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Insurers such as Sun Life Financial could deliver millions of pension-deprived Canadians a lot more income in retirement if they could go about things differently.

A senior Sun executive has offered a refreshing prescription for creating better conditions. But a pension expert says that vision falls short of what’s needed.

One side of Sun’s business delivers retail investment, savings and income products along with guarantees and personal advice from agents.

It’s a model that results in higher fees than even mutual funds, which are more costly in Canada than anywhere.

Those high fees, combined with the goods and services tax imposed by Ottawa and the provinces (including Ontario, as of next year) sap potential wealth.

Meanwhile, however, Sun runs group savings plans for a million workers with $39 billion of savings. The largest of these plans are cheaper than most mutual funds, at about 1 per cent of assets per year. Investment returns are comparable with the average for defined-benefit pension plans.

Sun could readily gear up to handle a million more retirement savers. So could its major rivals. If hundreds of thousands of us joined the same big savings and investment plan, then costs, returns, quality of management and results could all be improved.

More of us would join if employment standards laws required we be enrolled automatically at each new job, and be allowed to contribute even if the employer did not.

Could that ever happen?

It could and should, according to Dean Connor, president of Sun’s Canadian operations. He has called for government action to get things rolling. He outlined his concept to the Vancouver Board of Trade this week.

"Three to five million people across the country have inadequate pension coverage," he said. "We need to get them covered."

He called for:

New pension rules to permit employees from businesses across Canada, and for the self-employed, to join the same big savings plan free business cards.

A requirement that employers and employees earning more than the maximum income for contributions to the Canada Pension Plan be enrolled in one savings plan or another, with the right to opt out.

Changes in income tax law to permit extra tax-deductible contributions, with a lifetime limit instead of an annual limit, in order to compensate for investment losses, as defined-benefit pension plan sponsors can do already.

Industry innovation to provide lifetime income guarantees with group retirement savings plans.

It’s no coincidence Connor decided to speak out in British Columbia. The government there has vowed to launch a new agency by next Canada Day that would eventually provide one big, low-fee, retirement savings plan.

Connor argues B.C.’s initiative would be an unnecessary and costly intrusion into a sphere that could be served by life insurers.

"We have encouraged the B.C. government to look closely at leveraging the private sector platform that already exists, rather than building something new," he said.

Internationally known pension consultant Keith Ambachtsheer, whose ideas helped shape British Columbia’s proposed pension plan, has met with Connor.

Ambachtsheer says he told Connor that "costs are a huge success barrier, and that the insurance industry has been less than fully transparent about the costs of their retirement products and services."

He argues a single public agency could do a better job at lower cost, but could well hire Sun or other big companies to carry out certain functions.

Connor says insurers should at least be given a chance to compete, and says he is grateful British Columbia has put such a possibility on the national agenda.

James Daw, CFP, appears Tuesday, Thursday and Saturday. He can be reached at 416-945-8633; or at

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