pension readiness report finds most major industrial countries
unprepared for coming crisis
Standards of Living in Mature Economies Jeopardized by
Impact of Aging
DAVOS, Switzerland, Jan. 26 /CNW/ - The combined effects
of slower labour-force growth and population aging
could undermine the pension systems and broader economic
prospects of many developed countries, according to a
major new study by the World Economic Forum in partnership
with Watson Wyatt Worldwide.
The study, released at the World Economic
Forum's Annual Meeting in Davos last week, raises profound
questions around labour participation and productivity,
the cross-border flow of capital, the globalization of
labour markets, the financial viability of social insurance
programs, and how economic output is shared between working-age
and retiree populations.
The report highlights demographic trends sweeping the
globe and their economic consequences. For example:
- The EU will experience
a significant decline in its working-age population.
Taken together, even the less-developed countries being considered
for EU addition face shrinking labour forces.
- Germany and Mexico
today have working-age populations of about 50
million. By 2030, Mexico will have twice as many working-age
people as Germany.
- Italy's retirees will
outnumber its active workers by 2030.
- Over the long-term,
Japan would have to increase immigration 11 times over
existing rates to make-up for its low fertility rates.
- Assuming current demographic
and economic trends hold, the EU's share of
total global output will shrink from 18% today to 10%
in 2050. Japan's share would decline from
8% to 4%.
- The 335 million workers
that India is expected to add in the next 30 years
approaches the total working-age populations of the
entire EU and the United States combined in 2000.
- Other developing Asian
countries, including China, as well as Central and South
America, Africa, and the Middle Eastern countries will
all have surplus labour over the coming decades.
"Economic output is determined by labour force growth
and productivity rates," said Richard Samans of the World
Economic Forum. "In countries with significant projected
labour shortages, the supply of goods and services may
not meet demand and standards of living. However, things
do not necessarily have to unfold this way."
Among the remedies governments and
business have at their disposal are increased immigration,
capital deepening, technology investment and enticing
additional workers into the labour force. They also need
to develop ways to tap surplus labour pools in developing
countries through greater economic integration than ever
"While no single solution provides
a magic bullet, it's clear that the flow of capital and
labour across borders can be improved," said John Haley,
president and CEO of Watson Wyatt. "If the world's developed
countries cannot find adequate labour within their own
borders, they can export capital to other parts of the
world where there are ample and growing supplies of workers.
It will help raise standards of living in the developing
will provide sources of income and goods in the developed
economies where worker shortages will strain the economic
capacity to meet consumer needs. In the end, we all will
Increased immigration can also help,
but some societies are reluctant to allow significant
immigration because of the domestic implications. Adding
to the workforce can also be done to a limited extent
through extending the working period for older workers
and encouraging more women and younger workers into the
Another consequence of growing retiree
populations in the developed world is that the costs of
retirement systems will significantly increase. This makes
questions on whether pension systems should be "funded"
or financed on a "pay-as-you-go" basis and how changes
in living standards are allocated across segments of society
supremely important - especially in light of the slowing
labour force growth.
"The demographic changes present enormous
challenges for developed countries," said Sylvester Schieber,
director of research at Watson Wyatt and co-author of
the report. "There will be hard choices ahead, but in
the final analysis, more global integration is needed,
"We all face a daunting task," said
Samans. "If the impending labour shortages are not properly
addressed, business and society will have to answer many
difficult questions to avoid pitting the needs of the
working-age and retiree populations against each other.
The good news for now, however, is that there are a number
of ways out, but finding them will require us to recognize
that this is more than an issue of social security plan
benefits and taxes. Fundamentally, it is a question of
finding ways to improve economic growth and integration."
The World Economic Forum featured a
discussion on the report's implications at its meeting
in Davos, Switzerland, on January 21-25, 2004.
Among those attending a special session were ministers
from many OECD countries, CEOs, labour leaders and other
experts. The Annual Meeting's theme this year was 'Partnering
for Security and Prosperity'.
Over the past two years, the Forum's
Pension Readiness Initiative has combined leaders from
financial services and employment industry member companies
with other experts from labour unions, international organizations,
senior citizen groups and government for the purpose of
compiling a comparative assessment of the retirement system
readiness of OECD countries.
A copy of the report's executive summary
is available at www.weforum.org
About World Economic Forum
The World Economic Forum is the foremost
global community of business, political, intellectual
and other leaders of society committed to improving the
state of the world. Incorporated as a foundation, and
based in Geneva, Switzerland, the World Economic Forum
is impartial and not-for-profit; it is tied to no political,
partisan or national interests. The Forum has NGO consultative
status with the Economic and Social Council of the United
Nations. ( http://www.weforum.org
Media Advisory - Tax Tips to Keep in Mind when
TORONTO, Feb. 2 /CNW/ -
- Set up a separate bank account under your child's name
to deposit your Child Tax Benefit cheques. As long as
the child's income is less than the basic personal amount,
the money will earn interest tax-free.
- A lower-income spouse should use their funds to make
investments since the income earned will be taxed at a
- Interest on loans used to buy non-registered investments,
such as stocks and bonds, is tax deductible. However,
interest on RRSP loans is not. You can maximize your tax
advantage by using cash to buy RRSPs and borrowing to
buy non-registered plans.
- Interest receives less preferential tax treatment than
dividends or capital gains. Keep interest-earning investments
in RRSPs so they will not be taxed and keep investments
generating dividends or capital gains in non-registered
- When holding mutual funds outside of your RRSP, keep
a record of any distributions that are reinvested to buy
more units. These are added to the Adjusted Cost Base
of the units and reduce the capital gain when they are
- If non-registered investments are transferred to an
RRSP, they are considered sold for Fair Market Value.
While any resulting capital gain is taxable, a special
rule deems a resulting capital loss to be nil. This rule
can be avoided by simply selling investments and having
the RRSP reacquire them.
- When capital losses exceed capital gains, apply the
resulting net capital loss to capital gains incurred in
any of the three prior years or in any future year. Assuming
income levels remain the same, it will generally be more
advantageous to carry them back since tax rates were marginally
higher in those years. It will be especially advantageous
to carry them back to 2000 if your inclusion rate for
that year was higher than 50 per cent
Diet: Fact, Not Fiction
Scripps Clinic Research Verifies Link between Grapefruit
and Weight Loss
SAN DIEGO, CA, Jan. 22 /CNW/ - The grapefruit diet is
not a myth. That's what a new study by the Nutrition and
Metabolic Research Center at Scripps Clinic confirmed.
Researchers there found that the simple act of adding
grapefruit and grapefruit juice to one's diet can result
in weight loss.
The 12-week pilot study, led by Dr. Ken Fujioka, monitored
weight and metabolic factors, such as insulin secretion,
of the 100 men and women who participated in the Scripps
Clinic "Grapefruit Diet" study. On average, participants
who ate half a grapefruit with each meal lost 3.6 pounds,
while those who drank a serving of grapefruit juice three
times a day lost 3.3 pounds. However, many patients in
the study lost more than 10 pounds.
years people have talked about the grapefruit diet, and
some even swear by it, but now, we have data that grapefruit
helps weight loss," said Dr. Fujioka, principal researcher
at the Nutrition and Metabolic Research Center at Scripps
Clinic. "Our study participants maintained their daily
eating habits and slightly enhanced their exercise routine;
the only dietary change was the intake of Florida grapefruit
and grapefruit juice."
the research indicates a physiological link between grapefruit
and insulin, as it relates to weight management. The researchers
speculate that the chemical properties of grapefruit reduce
insulin levels and encourage weight loss.
importance of this link lies with the hormone's weight
management function. While not its primary function, insulin
assists with the regulation of fat metabolism. Therefore,
the smaller the insulin spike after a meal, the more efficiently
the body processes food for use as energy and the less
it's stored as fat in the body. Grapefruit may possess
unique chemical properties that reduce insulin levels
which promotes weight loss.
continues to plague the American public and the health
system. According to the National Center for Health Statistics,
64 percent of U.S. adults are considered overweight or
obese. Overweight or obese people stand a greater likelihood
of developing life-altering and/or life-threatening illnesses
such as heart disease, cancer, diabetes, high blood pressure,
high cholesterol, sleep apnea, arthritis, liver problems,
and many others.
study shows grapefruit can play a vital role in overall
health and wellness, and in battling America's ever-growing
obesity epidemic," stated Dr. Fujioka. "Whether it's the
properties of grapefruit or its ability to satiate appetites,
grapefruit appeared to help with weight loss and decreased
insulin levels leading to better health. It's good the
"Grapefruit Diet" never lost its popularity among the
study linking grapefruit and grapefruit juice consumption
to weight loss continues to broaden the health benefits
associated with this citrus product.
in Lakeland, Fla., FDOC is a state agency devoted to promoting
Florida citrus products. Florida is one of the world's
leading producers of oranges, grapefruits and specialty
citrus fruits, with more than 90 percent of Florida oranges
being made into orange juice. The economic impact of the
citrus industry on Florida's economy is $ 9 billion, and
the industry employs about 90,000 Floridians.
Founded in 1924, Scripps Clinic is a multi-specialty,
outpatient care facility caring for patients at multiple
locations throughout San Diego County, California including
Torrey Pines, Del Mar, Encinitas, La Jolla, Rancho Bernardo,
Rancho San Diego, San Diego, and Santee. Scripps Clinic
and its physicians are world-renown for research-driven
care and medical specialty expertise and is an operating
unit of Scripps Health, a not-for-profit, community-based
health care delivery network that includes more than 2,600
affiliated physicians, five acute-care hospitals, home
health care and associated support services. Scripps Health
is one of the largest health care organizations in San
Diego County, drawing from the expertise of more than
10,000 health care professionals.
should keep working - on their RRSPs, according to RBC
TORONTO, Jan. 28 /CNW/ - Canadian retirees may be missing
the opportunity to take full advantage of the benefits
of investing in an RRSP, based on results of the 13th
annual RBC/Ipsos-Reid RRSP poll, which shows that almost
80 per cent of retirees under 69 years of age are not
contributing to their RRSPs. This is substantiated by
a Statistics Canada report in October 2003, which showed
that nearly 80 per cent of Canadians who filed a 2002
tax return had unused RRSP contribution room.
"Many retirees under 69 years old may think because
they are no longer working they are ineligible to contribute
to their RRSP," said Michael Walker, director &
vice president, Financial Advisory Solutions Team at RBC
Investments. "If they have unused contribution room
available, investing right up to age 69 can be a great
strategy to defer taxes, lower taxable income and shelter
growth inside an RRSP."
According to the RBC/Ipsos-Reid poll, the average yearly
household income for retirees is close to $53,000 with
44 per cent of retirees reporting that employer pension
plan is their primary source of income in retirement.
Using this example, a 59 year-old retiree earning $53,000
annually, with $50,000 of unused RRSP contribution room,
could benefit from continued contributions to his or her
RRSP, according to Mr. Walker. Assuming a rate of return
of six per cent, this individual could contribute $5,000
a year for 10 years to their RRSP, by age 69 this investment
would have increased the RRSP by nearly $70,000. In addition,
the individual would have benefited by receiving a tax
refund each year of approximately $1,700, which could
be put towards future RRSP contributions.
The most popular reason given by retirees for not contributing
to their RRSP is that they are 'already retired/too old
to contribute' (55%), with 'I don't have enough money
to contribute' (18%) a distant second.
"Just because you are retired does not necessarily
mean you should stop contributing to your RRSP,"
said Mr. Walker. "A financial advisor can develop
a strategy to address cash flow and tax concerns, while
ensuring that you make the most of your RRSP."
These are the findings of an RBC/Ipsos-Reid poll conducted
between October 6 and October 24, 2003. The telephone
survey is based on a randomly selected sample of 1,205
adult Canadians, of which 137 are retirees under 69 years
of age. With a sample of this size, the results are considered
accurate to within (+/-) 2.8 percentage points, 19 times
out of 20, of what they would have been had the entire
adult Canadian population been polled. The margin of
error for retirees under 69 years of age is (+/-) 8.4
percentage points. These data were statistically weighted
to ensure the sample's regional and age/sex composition
reflects that of the actual Canadian population according
to the 2001 Census data.
About RBC Financial Group
Royal Bank of Canada (TSX, NYSE: RY) uses the initials
RBC as a prefix for its businesses and operating subsidiaries,
which operate under the master brand name of RBC Financial
Group. Royal Bank of Canada is Canada's largest financial
institution as measured by market capitalization and assets,
and is one of North America's leading diversified financial
services companies. It provides personal and commercial
banking, wealth management services, insurance, corporate
and investment banking, and transaction processing services
on a global basis. The company employs 60,000 people who
serve more than 12 million personal, business and public
sector clients through offices in North America and some
30 countries around the world. For more information, please