The number of Canadians with workplace pensions has been on the rise, with more than two-thirds of those members covered by defined-benefit plans, according to a new report by Statistics Canada.
The increase in pension membership signals a shift as companies offer more stable retirement benefits amid rising concerns over market volatility and retirement security.
The report shows that membership in registered pension plans rose to 7.2 million Canadians in 2023, a 4.2-per-cent increase from the previous year. Of those, 4.9 million were enrolled in a defined-benefit plan, up 4.2 per cent over the same period.
Defined-benefit plans, which promise a guaranteed income in retirement based on factors such as salary and years of service, are becoming more attractive at a time when many Canadians are feeling financially unprepared for retirement, said Janice Holman, a principal at actuary consulting firm Eckler.
“The more volatile markets are, the more Canadians will want this,” Ms. Holman said. “They don’t have the appetite for the risk of the markets any more.”
Overall, it’s been harder for workers to access defined-benefit coverage because of the decline of unions, which typically advocate for defined-benefit plans. Job market trends show increased movement toward industries where pensions are uncommon. Much of the rise in defined-benefit membership has come from the public sector’s expansion in recent years, Ms. Holman said.
Public-sector employment rose 3 per cent in 2023, according to Statistics Canada in its report released Tuesday, and many of those jobs come with defined-benefit plans as a standard benefit. Several large plans, including the Colleges of Applied Arts and Technology (CAAT) pension plan and the Healthcare of Ontario Pension Plan (HOOPP), have also expanded access to more employers in recent years.
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Many public sector jobs are also part of unions. “Unions have fought hard to keep defined-benefit plans for members,” Ms. Holman said.
While the private sector did see a rise in defined-benefit pension plan membership, increasing 2.8 per cent from 2022 to 2023, defined-contribution plans still outpaced those programs, rising 5.5 per cent.
Nearly two-thirds of Canadians said that amid global uncertainty, workplace pensions are of greater value for individual contributors, according to HOOPP’s annual retirement survey released earlier this month. The same report found nearly 90 per cent of Canadians said they would be willing to contribute 9 per cent of their salary in exchange for guaranteed lifetime income through a defined-benefit pension.
Knowing exactly what you’ll get in retirement can ease much of the financial anxiety people face, especially for those nearing or in retirement. “The markets cause a lot of anxiety and if you are on a fixed income and past your working years, knowing you have that guaranteed income is really reassuring,” Ms. Holman said.
However, not all defined-benefit pension plans are created equal, Ms. Holman said. Some are more generous than others, such as those indexed for inflation, but many companies, especially private employers, usually don’t offer inflation adjustments.
The Statistics Canada report also found that women’s share of active membership in registered pension plans held steady at 51.3 per cent in 2023, and accounted for 56 per cent of defined-benefit membership in 2023.
But a pension gap still exists for women, Ms. Holman said. Women tend to earn less over their careers and are more likely to take time away from work, affecting their retirement income.
A 2024 report from Ontario’s Pay Equity Office shows a pension gap of 17 per cent, meaning that for every dollar of retirement income men receive, women get only 83 cents.
Even as defined-benefit plans offer more security to those who have them, Ms. Holman worries the broader trend is creating an uneven playing field. “There’s an increasing gap of haves and have-nots,” she said. Canadians without access to workplace pensions must rely more heavily on personal savings and investments, which is becoming harder as life expectancy increases and the cost of living rises.
She expects that interest in public-sector jobs, where defined-benefit plans are more common, will continue to grow, particularly among younger Canadians facing steep housing costs and economic uncertainty.
