Data & Research January 12, 2012

Canadians More Confident About Retirement than Americans

Nearly 60% of Canadians are confident in their ability to save for retirement versus fewer than 40% of Americans. 
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These statistics are the results of a survey released by BMO Financial Group on a cross-border study examining how Canadians and Americans feel about planning and saving for retirement.

The study found 71% of Canadians are concerned about the performance of their Registered Retirement Savings Plan (RRSP), while almost 90% of U.S. residents express similar concerns about the performance of their 401(k).

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During a press call, Tina Di Vito, head of the BMO Retirement Institute said, “People are wondering if they will ever be able to save enough for retirement.”

The survey also found that half of Canadians and Americans say they have or may have to delay their retirement and/or work part-time during retirement due to a shortage of retirement savings.

“Despite the effect that the 2008 global recession had on investors’ abilities to save for retirement, the Canadian economy has fared significantly better than what’s been seen in the U.S.; this has contributed to our more optimistic outlook,” added Di Vito. “It’s telling, however, that half of respondents in both countries feel that they may need to delay their retirement or hold down a job during retirement.”

Additionally, the survey found almost two-thirds of Canadians have an RRSP in place, while only 34% of Americans invest in a 401(k).

Todd Perala, director, relationship management, BMO Institutional Trust Services, mentioned during the press call that as the Baby Boomer generation is hitting retirement, many are finding they will need to work longer to save.

“Employees that remain healthy enough will avoid retirement long past the retirement age,” he said. “It’s difficult to envision what this will do to the workplace. Will employers be stuck with older workers that they don’t really want? The next challenge for the retirement industry is to help predict retirement readiness.”

The Canadian survey was conducted by Leger Marketing from November 21 to 24, 2011, with a sample of 1,520 Canadians, 18 years of age or older. The U.S. survey was also conducted by Leger Marketing from November 3 to 8, 2011, with a sample of 1,032 Americans, 18 years of age or older.

The Markets January 12, 2012

Institutional Investors Address Climate Risk

Institutional investors that participated in a survey by Mercer addressed climate change risk via asset allocation and other initiatives.
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Mercer found more than half have decided to include climate change considerations in future risk management and/or strategic asset allocation processes, and half have undertaken or plan to make changes to their actual asset allocations.  

One-third of respondents have begun to or plan to allocate more to “climate-sensitive assets” (identified as real estate, infrastructure, private equity, sustainable equities (listed and unlisted), efficiency/renewables (listed and unlisted) and commodities (including agricultural land and timberland)). Eighty percent have or will increase their engagement on climate change with companies and policy makers.    

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The survey was a follow-up to Mercer’s 2011 “Climate Change Scenarios – Implications for Strategic Asset Allocation” collaborative study. The study found that traditional approaches to modeling strategic asset allocation fail to take account of climate change risk; therefore, new approaches to strategic asset allocation are required to tackle fundamental shifts in the global economy.  

The 2011 report and the follow-up can be downloaded from http://www.mercer.com/climatechange.  

In January 2010, the Securities and Exchange Commission provided guidance on certain existing disclosure rules that may require a company to disclose the impact that business or legal developments related to climate change may have on its business—rules that cover a company’s risk factors, business description, legal proceedings and management discussion and analysis (see SEC Draws Attention to Climate Change Reporting).  

Mercer previously said it can provide clients with a “carbon footprint” analysis of their portfolios, and compare it to a chosen benchmark, such as the FTSE All-Share, S&P 500 or Russell 1000 (see Mercer to Size Up Carbon Footprints).

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