Immigrants wanted: foreign workers will help pay pensions, Conference Board say
By Sunny Freeman, The Canadian Press
TORONTO – Canada will have to increase the number of immigrants allowed into the country by about 100,000 per year and boost productivity to help pay for pensions, the Conference Board of Canada’s chief economist said Tuesday.
The government will have to implement an immigration policy to grow the workforce to increase the number of workers making pension contributions and help offset the retirement of the baby boomers, Glen Hodgson told an audience at the Board’s 2010 Summit on the Future of Pensions.
Hodgson predicted slow labour force growth in the coming decades, means there will be fewer workers contributing to pension plans, but more retirees drawing from them.
“As all the boomers get ready to retire, as we look to new entrants, we won’t have any where near the same numbers of entrants from the born in Canada population,” he said.
“We’ll have fewer workers coming in to feed the system… that’s going to suck the life out of our economy. Slower labour force growth means slower economic growth.”
Governments and the business world are struggling to head off a potential crisis borne of an aging workforce that is not putting aside enough for retirement.
Currently about 250,000 immigrants are allowed to enter Canada every year. As an older population and smaller families become the norm, immigrants will be the only source of population growth in Canada at some time around 2030, Hodgson said.
While immigration alone will not reverse Canada’s aging trend, it will help keep population growth stable at around one per cent per year. As a result, immigration will be the dominant source of labour force growth in the future, Hodgson said.
Governments will need to implement policies that boost productivity, including developing an integrated immigration policy, investing in a more skilled workforce, and increasing the labour force by encouraging older people to work longer, he added.
While the recession took a toll on many people’s pensions, a survey conducted by the Conference Board earlier this year found that the economic downturn did not significantly affect the age at which Canadians plan to retire, Hodgson said. Only one person in three said the recession made them think about delaying retirement.
The average retirement age in Canada is exceptionally low, he said, but Canada should aim to avoid measures taken across Europe and Japan to raise the age at which workers can access government-sponsored retirement plans.
Hodgson said he favours a voluntary supplement to the CPP, in which enrolment would be automatic for all people with no corporate pension plans, with a choice to opt out.
But moves toward that approach were shot down by Alberta’s finance minister at a pension summit in that province Tuesday.
Ted Morton said Alberta would rather see an “incremental” approach that would allow governments make a few regulatory changes to give financial institutions more leeway to encourage people to save.