"WATCH OUT FOR A TSUNAMI OF RETIREES" - WILLIAM HANLEY - FINANCIAL POST

I "tsurvived" the tsunami, watching last Saturday's events unfold on TV from the comfort of a high-and-dry couch. So, I will likely make it to my 65th birthday on Thesday, March 9, when a government computer far away in Canada will go "phhht" in cyberspace and inform the folks who make the Old Age Security payments to electronically transfer William James Hanley a pension payment for $516.96 each month beginning April 30.

Being born in 1945, I am a year ahead of the Baby Boom generation, which Statistics Can­ada defines as those born between 1946 and 1965. Next year, the first cohort of nine million Canadian Boomers will begin receiving Old Age Security, a demographic tsunami that will see about 1,200 people a day celebrating the "Big 6-5" over the next 20 years.

While last Saturday's tsunami mercifully did not live up to advance billings, it did pro­vide Hawaii's emergency authorities with a successful rehearsal of what might be done in the event of the real thing. Unfortunately, there has been no rehearsal for what might transpire when the long wave of Boomers be­gins to flood into official old age and puts un­precedented pressure on the public purse and on the private pension plans of corporations and individuals.

Fortunately, the pensions crisis has landed full square in the public conscious. It is no longer a "looming" crisis. It is here. Now. Un­fortunately, it is a massive, complex problem that will test the will power and ingenuity of people and institutions at all levels.

Evidence mounts almost daily that the re­tirements of the Boomers and those older are under threat. This week, the Ontario Munici­pal Employees Retirement System COMERS), one of the country's biggest pension funds, announced that while its assets bounced back last year after 2008's big losses, it still is run­ning a deficit on what is needed to fund obli­gations.

This scenario is being repeated at pension funds - both public and private - across Can­ada as managers grapple with chronic under­funding stemming from overly optimistic return-on-assets assumptions. Recent reality, in the form of a struggling economy and the second stock market crash in a decade, has collided with the diminishing prospects for retirements going forward.

The growing unease about pensions and re­tirement among Boomers is apparent in many surveys.

A recent poll conducted by TNS Canad­ian Facts shows that almost one in every two people over 50 say they're not confident that the country's system of pensions and retire­ment savings, including employer pensions, OAS, the CPP and RRSPs, will provide them with a comfortable retirement income. More than a third say they're "somewhat confident" and only 15% are "very" or "completely" confi­dent in the system.

No surprise there. And no surprise that al­most half of the 50-plus group surveyed by TNS want pension-system reform, including more room for seniors in tax-free savings ac­counts, pension surpluses belonging to indi­viduals 'holding plans - not employers - priority for pensioners in the event of bankruptcy and the right to make voluntary supplementary CPP contributions.

While pension debate and subsequent re­form is a high priority as Boomers approach 65, they and other generations are becoming increasingly aware that they should be the main authors of their own retirement destin­ies. Common sense also tells us that over time many people will have to make sacrifices, that paying somewhat more and getting somewhat less is certainly in prospect at all pension lev­els.

It will be interesting to see in 2020 - half­way through the great Boomer tsunami ­what hindsight will tell us about where exact­ly we were in 2010-11 on the difficult road to a more secure retirement for Canadians.

If I'm spared, I'll by then be turning 75.Meantime, though, I've got next week and a birthday party at Chuck's Cellar here in Wai­kiki to get through in one piece. More than 20 of us will assemble, including young Boomers, older Boomers, retirees, those working past 65, for drinks and dinner, for a good night out. Retirement worries will have to wait.



William Hanley
in Honolulu
Comment
Financial Post
March 6, 2010