New Tax Credit Could Expand Vital Retirement Coverage for Working Canadians

February 3, 2026 – More than nine million working Canadians lack access to a workplace retirement plan, with the gap most pronounced among employees of small- and mid-sized businesses, according to a new C.D Howe Institute report. As a result, many are left to make inconsistent, often costly, savings decisions that increase the risk of inadequate retirement preparedness.

In “Spreading the Benefits: A Targeted Tax Credit Needed to Expand Retirement Plan Coverage in Canada’s Private Sector,” authors Keith Ambachtsheer and Alex Mazer examine the consequences of limited workplace pension coverage and propose a targeted federal Small Employer Retirement Plan Tax Credit to help reduce cost barriers that prevent small employers from offering retirement plans. The proposed credit would support plan set-up costs and employer contributions, expanding access to workplace retirement savings in a way that is fiscally feasible relative to existing federal retirement expenditures.

“The real risk is not today’s retirees, but tomorrow’s,” said Ambachtsheer, Executive-in-Residence and Director Emeritus of the University of Toronto’s International Centre for Pension Management. “Without workplace plans, younger and middle-class Canadians, already burdened by affordability challenges, are left to navigate retirement saving on their own. They deserve a tool that will help them build long-term wealth.”

The proposed tax credit would lower the cost of offering a retirement plan by nearly half for a typical small employer over the first three years, according to the authors’ estimates. Depending on take-up, the program could expand coverage to between 125,000 and 500,000 additional workers over five years at an estimated cost of $1 billion to $2 billion over that period – a modest cost in the context of federal retirement spending.

The report finds that fewer than one in five small- and mid-sized employers with five to 499 employees offer a retirement plan, compared to the United States, where nearly half of small employers offer a plan. The proposed program could help close this gap while enabling smaller businesses to offer more competitive compensation, attract and retain talent, and improve employee financial well-being.

“Small employers want to help their employees save, but cost and perceived complexity are real barriers,” said Mazer, Co-Founder and CEO of Common Wealth. “A targeted tax credit is a practical next step that would make it much easier for small businesses to offer retirement plans, while helping hundreds of thousands of Canadians build long-term financial security.”

Read the Full Report

For more information, contact: Keith Ambachtsheer, Executive-in-Residence and Director Emeritus, International Centre for Pension Management (ICPM), Rotman School of Management, University of Toronto; Alex Mazer, Co-Founder and CEO, Common Wealth; Raquel Schneider, Communications Officer, C.D. Howe Institute, 647-805-3918, rschneider@cdhowe.org.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

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