Half of retirement income now depends on private savings

Canada’s affordability crisis is leaving many households unable to save for retirement, while outdated public policies no longer reflect current realities.  

The Securities and Investment Management Association (SIMA) has released an action plan that calls for reform to strengthen Canada’s retirement savings framework and close gaps in the system. 

Andy Mitchell, SIMA’s president and CEO, said “Our plan lays out achievable, evidence-based strategies that will boost retirement security, enhance flexibility, reduce pressure on public programs, and support long-term economic growth.”  

He added that Canada needs to evolve and modernize its policies to close gaps in the system so more Canadians can take advantage of voluntary private savings options to finance their retirement. 

The report Canada’s Retirement Puzzle: Why Private Savings Must be at the Centre of Reform outlines how today’s income system—made up of Old Age Security, Guaranteed Income Supplement, Canada Pension Plan, Quebec Pension Plan, workplace pensions, and private registered or non-registered savings—has shifted.  

Nearly half of retirement income for Canadians aged 65 and older now comes from private savings. 

But inflation, high housing costs, stagnant wages, and household debt have eroded the ability to save.  

SIMA’s report highlights that without policy changes, the gap between retirement needs and actual savings will widen.  

It adds that the framework guiding retirement policies is still based on decades-old assumptions about retirement age, lifespan, and workplace support. 

To address these challenges, SIMA proposes a three-pronged retirement savings action plan: 

• Modernize retirement rules to reflect longer lives 

1. Raise the RRSP-to-RRIF conversion age from 71 to 73. 

2. Allow Canadians with RRIFs under $200,000 to opt out of mandatory withdrawals. 

• Level the playing field for all savers 

1. Eliminate GST/HST on investment fund management fees. 

2. Expand access to financial advice through hybrid models and clearer guidance on permissible forms of advice. 

• Make saving the default 

• Introduce automatic enrolment, deductions, and contribution escalation in workplace group RRSPs. 

• Integrate private savings education into national financial literacy programs and school curricula. 

SIMA states that Canada must act now to modernize the system, safeguard retirement security, and reduce fiscal pressure on public programs while building a more resilient economy.