Canada abolishes mandatory retirement age

In December 2011, the federal government decided to abolish the mandatory retirement age, which had been set at 65, as a way to help mitigate labour shortages.

The decision is quite well accepted by Canadians in general. Most provinces, with the exception of public sector employees in New Brunswick, had in fact already enacted laws to abolish the legal retirement age. Now, it also applies to managers and employees of companies under federal jurisdiction. This measure should help mitigate the labour shortages faced by many companies and help employees ensure higher pensions.

David Langtry, Acting Chief Commissioner of the Canadian Human Rights Commission, stated in a release shortly after the government announcement: ”This is a victory for human rights. We're not born with date stamps saying our fitness for work expires at 65.”

The government has also set up incentives to keep employees working longer. Even if this concerns only a small part of Canadian retirees, people who retire at 70 instead of 65 will from now on get 42% more from the Canada Pension Plan. The decision to extend the legal retirement age comes at a time when defined benefit plans are hard hit by the economic crisis. The poor health of these plans is forcing workers to postpone retirement for a few years. In Quebec, for instance, the private retirement plans have a deficit of $26 billion.

Experts, for their part, believe that this government decision will not affect Canadians’ retirement plans. The latest data shows that Canadians stop working at 61.5 years of age on average, and 60 years of age in Quebec, which abolished the legal retirement age 30 years ago.

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