Pension plans provide economic boost

The recent suggestion by the CEO of the world's money management firm BlackRock that good pensions were “one of the fundamental reasons” Canada didn't suffer as much as the United States during the last recession is just the latest reminder of how pension plans provide a boost to the economy.

Two studies released last year of Canadian pension plans show the impact pension plans have on the economy.

A study by Boston Consulting Group of the ten largest pension funds in Canada found that these pension funds have $400 billion invested in Canada. Between 2003 and 2011 the assets of these pension funds grew by over 100%.

And unlike many other large investments, most of the profits stay in Canada. People getting defined benefit pension plans are spending money in the community and paying their taxes.

A second Boston Consulting Group study found that taxes paid by retirees with defined benefit plans were worth between $14 and $16 billion to Canadian governments. Spending by people with defined benefit plans put between $56 to $63 billion into the economy. In addition, because people receiving defined benefit pensions are far less likely to need the Guaranteed Income Supplement, the federal government was saving between $2 and $3 billion a year.