TORONTO ? The CEO of AGF Management Ltd. says compulsory savings programs may be needed in Canada to tackle the massive household debt levels many Canadians now face.
In a speech to the Economic Club of Canada, Blake Goldring said that ?extreme? solutions were needed to address the high spending and lack of savings of Canadian households. He said the government should look to other countries that have compulsory savings programs for guidance, such as Australia, Chile and Singapore.
?In the last two decades, Australia?s compulsory savings and investment scheme has amassed a total net worth of $1.23-trillion,? he said. ?In Singapore, every worker is required to save 25% of their salaries, 10% of which is matched by their employers.?
Mr. Goldring pointed out that while these programs were ?conceptually not different from the Canada Pension Plan,? many Canadians fail to take advantage of the many alternative savings programs available to them, such as registered savings plans and tax free savings accounts.
?Despite their attractiveness, the participation rates for them remain woefully low,? Mr. Goldring said said. ?Compulsory participation seems extreme, but we are facing an extreme situation. If we are serious about getting canadians to save and invest and to do so earlier in their lives, we should consider all options.?
Recent data from Statistics Canada shows that the debt-to-income ratio for Canadian households hit 164.6% last year, which is the highest level among OECD countries.
Mr. Goldring also stressed in his speech that financial literacy was woefully inadequate in Canada. He pointed to a report from the Task Force on Financial Literacy that showed Canadians only spend about three hours a year planning for their retirement, adding that ?they?ll spend more than that planning their next vacation.
?We need to make financial education a priority across Canada,? he said.
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