Self-Serve Retirement Schemes may become Mainstream

Self services are increasingly common nowadays, with people opting for self check-outs at supermarkets and fuel purchases at gas pumps. Now, retirement schemes have become a self serve unit, following the footsteps of other products. Canadians are now being nudged to fulfill their own particular destinies. They must take into account the diminution of the defined pension plans and the consolidation and closing of the bank branches. They are forced to navigate the confusing paths of mobile and online banking. Lower expenses associated with self service investing has also attracted a number of people to the cause.

Positives and negatives

As with all processes, both positives and negatives are present when formulating one's own retirement plans. People, although more responsible for own investment decisions, however, are unfortunately not familiar with the know-how of doing so. This is why the service of a retirement planner is recommended.

It also does not help that the platinum variety of pension is on its way out. The intervening years from 2002 to 2012 witnessed a number of people employed in private sector decline from 27 percent to 23 percent. It did not help matters that the population of the private sector workers who were satisfied with their defined pension plans went down from a previous high of 73 percent to about 48 percent. Bigger companies are either extinct or on their way out- and taking their generous pension plans with them. A few, like Sears Canada, went bankrupt, leaving a massive shortfall of $270 million in its pension plan. The plan covered about 18,000 personnel. It is clear that employees won't get their retirement savings they had signed on the dotted line for in the first place.

Changing times

The banks themselves continue to either close branches or consolidate them. Money, if available, are spent in developing complex online services. The CIBC, earlier in 2017, said that it anticipates the closing of about 100 physical bank locations within 2019. The reduction will be from the present 1,100 to 1,000 facilities. It is not alone. Scotiabank shuttered 80 branches between 2015 and the earlier part of 2017. The bank also announced its intention to close five percent of the remaining 1,000 branches.

The Canadian Bankers Association, in February, reported about 68 percent of Canadians using mobile or online banking as the preferred modes of banking. This has been corroborated by Investors Economics Inc. It reported that the online brokerage accounts have risen by 4.6 percent during the last five years. This is much higher than the 1.2 percent increase for the complete service brokerages.

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