Paper Addresses Solutions for Savings Shortfall Expected to Reach $13.4 Trillion in Canada by 2050
Mercer, a global consulting leader in advancing health, wealth and careers, and a wholly-owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), today announced the launch of “Bold Ideas for Mending the Long-Term Savings Gap,” which addresses ways to improve the $70 trillion global retirement savings deficit. In Canada alone, this deficit reached $2.7 trillion in 2015 and is expected to reach $13.4 trillion by 2050. These ideas are part of Mercer’s ongoing commitment to exploring ways of improving financial security for individuals.
There are numerous factors contributing to this deficit in Canada, including:
In its whitepaper, Mercer explores innovative responses to this global challenge, one that Louis Gagnon, Senior Partner and CEO of Mercer Canada, refers to as, “one of the greatest crises of our time, for which there is no silver bullet.” Mr. Gagnon believes the issue of financial security is not just about retirement but instead about broader financial wellness concerns that plague individuals at varied life stages and ultimately undermine social and employment productivity.
Of key importance is how individuals often lack the confidence to tackle difficult, long-term financial decisions. According to Statistics Canada1, the household savings rate for the first quarter of 2017 was a mere 4.3 per cent. This inaction proves costly in the long run. This point is further emphasized in Mercer’s Inside Employees’ Minds™ research, conducted in September 2016. It reported that, on average, employees in Canada spend seven hours per month worrying about money matters at work.
“We do not believe this is merely a ‘retirement savings matter’. The retirement savings gap is part of the significant financial security issue that is chipping away at productivity and putting individuals into periods of financial instability,” said Mr. Gagnon. “Helping to find solutions to this problem goes to the core of our mission at Mercer, our offerings and our extensive research and data in this area.”
According to Mr. Gagnon, financially secure individuals are confidently able to set and achieve financial goals for themselves and their households, to support their dependents, to enjoy a desired quality of life, and to cover emergencies, without worrying about whether their future income is enough to cover expenses or to sustain retirement.
Through “Bold Ideas,” Mercer outlines the importance of multiple stakeholders coming together to take meaningful action against the savings deficit. Stakeholders include governments, employers and financial intermediaries, all of whom have the incentive and the ability to help mend the long-term savings gap. Each group also stands to benefit by helping to ensure that their citizens, employees and customers are able to save efficiently and appropriately for the future.
The paper details the main challenges causing the long-term savings gap, including:
Mercer has an ongoing mission to advance global financial security through strategic relationships with world renowned organizations like the World Economic Forum. Mercer is the lead collaborator on the World Economic Forum’s Retirement and Investment Systems Reform Project. In partnership with the Forum, Mercer has presented research findings to global leaders on the current state of global retirement systems and the importance of multi-stakeholder collaboration. Additionally, Mercer has a wide array of offerings aimed at resolving financial wellbeing challenges including the Mercer Financial Wellness and Harmonise™ platforms, among other solutions.
“Success will require bold and immediate action. Given the current size of the retirement gap, all relevant stakeholders need to act now,” said Jean-Philippe Provost, Senior Partner and Leader of Mercer’s Wealth Business in Canada. “Public and private sector individuals need to work together to create a cultural revolution that engages individuals in saving for the long-term, shifting the concept of ‘saving’ from a financial services experience into a consumer one. People need to understand what ‘good’ looks like when it comes to savings products, advice, and decisions. But they also need to have the confidence to act on their knowledge to achieve the best outcomes.”
To learn more about Mercer’s “Bold Ideas” and about Mercer’s work on financial security, go to www.mercer.ca/en/our-thinking/wealth/bold-ideas-for-mending-the-long-term-savings-gap.html
Mercer is a global consulting leader in health, wealth and careers. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in more than 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue of $13 billion and 60,000 employees worldwide, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.ca. Follow Mercer on Twitter @MercerCanada.
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1Statistics Canada. . Table 380-0072 - Current and capital accounts - Households, quarterly [CANSIM] http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3800072&paSer=&pattern=&stByVal=1&p1=1&p2=-1&tabMode=dataTable&csid=