Mar. 23: BEST OF THE BLOGOSPHERE

March 23, 2026

“Yawning pension gap” seen as a retirement security threat: report

Writing for the Financial Post, Pamela Heaven cites multiple sources of research that show there’s a growing gap between Canadians with pensions, and those without.

She notes that while Canada ranks reasonably well on the Global Pension Index, a “glaring weakness… is the vast number of Canadians without a workplace retirement plan, especially in the private sector.”

According to the C.D. Howe Institute, she continues, there are more than nine million Canadians without a workplace plan, “which research has shown is key to retirement security.” Those numbers are even higher when you count the estimated 2.7 self-employed Canadians, she adds, again citing research from the Institute.

She notes there is a pronounced difference in pension coverage between the private and public sectors.

“Just 37 per cent of private sector employees are covered by some sort of retirement benefit, while 87 per cent of public sector workers are members of a registered pension plan,” she explains, citing research from C.D. Howe. The Institute also notes that private sector employers mostly offer defined contribution (DC) plans, while public sector employers still offer defined benefit (DB) plans.

What’s the difference?

According to Investopedia, “employer-sponsored retirement plans are divided into two major categories: defined benefit plans and defined contribution plans. As the names imply, a (DB) plan—also commonly known as a traditional pension plan—provides a specified payment amount in retirement. A (DC) plan allows employees to contribute and invest in funds and other securities over time to save for retirement.” The income from a DC plan depends on how well the funds have been invested at the time of retirement.

“`Even assuming the broadest definition of private-sector pension coverage, it still means that a very large number of Canadians are not covered by a workplace retirement plan of any kind’,” state the report’s authors, Keith Ambachtsheer, director emeritus of the International Centre for Pension Management at the Rotman School of Management and Common Wealth CEO Alex Mazer,” in the Post article.

Heaven’s article notes that here in Canada, “only about 19 per cent of small and medium-sized businesses with five to 499 employees in Canada provide a pension plan, compared to about 50 percent of American firms of similar size.” These figures come from recent research from the Healthcare of Ontario Pension Plan, the article adds.

Can anything be done to boost the availability of workplace pensions?

“Australia, the United Kingdom, and most recently Quebec require employers to enrol their employees in a workplace pension plan, and one day more jurisdictions in Canada may follow suit, said the report. But right now with the economic environment in such a challenging spot, forcing the benefit would be a hard sell,” Heaven writes.

One idea from the Ambachtsheer and Mazer is a “carrot” approach involving tax credits to help offset the costs of setting up a plan and making employer contributions.

“The Small Employer Retirement Plan Tax Credit would include credits for the expenses of setting up the plan and to cover 50 per cent of employer contributions for workers earning $50,000 a year, and 25 per cent for workers earning $100,000 for up to three years,” the article reports.

“At a cost to Ottawa of up to $2 billion over five years, the credit could expand coverage to another 125,000 to 500,000 Canadians and cut the cost of businesses offering a plan by nearly half,” the article adds.

This is a thought-provoking piece. Retirement income security is much easier to obtain for those with a workplace pension plan.

If your organization doesn’t offer a workplace pension plan, you might want to take a look at the Saskatchewan Pension Plan. SPP has a number of options available for employers who want to deliver a retirement plan for their teams. Full details can be found here.

SPP can scale up for large organizations and can also handle smaller ones, and SPP – and not you – handles the lion’s share of administration work. A pension can help you attract and retain employees, too.

Check out SPP today!

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Financial Post, Investopedia

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