 per cent understood that you must contribute to get benefits.

  • ``Provided the system remains as it is today, would you say that you have a good idea, some idea or no idea at all how much you personally might collect from CPP and OAS when you retire?'' Good idea: 16 per cent. Some idea: 22 per cent. No idea: 60 per cent.

  • ``Do you think the CPP will provide you with more, the same or less benefits than retired people today, or no benefits at all?''

    More: 8 per cent. Same: 19 per cent. Less: 49 per cent. No benefits: 21 per cent.

  • ``Government would never take public pensions away from Canadians.'' Disagree: 49 per cent.

    The survey found low literacy about public pensions coupled with a general lack of knowledge about retirement planning. Fewer than one in five people knew how much income they would need when they retired.

    In addition to the 49 per cent of Canadians who wrongly thought they would get less from CPP than today's retirees, another 20 per cent wrote off public pensions entirely.

    Canadians still value the ideals of public pensions, despite their skepticism about whether the programs can be sustained.

    Two out of three said they didn't mind paying into CPP and only one in three believed CPP was just another form of taxation. The 33 per cent condemnation of CPP ``is not as high as one might expect,'' the government says, given that three-quarters of Canadians expect less from CPP than today's retirees receive.

    Ottawa wants to give us more and better information to boost our confidence in public pensions.

    Annual CPP statements are just the beginning.

    As a CPP contributor, you can count on an education blitzkrieg in the next few years.

    Government officials will go to public forums, with computers and printers, and produce individual pension statements while you wait.

    They will make the Web site for income security programs more friendly, adding calculators so you can work out your own figures.

    They will arrange partnerships with private-sector groups doing education campaigns (such as bankers and financial planners) and design information for high school courses.

    Here's a final surprise. Those surveyed said they would not resent - and would actually welcome - more government information on pensions as long as it was personal and detailed and not just propaganda.

    About 40 per cent rated Ottawa highly as a credible source of information on retirement planning, despite the fact it does almost nothing at the moment.

    That compares to only 19 per cent who gave a high rating to companies that sell mutual funds.

    Ellen Roseman's column appears Monday, Wednesday, Friday and Sunday. You can reach her by writing Your Business c/o The Toronto Star, 1 Yonge St. Toronto M5E 1E6, or by phone at (416) 945-8687; by fax at (416) 865-3630 or by e-mail at

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