Shillington“If you know a handful of people who are over 65 who don’t have a workplace pension plan … you must know some of them who have nothing. I have talked to hundreds of people over the years whose income at retirement is $20,000. And we can have the economists debate about whether or not they are poor, but it’s not a lot of money.” – Richard Shillington



A conversation with Richard Shillington is a fairly direct route to an obvious conclusion: for most Canadians, a workplace pension plan is the best solution to generating adequate retirement income.
Problem is, most Canadians don’t have one.
Data, an area of expertise for Shillington, shows that as many as 65 per cent of Canadians, mostly in the private sector, don’t have an occupational retirement plan, and for them retirement income will be based on how much they have been able to save, plus the amount they get from government programs: the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).
Research, including a recent study authored by Shillington, a mathematician with a PHD in statistics, indicates that a lack of retirement income is driving a social and economic crisis, leading to the search for solutions like an enhanced CPP, the Ontario Retirement Pension Plan (ORPP), and Quebec’s Voluntary Retirement Savings Plan (VRSP).

“If you know a handful of people who are over 65 who don’t have a workplace pension plan … you must know some of them who have nothing,” Shillington, who wrote An Analysis of the Economic Circumstances Facing Canadian Seniors for the Broadbent Institute, told ARIA during a recent conversation.

“I have talked to hundreds of people over the years whose income at retirement is $20,000. And we can have the economists debate about whether or not they are poor, but it’s not a lot of money.”
A policy-data analyst, Shillington says his work involves helping people understand data, particularly from Statistics Canada, and how that information speaks to a policy question under discussion.
A number of years ago a paper he wrote caught the media’s attention when he questioned the wisdom of having money in RRSPs when retiring, saying that if your retirement income was at a certain level, a retiree could be subject to having GIS benefits clawed back because RRSP savings elevated their income above the income threshold.
That research led him to the view that at age 50, savers should be determining whether or not they would need the GIS when they turn 65. For Canadians without an occupational pension or significant RRSPs or other sources of income, the answer is yes they will need the supplement, he advises. With that information in hand, they should divest themselves of RRSPs and pay the related taxes, which he suggests will be a lot less than any subsequent GIS claw-back.
“The majority of people who retire without an employer pension plan are on the GIS. There are a lot of Canadians for whom RRSPs are just toxic.”
At the end of the day, the point might be moot as Shillington’s recent study shows many Canadians don’t have much in the way of RRSPs, and that for them, divesting won’t be an issue. “The overall median value of retirement assets of those aged 55–64 with no accrued employer pension benefits is just over $3,000,” his study reveals.
Other key findings include:
• OAS and GIS guaranteed income levels are falling behind. “For single seniors, they have fallen from 76 per cent of median incomes in 1984 to about 60 per cent now. For senior couples, the OAS/GIS maximum benefits have declined from 53 per cent to 40 per cent of median incomes,” according to the study.
• It won’t get better for seniors reliant on these programs, with poverty rates increasing “because OAS and GIS benefits are indexed to the Consumer Price Index (CPI), while average earnings rise faster than the CPI over extended periods.”
• More singles than couples depend on the GIS, as do more single women than single men.
• Without an occupational plan, the retirement picture looks bleak for most middle-income Canadians, as only 15–20 per cent of them “have saved anywhere near enough for retirement.”
“These findings raise serious questions about the policy needs for future pensionless cohorts, such as the adequacy of benefits from Old Age Security, the Guaranteed Income Supplement, and the Quebec and Canada pension plans,” Shillington writes in the study.
“They also provide an invaluable baseline of evidence that the new federal government must consider as it moves forward to craft policy to address the economic security of Canada’s growing population of seniors.”
The study doesn’t identify solutions. Rather, it uses data to highlight the current concerns over the provision of adequate retirement income, demonstrating the “urgent need to address this situation.”
Making matters worse, many Canadians who quality for the GIS don’t know it, says Shillington. He points out that 15 years ago, 300,000 seniors eligible for the supplement didn’t know they were. The government is trying to rectify the problem through auto-enroll, he says, “which is great but it’s been 15 years.”
The methodology for his recent study involved looking at the 55-64 age group, removing those with an occupational plan and others “who don’t need one because their income is so low they are going to be fine with OAS, GIS, and CPP.”
“So, you look at the people whose income is high enough that they need to save for retirement, and who don’t have an employer pension plan … and how much have they saved. And that’s the data in the report that got all the publicity.”
The retirement-income gap, Shillington and others point out, is going to be felt most severely by those in the middle; wealthy Canadians have the wherewithal to put sufficient sums aside to keep them in retirement, while the GIS, OAS and CPP will provide an adequate replacement rate for low-income Canadians.
There are two ways of measuring a pension crisis, he continues: one is the replacement rate, and the other is the poverty rate.
“Some people with modest to middle income … not only will they fail the replacement rate criteria for a successful retirement, they will fail the poverty rate criteria.”
When it comes to solutions, boomers on the edge of retirement won’t benefit much or at all from an ORPP-type program or a beefed up CPP, as it will take years for benefits to be realized, says Shillington.
“If you want to do something more immediate, you either need to increase GIS, or I’d like to have a conversation about reducing the GIS claw-back and make it easier for people to benefit from any savings they might have.”

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