Task force to consult with Canadians on savings, debt – The Globe and Mail

Financial literacy

Task force to consult with Canadians on savings, debt

Sun Life chief executive officer Donald Stewart

Group formed by Jim Flaherty will be headed by Sun Life’s Don Stewart

Tara Perkins

Globe and Mail Update

The federal government’s task force on financial literacy is embarking on a cross-country consultation as it seeks to put together a national strategy that will teach Canadians how to manage their finances.

The task force will release its “Leveraging Excellence” consultation document Monday as a starting point to discuss issues including managing debt, saving and investing, retirement planning and pension reform.

Such issues are among the key problems on Ottawa’s plate right now, and Finance Minister Jim Flaherty has been working to address them through regulatory reform and other means.

The committee, led by Sun Life Financial chief executive Donald Stewart with vice-chair Jacques Menard, has spent months studying the degree of financial literacy among Canadians, and it has found reason for concern.

“Canadians must try to make sense of increasingly sophisticated financial products,” Mr. Stewart wrote in the introduction to the committee’s consultation document. “The recent economic downturn – and its impact on Canadians’ financial security – has highlighted the need for personal financial savvy.”

The group is examining a survey of more than 15,000 Canadians that suggests that one-third of the population is struggling financially. The data also suggests that Canadians don’t fully grasp their financial picture, or are overly optimistic. Half of them say they are confident that they will enjoy a comfortable retirement, but very few can explain how they plan to get there.

The task force, which appears highly ambitious, is already looking to determine what type of follow up study should be done in a few years time to assess the success of its national strategy.

“Time and again we see behaviour by people – we are talking highly educated, high income people – who are making less than ideal financial decisions for themselves and their families,” said one source. “Other countries that have developed a strategy have focused on education in high schools. This task force has come to the early conclusion that, while enhanced financial education is vital over the long term, it is insufficient.”

The task force is delving into behavioural science and looking for ways to nudge Canadians into adopting better financial practices, such as saving more. Committee members have had discussions with experts on the psychology of money, such as Richard Thaler, the author of “Nudge,” in the hunt for ideas.

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The task force is also concerned that if it limited its strategy to education in school, it would not help immigrants or aging Canadians who are struggling with retirement. One of the committee’s priorities is the pension situation.

The consultation process that’s being announced Monday will spread to each province and territory and make use of online forums, public hearings, requests for formal submissions, and round-table discussions.

As the committee, which was formed by Mr. Flaherty, develops its recommendations, it is keenly aware that it will need the provinces on side because they are ultimately responsible for education and pensions. Mr. Stewart travelled to Whitehorse in December to speak to the Canadian finance ministers about the task force’s work.

Some provinces have already made big strides in revamping their grade 10 curriculum to include financial education, and Australia is actually currently studying B.C.’s curriculum with an eye to adopting something similar, a source said.

With files from CP

Posted via web from Toronto Real Estate News | Blog

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