Baby boomers put pension plans under pressure

The leading edge of Canada’s baby boom is turning 65. Just don’t expect their pension plans to blow out the candles. Wheezing and winded from years of volatile stock markets, historically low interest rates and staggering billion-dollar deficits, traditional pension plans have been struggling to catch their breath from the 2008 financial crisis. There’s a growing sense in the pension industry that the days of hoping for higher interest rates and stronger market returns are at an end, said Laura Lynch, a senior retirement consultant at Towers Watson. “Many of the Canadian pension plans are getting close to their retirement years,” Lynch said. “Like the members of the plans, who as they get close to retirement cannot stomach the same levels of volatility, companies are finding that they also cannot stomach the volatility.” The first of the baby boom generation reached 65 in 2011, while those aged 60 to 64 proved the fastest growing of all age groups, expanding at a rate of 29.1 per cent from 2006 to 2011, the latest census figures released Tuesday by Statistics Canada indicate. For the first time, the census found, there were more people age 55 to 64 — an age at which people typically start leaving the workforce — than were age 15 to 24, an age when people typically start their working careers. That’s a scary omen for pension funds that are dependent on workers to help fill the coffers. And that ratio will continue to decline, said Laurent Martel, a senior demographer at Statistics Canada. “The number of those leaving the labour force will be even more important in the forthcoming years as this large cohort of baby boomers will leave the working-age population,” Martel said.