Most of my generation who grew up in North American can at least hum the Brady Bunch theme song if not sing along, correctly recalling most of the words[1].  Large families were a familiar experience in the 60s and 70s.  Even if we were not part of a large family we knew many who were.  To suggest that the size of modern families has shrunk would be a severe understatement.  Many parts of Europe are decades into the decline in birth rate.  One story about a town in Germany notes need to destroy empty houses because there are very few young families and no one needs these homes anymore[2].  European birth rates statistics show that in 1960 there were 7.5 million births compared with only 5.6 million in 2011.

Canada’s fertility rates are also decreasing rapidly, currently below replacement levels (typically defined as 2.1 children per female of child bearing years).  The 2011 fertility rate of 1.61 children is declining rapidly.  Even as recently as 2007 the fertility rate was 1.66[3].  Young parents (or future parents) are challenged by a lack of employment that not only supports a reasonable lifestyle but also provides flexibility to balance the demands of work and parenting.  .

The wrong message is sent to young adult Canadians.  Our news, research and literature offers too many headlines suggesting that Canadians have not saved enough for retirement.  Well-educated young adults have had more exposure to information on financial challenges in retirement than has any prior age group.  The financial road ahead of them is daunting.  They carry unprecedented levels of post-secondary education debt.  Too often they are unemployed or under employed.  The idea of saving for retirement must seem futile.  This likely translates into placing a low priority on raising a family.  Rapid population aging results.

The right message for young Canadians is innovative thinking and outcomes that create an environment for their successful financial futures.  A potentially new lever for retirement, the pooled registered pension plan (PRPP)[4], could provide more retirement hope for younger adults.  But PRPP innovations are needed.  Much of the thinking to-date around the PRPP appears to be focused on plan structure (e.g. default contribution options), plan administration (e.g. insurance companies, banks, others), and investment fees (e.g. ETFs, mutual funds).  Where’s the innovation?

How about enabling a contribution model that carries forward an increased contribution amount for parents, regardless of their current working status.  Enable parents to contribute more to the PRPP at a later stage in their lives when they may have more financial power.  Give young people the message that they will be able to care for their dependent children today, and, in their middle years they will be able to build a retirement portfolio that will support them later in life.  Sure, this idea needs more vetting to fully appreciate the complexities of implementation.  But let’s send a message to young people in Canada that their future is a priority and it is getting baked into the design of the proposed PRPP.