Advisors are increasingly focused on the 1 per cent, but a new report is validating the focus on a much-maligned group of workers.
Advisors are increasingly focused on the 1 per cent, but a new report is validating the focus on a much-maligned group of workers.
That research from a Canadian business group suggests those working in government have far more to save and invest than the rest of us.
The Canadian Federation of Independent Business suggests the average private sector worker earns $8,150 less per year while working six hours more per week than those in the public sector.
The cost of this disparity to the tax coffers of governments, both provincial and federal, in this country? $20 billion annually.
“The public-private wage gap is the elephant in every room when it comes to setting the public policy agenda in this country," said Ted Mallett, chief economist and vice-president at CFIB. "Public sector earnings have been allowed to drift well above market-tested norms, and cash-strapped governments are looking for ways to invest in infrastructure and other priorities. Closing the gap is not just what's fair, it's what is needed."
A pay gap exists between public and private sector workers in all of the provinces except Alberta where private sector workers make 4.3 percent more than their public sector counterparts.
So, advisors in every part of the country except Alberta should be prospecting for public sector employees?
That depends on how you view the entire contents of the report.
#pb#
At first glance, the gold-standard pensions that most government employees get makes them slightly less attractive because the pension adjustment reduces how much they can invest in their RRSP.
“Governments must move toward greater reliance on defined contribution plans or shared risk models rather than defined benefit pension plans which are far more expensive to maintain and much more Opaque,” says the CFIB. “Retaining defined benefit plans for existing employees and setting up defined contribution plans for new employees is a common way private sector employers have chosen to act.”
Just as in the private sector, the writing is on the wall.
Eventually, retirement savings between the two groups will be treated equally, at which point the differentiator becomes one of salary. Excluding benefits, the gap between public and private sector workers drops to around 10 percent.
Public sector workers are certainly attractive prospects but the gap in the future looks to go away as governments reign in those costs.
Taxpayers can only hope.
That research from a Canadian business group suggests those working in government have far more to save and invest than the rest of us.
The Canadian Federation of Independent Business suggests the average private sector worker earns $8,150 less per year while working six hours more per week than those in the public sector.
The cost of this disparity to the tax coffers of governments, both provincial and federal, in this country? $20 billion annually.
“The public-private wage gap is the elephant in every room when it comes to setting the public policy agenda in this country," said Ted Mallett, chief economist and vice-president at CFIB. "Public sector earnings have been allowed to drift well above market-tested norms, and cash-strapped governments are looking for ways to invest in infrastructure and other priorities. Closing the gap is not just what's fair, it's what is needed."
A pay gap exists between public and private sector workers in all of the provinces except Alberta where private sector workers make 4.3 percent more than their public sector counterparts.
So, advisors in every part of the country except Alberta should be prospecting for public sector employees?
That depends on how you view the entire contents of the report.
#pb#
At first glance, the gold-standard pensions that most government employees get makes them slightly less attractive because the pension adjustment reduces how much they can invest in their RRSP.
“Governments must move toward greater reliance on defined contribution plans or shared risk models rather than defined benefit pension plans which are far more expensive to maintain and much more Opaque,” says the CFIB. “Retaining defined benefit plans for existing employees and setting up defined contribution plans for new employees is a common way private sector employers have chosen to act.”
Just as in the private sector, the writing is on the wall.
Eventually, retirement savings between the two groups will be treated equally, at which point the differentiator becomes one of salary. Excluding benefits, the gap between public and private sector workers drops to around 10 percent.
Public sector workers are certainly attractive prospects but the gap in the future looks to go away as governments reign in those costs.
Taxpayers can only hope.
