A Year of Retirement Innovations for Today’s Generations

Reflecting on the past year, I feel extremely grateful for the shared commitment and ingenuity of my team and my network. Among members, business leaders, trade associations, researchers, policy experts, plan providers and the CAAT team – with each year, our dedication grows deeper to ensure every generation can retire with confidence.

Businesses are seeing that investing in their employees’ financial wellness is an investment in their own success. Alleviating the financial anxiety employees feel about the future improves engagement and fosters a sense of security that binds a productive workplace.

According to the National Payroll Institute, over half of employees report lower productivity due to financial worries, amounting to $53.9 billion in lost productivity each year. This issue intensifies as more Canadians face anxiety about whether they’re saving enough for retirement. More than 8 out of 10 of near-retiree households attribute anxiety about their retirement savings to rising costs.

Six out of 10 Canadians overall report daily financial stress, and about 7 in 10 Millennials are specifically concerned about running out of money in retirement.

Longer lifespans, rising costs and uncertainty about the future are worrying many Canadians who will be living longer than past generations. Without focused attention, this could have a costly intergenerational impact on our government programs, communities and social identity.

With 1 in 5 working Canadians now nearing retirement, it’s in everyone's interest to expand access to more efficient, valuable ways to save and convert savings into lifetime income.

Canada’s demographic turnover is not unique. Globally, the retirement industry is innovating to strengthen the safety net for ageing workers and to nudge better savings practices.

From Australia’s system that offers Variable Payment Life Annuities (VPLAs) to the UK’s automatic enrolment which has increased pension coverage from 33% to 75% in 10 years, plan providers are accounting for behavioural data that show most people need help saving. They want simple, efficient plans that help them build up and draw down their funds.

CAAT members have echoed this and supported instruments to save more with a plan they trust. In Canada this year, we launched GROWTHplus, a voluntary investment savings account that allows members to grow tax-sheltered savings (for example, from LIRAs and RRSPs) and benefit from the Plan’s investment returns. For employers, the optional vehicle improves total rewards at no additional cost, since members can participate without additional employer contributions.

These designs reflect the progress made to adapt to demographic, business, and behavioural trends – meeting individuals where they are while minimizing friction and risk for employers.

In 2023, the spending generated from DB pension payments added $17.4 billion in government revenue, including federal, provincial, and municipal taxes. In Canada, it drove $60.9 billion in economic output and contributed $34.6 billion to Ontario’s GDP.

As we look to the year ahead, the workplace remains a significant source of value, where employee health, business growth, social good, and economic impact intersect. Businesses and their employees have a shared interest in efficient, secure workplace retirement plans, both as a long-term financial investment and a lasting force for economic and social stability.

Thank you to all who have voiced their support to improve retirement income security in Canada. I look forward to more discussions with you in 2025 and continuing to partner to make tomorrow better, starting today.

Happy holidays. Stay safe, stay well, and see you next year.

Derek