Ontario 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
TORONTO (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 Ontario, 52% of employees are living pay cheque to pay cheque
– higher than the national average.
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).
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
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:
- 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. In Ontario, an even higher percentage of
employees (42%) are spending at this rate.
“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
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.