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Enquirica Research – Demographics and Pensions Cannot Be Ignored Forever

According to recently released research by the C.D. Howe Institute (The Glacier Grinds Closer: How Demographics Will Change Canada’s Fiscal Landscape) demographics shifts in Canada are creating the need for “immediate measures” to contain costs

 
PRLog - Oct. 10, 2011 - CALGARY, Canada -- According to recently released research by the C.D. Howe Institute (The Glacier Grinds Closer: How Demographics Will Change Canada’s Fiscal Landscape) demographics shifts in Canada are creating the need for “immediate measures” to contain costs and fund age-sensitive social programs on a sustainable basis.  According to the report  “If current patterns of spending in age-sensitive public programs – healthcare, education, elderly and children’s benefits – persist as the population evolves, Canadians will divert more of their incomes from other public and private purposes to fund them. Discounted over 50 years, that increase amounts to an implicit liability of $2.8 trillion for governments, with essentially all of the burden falling on the provinces and territories rather than on Ottawa. Spreading this cost evenly over the period with CPP-style level funding would require immediate annual levies ranging from 2.9 percent of GDP – $1,800 per person – in Saskatchewan to 7.7 percent of GDP – about $2,700 per person – in Nova Scotia and New Brunswick, and more than 10 percent of GDP – $5,700 per person – in Yukon.”

Of all the age sensitive state liabilities, research by Enquirica makes it believe the developed economies are at the very beginning of the problems that will have to be faced with pension finances.  Enquirica believes that significant amounts of future bail-out funds will required for struggling state pensions across the developed economies with serious consequences for already precarious public debt levels.  The longer zero interest rate policies continue the worse the funding shortfall problem will become and it already appears to be serious.   Studies on US municipal and state pension obligations by the Kellogg School found a total funding shortfall at the municipal and state levels of approximately $3.5 trillion. Shortfalls of this magnitude make it unlikely that there will be enough to pay promised benefits without significant additional capital in the form of higher contributions or bail-out funds.  The alternatives are benefit reductions or bankruptcy - neither of which appears to be a viable option in the current political climate.  

Enquirica Research is a Calgary based firm focusing on the analysis of alternative asset classes and investments, primarily in western Canada. For copies of Enquirica research register at www.enquirica.com.
                                    
DISCLAIMER:  The opinions, estimates, projections and other information which is contained herein and derived from or attributable to persons other than ENQUIRICA is neither endorsed nor adopted by ENQUIRICA – it is presented for informational purposes only.  Further, the opinions, estimates, projections and other information contained herein are not intended and are not to be construed as an offer to sell, or a solicitation to buy any securities, nor shall such opinions, estimates, projections and other information be considered as investment advice or as a recommendation to enter into any transaction.

FORWARD-LOOKING INFORMATION: This news release may contain certain information that is forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words "anticipate", "expect", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward looking information. Those forward-looking statements herein made by ENQUIRICA, if any, reflect ENQUIRICA’s beliefs and assumptions based on information available at the time the statements were made.  Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material.   Readers are cautioned not to place undue reliance on any forward-looking information contained in this news release (if any), which is given as of the date it is expressed herein. ENQUIRICA undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

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Enquirica Research is a Calgary based firm focussing on the analysis of alternative asset classes and investments, primarily in western Canada. For copies of Enquirica research register at www.enquirica.com.

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Source:Enquirica
City/Town:Calgary - Alberta - Canada
Industry:Accounting, Finance, Research
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