Alberta News Release
Attention: News Editors, Business Editors
CPA survey finds fewer Canadians living pay
cheque to pay cheque.
Employees saving more, but many still far from their
CALGARY (September 6, 2012) –
There’s good news and there’s bad news in this
year’s survey of employees conducted by the Canadian Payroll
Association (CPA) to mark National Payroll Week. First, the good
Fewer living close to the line
Responses from 3,500 employees across Canada found that fewer are
now living pay cheque to pay cheque. Although 47% are still reporting
that they would be in financial difficulty if their pay was delayed by
even a week, it is still a significant improvement over the 57% last
year who were just making ends meet.
In Alberta, the percentage of employees living pay cheque to pay
cheque is also 47%, the same as the national number.
Another encouraging sign in CPA’s fourth annual survey is that
many more employees are now finding they are able to increase their
savings. While only 40% of employees trying to save more were able to
do so last year, this increased dramatically to 66% in 2012.
Re-assessing retirement needs
Canadian employees also appear to be taking a harder look at their
retirement needs. Fewer now feel that savings of $500,000 to $1 million
will be sufficient to live comfortably in retirement (34% this year,
42% last year) while more think a nest-egg of between $1 million and $3
million will be needed (38% this year, 27% last year).
A higher percentage of employees in Alberta, relative to anywhere
else in Canada, believe that the larger dollar amount will be required
to retire comfortably.
Now, the bad news:
Rate of savings remains low
Although more employees are saving, the rate of savings remains low.
Almost half (46%) of employees in Canada say they’re putting away
only 5% or less of their pay. Financial planning experts generally
recommend a retirement savings rate of 10% of net pay.
Far from reaching retirement goals
The low savings rate is reflected in another worrisome finding. When
asked how close they are to their retirement goal, 73% of employees in
Canada (75% in Alberta) say they have saved less than a quarter of
what they wish to accumulate.
Of particular concern is the finding that even among Canadian
employees closer to retirement (50 and older), 45% report that they are
less than a quarter of the way to their retirement savings goal.
Having to work longer
For those employees with a target retirement date:
- 41% say they’ll now have to work longer – five more
years on average – than they planned in 2007;
- the top reason cited for having to work longer was “I'm not
saving enough money for retirement"; and
- the median retirement date is 60 years of age.
Debt is the chief obstacle to saving
Two out of every five Canadian employees are spending at, or in
excess of, their net pay.
“This year’s survey shows that more Canadian employees
are now able to save more, and fewer are living pay cheque to pay
cheque,” notes Caroline Bernard, CPA Chairman. “However,
only 13% have saved half or more of their retirement funds
Patrick Culhane, President and CEO, says the low retirement savings
numbers are especially worrisome among older workers. “Many are
people who will be leaving the workforce in a few short years, yet most
of them remain far below their retirement targets.”
Payroll professionals can often help employees save by automatically
directing a portion of their net pay to a separate savings account
and/or into a Registered Retirement Savings Program (which reduces
one’s income tax).
Visit www.payroll.ca for a
summary of the survey findings (under Media Room) and for
further information. CPA spokespersons across Canada are available for
CPA Survey of Employed Canadians:
A total of 3,499 employees from across Canada, and from a wide
range of industry sectors, responded to an online survey between June
16 and August 13, 2012, using a convenience sampling methodology.
Respondents to the survey were recruited by members of the CPA with
whom they work to get responses from employed Canadians. This Canadian
Payroll Association developed survey was conducted by Framework
Partners, a market research and strategic planning firm. The survey is
consistent with a margin of error of plus or minus 1.6% 19 times out
20, but as a non-probabilistic methodology was used a definitive margin
of error cannot be expressed.
About the CPA:
Payroll professionals in 1.5 million organizations across Canada
are responsible for ensuring the timely and accurate payment of $830
billion in wages and taxable benefits, $260 billion in statutory
remittances to the federal and provincial governments, and $90 billion
in health and retirement premiums, while complying with more than 191
regulatory requirements. The Canadian Payroll Association (CPA) has
influenced the payroll compliance practices and processes of hundreds of
thousands of employers since 1978. As the authoritative source of
Canadian payroll knowledge, the CPA affects the legislative processes
and practices of payroll service and software providers, as well as
hundreds of thousands of small, medium and large employers.
National Payroll Week (September 10-14, 2012) recognizes the
accomplishments of payroll professionals and the CPA by building greater
awareness of the size and scope of payroll and its impact on employers,
employees and government across Canada.