A new report finds that fewer than half of non-retired Canadians currently have a workplace pension plan. IG Wealth Management’s annual retirement study reveals a generational shift in how people in Canada are preparing for retirement: just 48% of non-retirees report having a workplace pension, whether a defined-benefit or defined-contribution plan.
“The decline of defined benefit and contribution pension plans has fundamentally shifted the burden of retirement planning on to individuals in recent years,” said Christine Van Cauwenberghe, head of financial planning at IG Wealth Management, in a news release. That shift means more Canadians are responsible for building and converting their own savings into reliable retirement income.
As pensions disappear, many Canadians lack a retirement plan
Employers began phasing out defined benefit pension plans about 30 years ago, the study notes, leaving modern workers with less guaranteed income than previous generations enjoyed. Although many Canadians recognize that workplace pensions are less common, a large portion still lacks clarity about what they need to save and how to turn savings into an ongoing retirement income stream.
The survey found only 11% of non-retired Canadians say they know how much annual income they will need in retirement, while roughly half say they simply do not know at all. Only about one-third said they currently have both a retirement plan and dedicated retirement savings. At the same time, roughly one-quarter of employer pension holders didn’t know the details of their plan, including whether it is a defined-benefit or defined-contribution arrangement.
Canadians remain unprepared for longevity and market risks
The study also highlights critical knowledge gaps at a time when Canadians are increasingly dependent on personal savings for retirement income. Only four in 10 respondents indicated they understand government benefits such as Old Age Security, registered retirement income funds (RRIFs), or the tax implications of drawing retirement income.
Few respondents appear to have properly planned for longevity-related risks: inflation, rising healthcare costs and market downturns. Around 67% of those surveyed have not stress-tested their retirement plan against potential major economic or financial shocks, leaving many households exposed to the risk of outliving their savings or being hard hit by market declines near or after retirement.
The online survey of 1,350 Canadian adults was conducted by Pollara Strategic Insights on behalf of IG Wealth Management between Jan. 9 and 14. The Canadian Research Insights Council notes that online surveys do not use random probability sampling and therefore cannot be assigned a standard margin of error.
Tax-free savings are outpacing RRSP contributions
Recent data shows Canadians have been favoring tax-free savings vehicles over traditional registered retirement savings plans (RRSPs). Statistics Canada reported that in 2023, 11.3 million tax filers made contributions to either an RRSP or a tax-free savings account (TFSA). Of those contributors, 3.8 million put money only into an RRSP, five million contributed only to a TFSA, and about 2.5 million used both accounts.
The growing preference for TFSAs reflects changing priorities around tax treatment, flexibility, and short- to medium-term savings goals. While TFSAs offer tax-free withdrawals and can be a powerful tool for accumulating wealth, they are not a direct substitute for structured retirement income solutions; converting savings into a dependable income stream in retirement still requires planning, whether through RRSPs, RRIFs, annuities, or other strategies.
With workplace pensions declining, knowledge gaps about retirement income sources and limited stress-testing of retirement plans, many Canadians face a greater responsibility to understand retirement planning basics and to take concrete steps to protect their financial futures. Improving financial literacy, reviewing plan details with employers, and seeking professional guidance where needed can help individuals build a resilient retirement strategy that accounts for longevity, inflation, health-care costs and market volatility.
Key takeaways
- Less than half (48%) of non-retirees in Canada reported having a workplace pension plan.
- Only 11% of non-retired Canadians feel they know how much annual income they will need in retirement; about half say they do not know at all.
- Only one-third have a retirement plan and savings; roughly one-quarter of pension holders lack clarity about their plan type.
- Many Canadians lack understanding of key retirement concepts (OAS, RRIFs, tax rules) and have not stress-tested plans for longevity, inflation or market downturns.
- In 2023, contributions to TFSAs outnumbered RRSP-only contributions, signaling a shift toward tax-free savings vehicles.