The future of retirement: Canada’s retirement crossroad

Rethinking retirement

Spurred by the 2008 financial crisis, the large majority of private sector employers have now adopted defined contribution (DC) plans, shifting all the risk for preparing for retirement to their employees. Over time, the plans’ limitations became evident.

People were following conventional wisdom, saving consistently throughout their careers, doing everything they were told, but still falling short when it comes to income in retirement. The gap revealed a fundamental flaw in the system’s design.

That realization reframed our understanding of retirement success. It’s not simply a matter of savings accumulated, but whether those savings deliver stability, confidence, and peace of mind.

The longevity challenge

Nearly half of Canadians (49%) worry about outliving their retirement savings, while almost 60% fear inflation eroding their purchasing power, and 57% are apprehensive about rising healthcare costs.¹ These are all valid concerns. Retirement models based on averages, like life expectancy or expected returns, cannot reflect how most individuals actually live, work, or retire.

Most people also have limited financial knowledge and lack the confidence to manage their retirement planning alone.

The implications go beyond personal finance. This is a challenge that directly affects workforce health and business performance. A well-designed retirement plan should improve workforce planning, reduce employee financial stress, and build long-term resilience.

Canadian perspectives

Reimagining what’s possible

Retirement security should not be reserved for a select few. Today, about 27% of Canadian employees are participating in a defined benefit (DB) pension open to new members. However, 80% of public sector employees participate in an open DB pension plan, while only 10% of private sector employees have the same privilege.²

The team at CAAT believe it’s time to change all that. Canada has a real opportunity to lead the world in retirement innovation by expanding access beyond the public sector. That means designing inclusive plans, pooling risk effectively, and grounding every solution in how people actually work and retire in the present.

Meeting multigenerational needs

There are four generations represented in today’s workforce, each at a different lifecycle stage, each with unique priorities.

And yet, their workplace retirement plan needs are surprisingly consistent. All they want is clarity, simplicity, flexibility, and trust.

People don’t need more variation. They need a single, adaptable design that provides a stable foundation for all employees, no matter where they are in life.

Simplifying retirement income

Complexity is a major barrier. When plans are filled with jargon and require complex decisions, employees often disengage. It’s not because they’re checked out. It’s because they feel unqualified to make high-stakes financial choices.

No one wants to spend their whole career working hard only to become their own financial manager in retirement. People want something simpler, like predictable, lifetime retirement income. It’s a familiar concept, like a paycheque. It appears in their bank account every month, without fail.

By contrast, asking someone to figure out how to draw down their savings over multiple decades can be downright overwhelming.

Borrowing from global innovation

Canada doesn’t need to start from scratch. Other countries have already implemented successful models, like the U.K.’s master trust system, which pools market and longevity risk across employers to improve efficiency and outcomes. In North America, we’re also seeing plan designs that integrate behavioural insights to simplify decision-making and improve participation.

The opportunity lies in bringing these elements together. By blending proven international structures with local realities, we can build a retirement model that meets the needs of both individuals and employers.