Globe Advisor's Pensions Unpacked series examined how workplace pensions fit into broader retirement plans, including complex topics such as pension buybacks and survivor benefits.The Globe and Mail
There’s a classic metaphor in the investment industry that retirement planning is a three-legged stool, requiring three essential sources to secure a stable retirement income. Those include government-funded retirement programs, such as the Canada Pension Plan and Old Age Security; personal savings, such as registered retirement savings plans and tax-free savings accounts; and employer-sponsored pension plans.
In recent years, greater attention has gone toward personal savings as only 37.5 per cent of Canadians are covered by a workplace pension plan, according to the latest Statistics Canada data. Even then, unlike CPP benefits, many workplace pensions – except the increasingly rare defined-benefit (DB) plans – don’t come with guaranteed income.
For clients saving for retirement without the benefit of a workplace pension plan, that leaves a lot of work for the CPP and their personal savings. For those who do have workplace pensions, they’re an important piece of the retirement income puzzle. As clients change jobs more frequently, navigating pensions becomes more complex.
Globe Advisor decided to dig into some of that complexity in a special series, Pensions Unpacked, which was published early this year. Here are 10 articles from the series that readers engaged with most:
How workplace pensions fit into the retirement income puzzle
For most Canadians, CPP benefits alone aren’t enough to retire comfortably. The maximum annual CPP pension is about $17,200 (before taxes) for someone turning 65 in 2025, and only about 6 per cent of Canadians qualify for the maximum. Personal savings may also not help many retirees make ends meet. That leaves workplace-sponsored pensions as a critical piece of the retirement income puzzle.
Don’t have a workplace pension? Here are four retirement income options
With most Canadians unable to rely on a workplace pension to fund their retirement, advisors are being tasked with creating pension-like incomes for clients in their retirement. Some options for retirees who don’t have a pension but are looking for greater income stability include: tontines, segregated funds, individual pension plans for business owners, and tapping into home equity via reverse mortgages.
How to determine the appropriate survivor benefits payout on DB pensions
Clients who have DB pension plans tend to be well aware of their annual payout when they retire. But survivor benefits – the payout for a spouse when the pensioner passes away – are not as well understood. Employees are often given a few options of percentage amounts for monthly survivor benefits. A default tends to be for the surviving spouse to receive 50 per cent of the pension benefit.
How pensions fit into retirement income, tax and investment planning
Jason Evans, financial planner at Evans Retirement Planning in Winnipeg, sees a DB pension plan as a solid foundation on which to start income planning. He usually assigns it to cover as many core expenses as possible, with other savings allocated toward discretionary spending. In contrast, he says the CPP and OAS are the foundations for someone with a defined-contribution pension plan.
What Canadians with DB plans should consider before proceeding with pension buybacks
Clients who took short breaks from their careers or who neglected to join their company’s DB pension plan when eligible may opt to “buy back” into their pensions to boost the amount of guaranteed income in retirement. Usually, employers present buyback opportunities over a specific time period. DB pension plans will have the employer match the employee’s contributions or, in certain cases, exceed them.
How pension bridge benefits affect withdrawals from other retirement income sources
Bridge benefits play a big role in DB pensions for those retiring before age 65. Bridge benefits are additional payments on top of the client’s regular pension amount. As the name implies, the benefit is intended to “bridge” the gap from when someone retires and starts to receive their pension to when they may rely on CPP and OAS.
Why multiple pension plans can mean multiple tax challenges
Canadians with multiple workplace pensions may face myriad tax challenges if they don’t plan their withdrawal strategies ahead of time. One challenge for advisors when calculating clients’ monthly spending needs is how pensions pay out, says Cody Weber, owner and certified financial planner at Basic Financial Services Inc. in St. Catharines, Ont. For example, one pension may pay out every month, while another may have a more hybrid approach, paying out less consistently.
Lost pensions are a real problem. Here’s how to find them – and make sure they’re never lost again
While it might seem unthinkable that someone could forget about their pension plan, it happens a lot. Frequent job changes, relocations and a lack of financial guidance can easily lead to misplaced retirement savings. In Ontario alone, an estimated 200,000 pension plan members have left a staggering $3.6-billion on the table, according to a December, 2024, report from the National Institute on Ageing. Helping clients recover these forgotten pensions can boost their retirement security significantly.
How to diversify retirement income in case a DB pension plan is at risk
At first glance, a DB pension plan is a rock-solid foundation for retirement, providing guaranteed income for life that may be indexed to inflation. However, even after Bill C-228 gave “super priority” to the unfunded pension liability of federally or provincially registered DB plans, some clients may still worry about the possibility of losing their pension. How can advisors shore up retirement income planning to ease those concerns?
How a workplace pension fits into a broader retirement plan
Canadians who take advantage of employer-sponsored pension plans are generally a step ahead in their retirement planning compared with those who don’t have a workplace pension plan or choose not to participate in one. However, those with workplace pensions generally still need to save personally – via RRSPs, TFSAs and non-registered accounts – to meet their retirement income target.