JUNE 2012 ANNUAL MEETING TORONTO (SESSION

Transcription

1 JUNE 2012 ANNUAL MEETING TORONTO (SESSION 27) 1 Session 27: Séance 27 : CIA Retirement Risk Survey Update Sondage de l ICA sur les risques liés à la retraite Mise à jour MODERATOR/ MODÉRATEUR : SPEAKERS/ CONFÉRENCIERS : Chris Fievoli Benjamin Cox Sandra Guiry Chris Fievoli?? = Inaudible/Indecipherable ph = phonetic U-M = Unidentified Male U-F = Unidentified Female Moderator Chris Fievoli: Thanks, everybody, for coming today. This is the session on the retirement risk survey. My name is Chris Fievoli. I m the resident actuary for the CIA. I ve been involved with the survey this year and also with the first survey we did back in We found it generated some really interesting results, and we re happy to share some of those results with you today. Our presenters are both with Ipsos Reid, the company that conducted the survey on our behalf. To my right is Sandra Guiry, who is a vice-president with Ipsos Reid, and Ben Cox, who is a research manager. I ll just give you a bit of background on them. Sandra joined Ipsos Reid in She has been involved in public affairs research for a wide variety of clients in the private and public sectors. She is active in all areas of research, specializes in reputation and issue management, communications research and stakeholder satisfaction. She has a background in advanced statistical analysis such as multi-variant regression, segmentation, disaggregate discrete choice, and various forms of perceptual mapping. I used to know what those meant but I have since forgotten. It s been a while. She is also a skilled qualitative researcher and an experienced focus group moderator. Ben joined Ipsos Reid in 2010, completed his studies at Queen s University, specialized in political science and history. During that time he completed several major research projects, both quantitative and qualitative, that emphasized emerging technologies and the effect of demographic and economic change on public policy. So I ll turn things over to Sandra and Ben and let them get started. If you have any questions we prefer that you save them to the end of the session. We ll have a question and answer period after the presentations are completed. Speaker Ben Cox: Thanks, Chris. I ll probably just jump right into it. It s not going to be too long a presentation. We ve got a few of the highlights from the survey that we wanted to go over with you guys. Thank you for having us is the other thing. This is one of the more interesting projects I get to work on. It s really tangible and hits close to home because in the coming years as the baby boomers begin to retire it s going to get interesting with the changes that we go through. To start things off, this is the second time that the CIA has conducted a survey. The previous one was in The CIA is interested in understanding whether the attitudes and behaviours related to retirement have changed significantly over the last two years. As you ll see in the next few minutes in many respects it has. The key topics that we covered are Canadians level of confidence and concerns about their financial future, how Canadians are managing and taking steps PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES Vol. 43, June 2012

2 2 JUIN 2012 ASSEMBLÉE ANNUELLE TORONTO (SÉANCE 27) to mitigate their financial and health risks, how Canadians are planning for retirement, and how Canadians manage or plan to manage their income in retirement. Just to go over the methodology quickly, this is more of our nerdy area. We surveyed between February and March of this year, we covered around 2,000, or just over 2,000 Canadians were surveyed between two groups. The first group was the pre-retirees. They were over the age of 45 but had not yet retired or claimed to have not yet retired. The retirees are over the age of 45 and have retired. We had 1,000 responses in each group. It s representative nationwide by region, age, gender, education, and income. Of course we weighted the results back to the actual numbers to make sure it s reflective as possible of the population. The first sections we re to cover are retirement confidence and concerns. What percentage of retirees said that they are confident in their financial future? Sixty-one percent, so not as high as I was expecting but it s not a bad result. Now what percentage of pre-retirees said that they are confident in their financial future? Forty-four percent, so significantly less. It s actually a 17 point difference between the two audiences. As you ll see in the next few slides it s kind of consistent throughout the entire survey. One thing that we did note, I m not sure if Sandra would want to talk to it, but as people got closer to their retirement their confidence gets significantly lower. However, there s this peering over the cliff idea going on here, whereby once they make the plunge their confidence becomes much higher. Once they realize their expenses drop that are related to the commuting or coffee in the mornings, the simple things like that that truly add up that people don t generally take into account. Are pre-retirees more confident about their financial future compared to two years ago? They re not; not by much though. The difference between the retirees is only down by 2 percent, and the pre-retirees there s a difference of down by 1 percent. So it s closer to being flat but nevertheless their confidence hasn t changed at all since Who feels more affected by the recession, retirees or pre-retirees? It s pre-retirees. In fact it s by quite a substantial margin. There s a 13 point difference between 2012 and 2010 among the pre-retirees where they say they ve been affected by the recession. I found this interesting because, as I m sure you all know, the recession really kicked off in 2008 but the effects are obviously still being felt substantially by the pre-retirees. That being said, the retirees seem to be doing OK; they re at least not getting any worse, or say they re not getting worse as a result of the recession. What are they concerned about? This is for pre-retirees. We asked a battery of possible things that they could rate how concerned they were. The top three were maintaining a standard of living for the rest of your life, the value of your savings and investments may not keep up with inflation, and having enough money to pay for adequate healthcare. So what are the pre-retirees and the retirees doing to manage the risk associated with retirement? Are pre-retirees taking more steps to protect themselves financially than they did in 2010? They actually are. There s a lot going on in this slide but the important thing that we want to point out is that there are several things that they ve already done. These include investing in stocks, eliminating their consumer debt, trying to save as much as they can and consulting a financial advisor. Moreover, there are numerous things in yellow that they plan on doing and hopefully they follow through on, because obviously these are things that will definitely help them, help their financial situation in retirement. The only two things they aren t planning on doing are buying a product or choosing an employer plan option that will provide you with a guaranteed income for life. I m not sure if that s because they are harder to come by these days, and the other one is buying or investing in real estate which might be a good idea not to do. Now, compared to retirees they have much more accomplished. Many of the things that we asked about they ve already done or large pluralities have already accomplished much like it s the same with the pre-retirees, such as paying off their consumer debt and consulting financial advisers. Again, the only things that weren t being done are buying real estate and guaranteed income for life in addition to moving to a smaller home or a less expensive area. All in all, the retirees and pre-retirees both have, or seem to have, or plan to have their financial house in pretty good order. However, we were interested about whether or not they were taking any steps to protect themselves from health expenses. In retirement there are a lot of things that can go wrong with your health and more often than not these problems come with monetary costs. So the pre-retirees aren t taking steps to protect themselves. In fact, the only major thing they say they ve already done is maintaining a healthy lifestyle, such as proper diet and exercise. I don t know about everyone in the room but I say that to myself on a weekly basis and I still haven t done it, so whether or not this is Vol. 43, Juin 2012 DÉLIBÉRATIONS DE L INSTITUT CANADIEN DES ACTUAIRES

3 JUNE 2012 ANNUAL MEETING TORONTO (SESSION 27) 3 something they re actually doing is another question. But that seems to be their main idea for how to protect themselves for healthcare: just staying healthy, which is in my opinion a big cause for concern. The only other thing that more or a plurality said they were planning on doing was buying travel health insurance when they leave the country. For the retirees it s the same thing, 76 percent saying they just plan on staying healthy, exercising more, dieting and whatnot, as well as the insurance. U-M: (off mic) [?? 9.48] Speaker Cox: Not really, no. How important is it to buy insurance products to help protect against risk related to retirement? Most said it s very or somewhat important, 70 percent and 78 percent for retirees and pre-retirees respectively, which is good, but as we just saw it doesn t seem like they re actually going through on that except for the travel insurance. Among the people that said they plan on buying health insurance as a step for mitigating risk in their retirement, we asked which ones they were planning on purchasing. There are a good number of people planning on taking all the ones that we tested, but in particular a prescription drug plan and the coverage for practitioners. Now this is one of the more terrifying slides that we put together, in my opinion. We asked, Do you think there will be a time in your retirement when you are much less able to do things you used to do and your needs will be very different as a result? As you can see, 73 percent of retirees and 64 percent of pre-retirees said that there would be. However, there are also 27 percent of retirees and 36 percent of pre-retirees who say that there never will be. As I m sure you guys have heard, there are a litany of diseases that can completely debilitate you in your retirement. Off the top of my head I know dementia is one, has an incidence of about one in five in Canada. That s something you ve got to watch for and a lot of people just aren t anticipating it. U-F: (off mic) [?? 11.34] Speaker Cox: Exactly, and they are just not things people take into account, when they re no longer able to do things that there are going to be costs associated with it. It s a part of your life you need to come to terms with and plan for. Speaking of planning for retirement, retirees were prepared for their retirement while pre-retirees feel less prepared. I think it s 80 percent of retirees versus 60 percent of pre-retirees when it comes to feelings of preparedness. As I mentioned earlier it s the same thing that as you approach the age of retirement your concerns escalate exponentially, but once you take the plunge things do slow down or become alleviated. So pre-retirees expect to retire a full five years after the age that retirees said that they retired. That s a long time, and we have one more slide that plays off this: it s what would be the major reason that prompts you to retire. Obviously this is looking in the past for the retirees, and it s I qualified for a pension, which was one in three, and health issues about one in five. Now the pre-retirees say that they plan on just retiring once they have enough money, and I guess that s around 65 for about one in four pre-retirees but what s interesting here is and by the way, this was an open-ended question so we had a long list of possible things that they said these are just the top two for each. One in five say they will never fully retire so their plan is to either maintain their current position or move to a part time quasi-retired position where they still get some sort of income. To summarize, more pre-retirement aged Canadians are taking steps to prepare themselves for retirement but many are still not. Despite taking more steps to prepare for the future, pre-retirees are not feeling more confident about their financial future; in fact, pre-retirees, as I just showed you, are planning to retire five years after. Feelings of more financial stress from the recession are likely adding to their concerns and intention to retire or stay in the workforce longer. Many pre-retirees have not taken steps to prepare themselves for retirement. And for the actuaries and for many industries across Canada there are significant opportunities to educate retirees and pre-retirees about the benefits of retirement planning as a whole. There are certainly many steps that they could be taking, particularly in regards to the health expenses that they simply aren t and probably should be. That wraps up our part of the presentation at least. Moderator Fievoli: Thanks. (Applause) PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES Vol. 43, June 2012

4 4 JUIN 2012 ASSEMBLÉE ANNUELLE TORONTO (SÉANCE 27) My slides are nowhere near as colourful so I ll warn you ahead of time. What I d like to do for a few minutes is just sort of talk about our view of the survey sort of from the actuarial perspective. Ipsos Reid has done a lot of work doing the survey, collecting the results and doing the analysis and all that was great, it was extraordinarily helpful. What I d like to do for the next few minutes is sort of give you a sense for when we do eventually release this survey some of the comments that we re going to put on it from an actuarial profession point of view. Actually, as we get into the questions and answers I would like to hear your observations on this and certainly we can include that in any summary that we do of the survey later on. First I d like to just give you a bit of a background on how we started doing this survey and the results we had back in Now this is not an original idea. The Society of Actuaries actually did a retirement risk survey themselves. They ve done it for a number of years. I think the first one was in 2001 and they ve done it every two years since then and it has been a big success for them. We re certainly not so proud that we wouldn t copy a good idea, so in 2010 we said, Let s try and do something similar but obviously do it for a Canadian market. We conducted the survey and spent some time looking at the results and decided, OK, this is good, this is interesting information, let s release this to the public and see if it generates any interest. We were actually the beneficiaries of a bit of good timing and a bit of luck on our part because when we released the results of the survey it was right at the same time that the First Ministers were having a conference to talk about financial issues. Fortunately for us the First Ministers came out and said absolutely nothing, and so the media was looking for an interesting B story to fill in the difference and there was our survey in front of them. Consequently, we had a tremendous amount of media attention on this first retirement risk survey and we got all kinds of calls to do radio interviews, television interviews. The results were picked up in all sorts of media outlets. We just had a tremendous amount of interest, all kinds of visits to the website. This was a real success for us and we were very happy with how it turned out, so of course we decided that we were going to do it again in 2012, and I think this will be an ongoing thing for the CIA. We will continue to do this survey every couple of years and compare the results. Now that we ve got a bit of a history going it will be interesting to see how trends change over time and how perspectives are changing. So yes, the major reason for this was to see if we could educate the public on risk awareness. As actuaries we understand risk, that s what we do. But this was a good opportunity for us to sort of take this knowledge and take it to the public and say, You are all facing a risk yourselves when it comes to retirement. How aware are you of what s going to happen? Certainly we think some of the information in this survey will be useful to CIA members in your own practices, especially if you re in the retirement practice or perhaps involved in the pricing and product development of retirement savings products there may be some observations here that you can take away and use in your business. What I m going to do is just pull out a few observations I had from looking at the survey results, things that struck me as interesting and I think we would want to discuss a little bit. Certainly, you saw this on a slide a few moments ago; it s the mean age of retirement. I saw this and I was kind of surprised because it s 57 for current retirees and 62 for pre-retirees. Well, maybe the pre-retirees are a little more realistic in their expectations but to me 57 seems awful young. I think, as you heard at the presentation at lunch today, Don Drummond was questioning a system where you work until 55 and then you retire for 30 years, and is that sustainable? We all know that people are living longer and we hear lots of discussion that we should be prepared to work longer. We re healthy enough, it s certainly a possibility. I just wonder are today s retirees thinking realistically. Is 62 workable for them? I don t know, maybe it is; maybe their plans will pan out. But there may be an opportunity for us as a profession to do a little bit better education so people understand life expectancy. What does that really mean? What is realistic? It is changing over time. Certainly for the generation prior to us, maybe 65 was the right retirement age and that may have changed over time, but I think as a profession we re the ones that understand longevity, life expectancy. This is an opportunity for us possibly to get out to the public and say what is a realistic expectation. Just as a side note, the CIA has just recently set up a task force that is looking at the issue of retirement age. We re probably not going to come out and say, The right retirement age is this or that. What we want to do is analyze the issues behind it and just have a good discussion because the issue is out there. The Old Age Security is in the process of raising its entitlement age from 65 to 67. There has been some discussion in the press about what is the right age to retire. We re certainly going to contribute to that dialogue as well. Vol. 43, Juin 2012 DÉLIBÉRATIONS DE L INSTITUT CANADIEN DES ACTUAIRES

5 JUNE 2012 ANNUAL MEETING TORONTO (SESSION 27) 5 The other thing that caught my eye on a related note was there was a question around the mean number of years that people look into the future when they re doing their planning. It s 10 years for current retirees, nine for pre-retirees. That s not a significant difference but again that strikes me as awfully short, especially considering that if you retire at 65 you re probably going to be around for a lot more than 10 years; 15 to 20 years, I think, is a reasonable expectation. What s even a little more disturbing is that 43 percent of retirees and 35 percent of pre-retirees only look zero to five years into the future, and it s actually the zero that has me concerned but even so, a five-year time horizon? That s certainly not going to do it. U-F: Living for the moment. Moderator Fievoli: Exactly, living for the moment. Now as actuaries we are used to looking several years into the future but I think we can look at this and say, This is a real concern. If any of you were in the financial literacy session we did this morning there was a very interesting comment from Don Stewart. He was talking about, I forget the situation, but he was discussing how people are so hesitant to look at their own future and try to imagine what they re going to look like in their retirement years. And there is somebody, what they ve done is they ve taken a picture of the individual and using a computer program they ve aged it 40 years and then shown the person, This is what you re going to look like in 40 years. Now, are you going to think about retirement? It really does change their perspective when they actually see themselves as an older person then it clues in, they have to do some serious thinking about it. But I think this may be indicative of just a general discomfort of long-term planning and for us as a profession that s a real challenge. How do we address that? How do we get people comfortable with the idea of looking that far into the future and doing appropriate planning because obviously the comfort level is not there? You saw some of the responses about healthcare, what people are doing. This is one of those questions where you d like to sit people down and say, Come on, you can do better than that. Maintaining a healthy lifestyle. As Ben said we all talk about it and we don t always do it, but that doesn t represent a concrete plan for dealing with the health issues that you may face when you re older. As I looked at that I was trying to think, Where is this perception coming from? This survey was intended to get to understand how people see the risk associated with retirement. This is one risk that they re missing completely. They are not giving it serious thought and I was trying to think, Why is that the case? I think part of it is that there is a general assumption that because we live in Canada we have a public healthcare system and our healthcare is going to be looked after permanently. That s not necessarily the case. There are a lot of health needs in retirement that are not going to be covered by the public system. A lot of people may think, My employer s benefit plan is going to continue to cover me after I retire, and that s not the case either. So this is one example where the awareness of the risk is just not there, and I think that represents again an opportunity for us as a profession to try and address it. Perhaps there is a market need that needs to be filled. I m a little bit removed from the insurance industry myself but maybe there s something there that we need to step in and do something about. There is certainly a need for better education; if there are opportunities to do that we should take advantage of it. That was a little bit disturbing to see that and I think that represents an opportunity for us. Another thing that seemed to come through in the survey, and we saw this back in 2010, was just a general lack of a solid financial plan. Perhaps one reason for this is that the retirement savings industry really is focused on product. Companies are out there trying to come up with the best products for their advisers to sell to help their clients in retirement, but the planning aspect? It seems that it s left to the adviser. So the company will provide the product and their assumption is that the adviser will take this product, wrap some advice around it, and that will be the financial planning process. I guess one question I had as I was looking at that was, Is there any more that financial institutions can do? As a profession those of us that are involved in retirement planning products, is there something that we can add to it to sort of get that planning mentality into the users of these products? I don t know if there is an easy answer to that I m just bringing it up as a discussion point, but that certainly jumped out, that even after all the discussion about having a good financial plan it just doesn t seem to be catching on, at least not from what we ve seen in the survey. An interesting statistic was... I don t know if it was discussed in the presentation but we asked how many or what proportion of retirees and pre-retirees have a defined benefit plan as a source of income or are counting on a defined benefit plan as a source of income. Forty six percent of retirees have defined benefit plans and 35 percent, which is a lower number, plan on having it. So I think we all know that defined benefit plans at least in the private sector certainly PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES Vol. 43, June 2012

6 6 JUIN 2012 ASSEMBLÉE ANNUELLE TORONTO (SÉANCE 27) have gone into decline in the last few years. Fewer and fewer people should be expecting to have a defined benefit plan to fund their retirement income. You certainly see it there in the sense that we ve got a bit of a generation gap: the current retirees and those that have not yet approached retirement, fewer of them have a defined benefit plan to rely on. The one thing that we didn t get out of the survey was I don t think we could tell how many were employed in the public sector because there is a significant difference between the prevalence of defined benefit plans in the public sector versus the private sector. It would have been interesting to know what proportion was responding to this question. But if you pay any attention to some of the public policy issues the CIA has talked about for the last few years, pensions is one of the issues we keep coming back to. We issued our pension prescription back in 2009 where we had some proposals to sort of reverse the trend where defined benefit plans were disappearing. This is something we focused on a lot. We do think it s in the public interest to have defined benefit plans out there. We think they are better for the public because they have that certainty of income as opposed to a defined contribution plan where you re putting money into a pot and whatever you happen to have when you retire, that s what you get. So we would certainly as an organization, as a profession, we would like to see this trend reversed. I don t know if there s a magic bullet that will do it but certainly I think the survey is reflecting the fact that defined benefit plans are becoming less and less of an expected source of income, so that concerns us as usual. What opportunities are there? One of the general themes coming out of this was, we do see a lack of confidence still in the people that we ve surveyed. And the big question for us is, how do we address that? Are there retirement savings products that we could continue to develop that will help address that lack of confidence? How can we educate people, how can we address this uncertainty and in terms of pension plans, what can we do to sort of get employers thinking more about defined benefit plans, less about defined contribution? Is there anything out there that would start to reverse that trend? These are all big questions. I don t know if I have the answers but these are some of the issues that we should be thinking about. Another thing that I noticed is that there seemed to be a direct correlation between income level and confidence in preparation. Specifically that people with a lower income tend to be less confident, tend to be less prepared and really they are the ones that need the most help. That s an interesting issue and something we should think about if there s anything we could do to sort of address that need. I know in the financial services industry especially from the advisers perspective they are very attracted to the high-income clients because that s where you can make a lot of revenue, but I think there s still an opportunity there to do something for lower income Canadians to help them because they re going to be facing perhaps the toughest consequences when it comes to retirement. Another theme that seems to be coming through this consistently, and again we had a session on that this morning, is the whole concept of financial literacy. Every indication we ve seen is that financial literacy generally needs to be improved. Any opportunity that we can take in our work or profession to improve financial literacy would be a good thing, and that should be a theme that we keep in mind as we go forward. So that s sort of our observations on this but we d like to open the floor now for questions on anything that was in the survey, anything that we didn t get to address. We ll open that up to you now. U-M: I d like to offer observations or maybe counterpoints that I think we need to be careful when we look at the results. Maybe I missed some of the detail but when we look at the pre-retiree group and the retiree group their level of comfort and concern about the future, there may be an inherent bias in that the group that have retired already may have gone through, they may already be comfortable that they could afford to retire, and so have moved into that stage. I just wonder, I don t think it s two populations. We need to be careful; we may not be looking at the same thing. You could have someone without adequate resources that s age 62, so they may be expressing concern about and still is a pre-retiree for instance, whereas someone may be at age 55, has just received a full unreduced pension, and may have significant assets. So just by the fact that they ve retired it may be because they ve already addressed all those concerns. I think we need to be careful in drawing those differences between the retiree and the pre-retiree group. Secondly, on the issue about the healthcare and peoples response saying they were going to focus on healthy lifestyle. In my role I m responsible for our company s benefit plans and pension plans, a number of things, and a big focus right now on the benefit side is wellness programs. I think there is beginning to be significant research that shows that if Vol. 43, Juin 2012 DÉLIBÉRATIONS DE L INSTITUT CANADIEN DES ACTUAIRES

7 JUNE 2012 ANNUAL MEETING TORONTO (SESSION 27) 7 people are leading healthier lifestyles and doing some of those wellness initiatives that they will tend to have better outcomes in terms of reliance on healthcare. Now I know that in retirees that shouldn t be the only thing they rely on, but I don t think we should discount because they ve said that s what they re focused on, that may not be a terribly bad thing. Just those two counterpoints. Speaker Sandra Guiry: Yes, the only thing I would say to that second point is I think what we were trying to point out is that maintaining a healthy lifestyle was in fact the only option that a majority selected. The take away from our point of view in having a different perspective than you might is that it was the only one a majority was saying they were doing. So not even a majority is doing any of the other things they might do to protect their health in the future. U-M: Yes, just one other comment. We re not disputing that having a healthy lifestyle will have benefits in the long run, but there are some illnesses and I m thinking specifically of Alzheimer s which I don t think have any connection to how you ve lived your life. If you are faced with that you are going to need care, and if you haven t thought about that or made preparations ahead of time that s going to be a burden on particularly your family that has to look after you. So I just worry that perhaps that awareness is not there that this is something that could happen and does carry with it financial burden. Ken Fraser: Ken Fraser, I wonder if you could just review briefly the methodology of how people were selected and interviewed and in particular how you distinguish between who is a retiree and who is not. I m thinking about people who have retired and gone on to do other employment or whatever, how are they classified? Speaker Guiry: Just to give you a little more detail on the methodology, the survey was conducted through our online panel so it is a representative sample of people who self-identify as being retired. They would fall under the retired group, granted they fall into the age requirement as well. U-M: It s an online survey so people without a computer were not in it? Speaker Guiry: Yes, it s true, it s an online survey so if you don t have a computer then you aren t in the universe from which we would pull the sample. That s correct. Speaker Cox: That being said, though, we did have age quotas to ensure representatives of the sample. Even though older responders were less likely to have computers they were still included in the study. Speaker Guiry: Yes, and I don t want to go in and try to talk a whole lot about how wonderful online research is, but online research is a core part of our industry and it s how we pull rep samples for all kinds of studies and how we do all of our election polling. So we feel very confident that using the online panel, especially one as large as ours, we can pull from it a representative sample so you can be confident that the sample is representative of the universe we re intending to represent. Yes, but it is based on self-identified retirement and my understanding of the definition of retirement is they are not working, so they are not working part-time. U-M: [off mic 35.48] The question simply asked, Are you retired? Speaker Cox: No, it asked to describe their current situation regarding employment. It offered options regarding fulltime work, part-time work, occasional work. I think under the table work was even included in there, but included in that was no income from working, more or less. I d have to get the actual wording that was in there, but it was for us to make sure that people who considered themselves retired but still worked weren t included as a retiree. Moderator Fievoli: Do you have any other questions? Wan-Yi Huang: My name is Wan-Yi Huang. The feedback on lack of financial literacy: I know we give well, the CIA gives there are a few foundations that give scholarships for students in math or they score perfect 10 in exam C, for example. Would the CIA consider to help university or even high school students with a class that s just... Let s talk about money, because I come from a culture where we re not very shy talking about money. When I see my friend, the first thing he says is, Hey, are you working? How much are you making? In Canadian culture this is rude but in my family, in my culture, it boils down to, How much are you making? How much are you saving? Is this affordable? So financial literacy is kind of embedded in my Chinese culture, but in Canadian it s a taboo. I think that has to be PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES Vol. 43, June 2012

8 8 JUIN 2012 ASSEMBLÉE ANNUELLE TORONTO (SÉANCE 27) changed. And I find a lot of people didn t realize once they get old they cannot shovel the snow; they cannot cut the grass; even a hearing aid costs $700, $1,500; your insurance only gives you $300, $400. You don t breathe well, you need a mask or tank. There are so many things retirees are just not thinking. We re afraid of looking into the future because we all think we won t age. So I guess taking a picture of me 40 years from now, I m sure I m going to be as pretty, but it s an effective way. I really like the survey, it s an eye-opener. Moderator Fievoli: Just to go back to your first point about improving financial literacy, that s something the Actuarial Foundation of Canada has actually taken on to some extent. Obviously their focus right now is at the younger generation. So there may be potential there to someday do something for the older generation, people that are 15, 20 years from retirement, to sort of get financial literacy into them. That s certainly a possibility, and if anybody is keen on doing something like that I m sure the foundation would like your help. But if you were in the session this morning on financial literacy you would have seen a presentation by Ellen Whelan who is doing some of this stuff. She has set up a company now to develop financial literacy modules and take it to school-age kids, primarily teenagers, and educate them on some of the basics of: how do debit cards work; how do credit cards work; what does it mean to be budgeting your money. So there are examples of people out there doing these sorts of things and trying to improve financial literacy, the stuff that Don Stewart and Susan Murray spoke about at the same session. It s certainly a big attention-getter. The real challenge now is taking these ideas and putting them into practice and delivering that knowledge to people on an effective basis. As a profession I think we re maybe uniquely qualified to bring some of that knowledge but the real challenge is: how do we go about doing it? Speaker Guiry: I just wanted to take a moment to reiterate one of the points that Ben made in the presentation that I found particularly salient, which was comparing the two studies 2010 to That was the whole point of the exercise. One of the points of the exercise was to figure out if attitudes have changed. Are people more concerned, less concerned? Are they more prepared, less prepared? And what I found is an interesting take-away, is that clearly the recession has had a significant impact on the fears of pre-retirees and yet they are not doing that much more than they were two years ago. I think the slide showed a slight uptick in the proportion of people who were doing certain things, but it was very minor. It was just outside the margin of error, essentially. While that s great, that we see a significant change, it s not as large as we thought it would be. The take-away for me was, Wow, you re more concerned but you re not doing anything to address it. That s, to me, where a big gap is. Moderator Fievoli: OK, do we have any further questions? If there s nothing else I would like to thank Ben and Sandra for coming today and taking time to do their presentation, we certainly appreciate it and thank all of you for coming. I hope you found this interesting and enjoy the rest of your meeting. (Applause) [End of recording] Vol. 43, Juin 2012 DÉLIBÉRATIONS DE L INSTITUT CANADIEN DES ACTUAIRES