What level of pensions do Canadians really want

This was in the Financial Post on Friday March 19 - courtesy C.D Howe. Here is link to C.D Howe brief.

It basically suggests that there is a problem with our RRSP limits as they do NOT allow taxpayers to accumulate a comfortable retirement lifestyle. 

There are a number of problems with this analysis - plus it ultimately has limited value as  retirees have no alternative but to change their future behaviour (unless they want to work part-time). Although I suppose one could use it to point to Policy Catch22. We want to design policy alternatives to help citizens provide for themselves, but these need to be tested to ensure they are feasible..

1) In the lowest income deciles (upto 4th decile or 30-40% - that C.D. Howe calls the Working Poor?) are theoretically well served by existing RRSP limits above and beyond Mandatory CPP/OAS coverage (upto 60-70% of pretax income). EXCEPT we know that most Canadians DO NOT make their annual RRSP contributions. But I imagine CCRA has done this *analysis - matching say last 5years RRSP contributions against pretax deciles. * Horner, Keith. 2009. “Approaches to Strengthening Canada’s Retirement Income System.” Canadian Tax Journal. Vol. 57. No. 3. November.

2) Is assumption that taxpayers target 60-70% of pretax income reasonable for upper income earners? Probably not.   In Table C1 we can see that those who earn very high earning early in life AND start saving early (age 30-41) will have no trouble saving for retirement IF expectations are reduced to 50% of income.   This will only involve saving 7% of income - which I think is quite acceptable.

3) Clearly, these are not "lifetime income" - just a single year snapshot - so there is a logic gap in assuming these taxpayers stay in these cohorts.

4) No assumption is made about non tax sheltered investment like a small business, personal investment portfolio or most the important asset for many - including the middle class - owned/free& clear principal residence.

In conclusion it at least shows that below Median Pretax taxpayers COULD, if they wanted protect themselves in retirement - absent if these income levels provide an acceptable standard of living.

In the online comments, another surly point was made:

Meanwhile federal civil "servants" retire at age 58 with 70% income replacement and put it only 10% of their income - taxpayers putting in the other 22%!!