The level of general financial literacy among Canadians is fairly low, although it is comparable to what is observed elsewhere. In the context of an aging population and of a changing retirement landscape – programs, behaviours, labour market, family structures, health… – it is appropriate to measure the knowledge that Canadians have of their retirement income system. Indeed, a certain level of knowledge seems essential to plan for retirement, particularly in a system that relies heavily on non-public pillars.
The RSI Index combines the responses of 3,000 Canadians aged 35 to 54 to 6 questions of general financial knowledge and 23 program-specific questions on 4 different topics, for a total of 29 questions. For the first edition, the overall index is 36.5%, reflecting a limited knowledge of our multi-pillar system and of certain key concepts. As one might expect, older, more educated, and higher-earning individuals do slightly better, but their level of knowledge is still low. The most difficult topics are the ill-known employer plans; and Old-Age Security, which comprises of various poorly understood programs. On the latter topic, most respondents have a hard time providing more than 2 correct answers out of 8 questions. Limited knowledge of the system could put at a disadvantage those relying on private savings, as much as lower- earning individuals – who might be more likely to depend on public programs. The 2019 RSI Index reminds us of the importance of information about the retirement system.