Canada's Retirement Savings Gap: What It Means for Your Future

Key impact: If you work for a small or medium-sized business, you likely don't have a workplace retirement plan. That could leave you financially insecure in retirement. But new low-cost options and proposed tax credits may soon make it easier for your employer to help you save.

Over nine million Canadian workers lack access to a workplace retirement plan. That's a huge number. Fewer than one in five employers with 5 to 499 employees offer retirement benefits. In the United States, nearly half do.

This gap is hurting Canadians. Canada ranked only 16th out of 52 countries in the 2025 Global Pension Index. The main reason? Lack of workplace coverage.

Without a workplace plan, many retirees rely on personal savings. But personal savings can be inconsistent. That means more financial stress later in life.

What's changing?

Two big developments could help:

Sun Life's new workplace savings plan – This plan targets small and medium-sized businesses. It offers RRSP and TFSA options. There are no setup fees or minimums. That makes it easier for small businesses to offer retirement benefits.
Proposed tax credit from the C.D. Howe Institute – This would encourage more small businesses to offer retirement plans. The proposal includes:
- Up to $5,000 per year for three years for startup costs
- Up to $1,000 annually per eligible employee earning under $150,000

These changes could help more Canadians save for retirement through their jobs.

Who is affected?

Workers at small and medium-sized businesses – You are most affected. Over 80% of these employers don't offer retirement plans.
Self-employed Canadians – You also lack workplace savings options.
Part-time or contract workers – You often miss out on benefits too.
Anyone without a workplace pension – You need to rely on personal savings and government programs like CPP and OAS.

What you should do

Ask your employer about new low-cost plans – Sun Life's plan has no setup fees or minimums. Your boss might not know about it yet.
Advocate for a workplace plan – Talk to your HR department or manager. Mention the proposed tax credits. They could make it affordable for your company to offer a plan.
Open a personal RRSP or TFSA – If you don't have workplace savings, start your own. Even small amounts add up over time.
Check your CPP and OAS estimates – Government programs help, but they won't cover all your retirement needs. Know what you'll get.
Stay informed – Watch for updates on the proposed tax credit. If it passes, more employers may offer plans.

Bottom line

Over nine million Canadians lack workplace retirement plans. That's a serious problem. But new low-cost options from Sun Life and proposed tax credits could change things. If you work for a small or medium-sized business, ask your employer about these options. If you're self-employed, start your own savings. The sooner you act, the more secure your retirement will be.

Source: The Globe and Mail