TORONTO, Sept. 6, 2012 /CNW/ - 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 news:
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.
The provinces/regions with the highest percentage of employees living pay cheque to pay cheque are: Maritimes (54%), Manitoba (53%), and Ontario (52%). Quebec has the lowest percentage (33%).
Saving more
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.
Employees in Quebec lead the way with respect to being able to successfully boost their savings (71%).
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).
Now, the bad news:
Rate of savings remains low
Although more Canadian employees are saving, the rate of savings remains low. Almost half (46%) 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 say they have saved less than a quarter of what they wish to accumulate.
Of particular concern is the finding that even among 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:
Debt is the chief obstacle to saving
Two out of every five Canadian employees are spending at, or in excess of, their net pay.
Summary
"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 goal."
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 interviews.
Contact:
Robert Stephens 416-777-0368
Niki Kerimova 416-777-0368
Kevin Gaudet 416-777-0368
Leslie Challis 416-767-0167
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.
Image with caption: "According to 3500 responses (highest number ever) to the CPA's fourth annual survey of employees, fewer are living pay cheque to pay cheque, and more are saving. But most continue to fall far short of their retirement goals. Especially worrisome is low retirement savings among older workers. (CNW Group/Canadian Payroll Association)". Image available at: http://photos.newswire.ca/images/download/20120906_C3784_PHOTO_EN_17477.jpg
SOURCE: Canadian Payroll Association
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