The Canadian retirement evolution: Why financial institutions and policymakers must rethink retirement

Despite notable progress in retirement planning, a considerable segment of the Canadian workforce, particularly employees of small and medium-sized enterprises as well as gig economy workers, remains insufficiently served. Data from the Canadian Institute of Actuaries reveals that more than 47% of private sector employees do not have access to employer-sponsored pension schemes, resulting in many individuals lacking both structured guidance and adequate savings for retirement. Furthermore, recent figures from Statistics Canada indicate that almost one in five Canadians participates in gig work, frequently without access to traditional retirement benefits.

In response, financial institutions and retirement service providers are introducing innovative solutions aimed at closing these gaps:

• Pooled registered pension plans (PRPPs): These plans offer an affordable and accessible retirement savings mechanism specifically designed for employees whose employers do not provide pension plans, as well as for self-employed individuals. By consolidating contributions from numerous participants, PRPPs enable professional investment management while significantly reducing administrative complexity. This model allows gig economy workers to make contributions either on a regular basis or as lump-sum payments, with investment choices tailored to individual risk preferences. Nevertheless, uptake of PRPPs remains limited: as of 2025, fewer than 100,000 Canadians have enrolled, owing largely to regulatory challenges and insufficient engagement from employers.
  
  
• Flexible savings products: Prominent Canadian financial institutions have introduced retirement savings accounts modelled on TFSAs and RRSPs that do not impose minimum contribution requirements. These products are particularly advantageous for gig workers and individuals with variable incomes, as they permit individuals to make contributions to be made when it’s financially viable for them. Common features include automated deposit mechanisms and convenient mobile access, thereby enabling users to systematically accumulate retirement savings over time.

Innovative solutions such as PRPPs and flexible savings products demonstrate a commitment to inclusivity and adaptability, but their limited adoption underscores the need for increased awareness, regulatory reform and employer engagement. Moving forward, a collaborative effort among policymakers, financial institutions and employers will be essential to ensure that all Canadians, regardless of their employment status or income variability, have access to reliable and effective retirement savings tools. 

Technology is reshaping the future of retirement

Technology is increasingly playing a crucial role in the transformation of retirement systems. Artificial intelligence, digital platforms and advanced data analytics are making it possible to offer scalable advice, highly personalized experiences and significant improvements in operational efficiency. 

Both in Canada and globally, service providers are enhancing their technological infrastructure, forging strategic outsourcing partnerships and developing integrated, client-centric ecosystems. These efforts are designed to deliver seamless omnichannel experiences and support comprehensive, holistic financial planning, thereby fundamentally transforming the retirement landscape.

The reduction in employer pension schemes and the rise in personal debt have highlighted considerable shortcomings within Canada’s retirement system, causing concern about how Canadians will achieve financial security in their later years. As a result, policymakers are increasingly looking for reforms to retirement savings plans. 

The following measures aim to address the evolving economic realities facing Canadian retirees. 

• Canada Pension Plan (CPP): Enhancements to the CPP, which is the foundation of retirement income, provide monthly payments to contributors. Recent improvements are expected to boost average benefits by about 50% for new retirees, significantly enhancing the long-term adequacy for future generations.
  
  
• Old Age Security (OAS): OAS alongside the Canada Pension Plan offers a universal benefit to all Canadians aged 65 and over. This is further supported by the Guaranteed Income Supplement, which assists low-income seniors. These arrangements offer crucial protection against poverty and provide a steady income throughout retirement. For instance, the Alberta Seniors Financial Assistance Program supported more than 75,000 seniors in 2023, providing targeted help with health and housing costs.
  
  
• Registered retirement savings plans (RRSPs): RRSPs are an essential component of personal retirement savings in Canada, providing tax advantages to help Canadians accumulate funds for retirement. Retirees have the option to use their RRSP savings to purchase an annuity from a life insurance provider, guaranteeing a stream of income either for a fixed period or for life, depending on the terms of the contract. Alternatively, contributions can be transferred to a registered retirement income fund (RRIF), allowing for regular, tax-sheltered withdrawals to maintain income during retirement.
  
  
• Pooled registered pension plan (PRPP): For those who are self-employed or work in small businesses, these plans now offer accessible and portable pension solutions, helping to extend coverage beyond traditional employment sectors.
  
  The government also gives priority to financial literacy, with national strategies and educational programs enabling Canadians to make well-informed decisions regarding retirement savings and investments. Collaborative efforts between the government, financial institutions and community organizations help retirees navigate the complexities of retirement planning and access support for both financial and general wellbeing.

These initiatives mark significant progress towards improving retirement security. Continued reform is necessary to fully address existing gaps and provide robust support for all Canadian workers.

The human factor

Retirement represents far more than a financial milestone. It’s a profoundly personal life transition, shaped by each individual’s aspirations, experiences and distinct circumstances. Recognizing this complexity, Canada’s financial institutions and policymakers must look beyond one-size-fits-all solutions and embrace a holistic, human-centred approach — one that upholds the dignity, autonomy and agency of all older Canadians.

Understanding the diverse realities of retirement

Retirement experiences vary widely across demographics, influenced by factors such as experiences, health status, cultural background, career trajectory and social support networks. For example, Statistics Canada reports that nearly 25% of Canadians aged 65 and older continue to work, driven by financial necessity, personal fulfillment or a desire to stay socially connected. This highlights the need for flexible retirement models that accommodate phased or partial retirement rather than abrupt cessation of work.

Policy implications: enabling choice and inclusion

Policymakers must foster an environment where diverse retirement pathways are viable and respected. This includes revisiting eligibility ages for public pensions, supporting lifelong learning and reskilling programs, and enhancing health care and social services tailored to older populations.

Inclusive policies should also address systemic inequities that disproportionately affect certain groups, including Indigenous Peoples, racially marginalized communities and women, who often face lower lifetime earnings and savings.

Designing human-centred financial products and services

Financial institutions have a pivotal role in supporting this holistic vision. Products and services must be tailored to the evolving needs of older adults, offering flexibility, transparency and personalized guidance. For instance, retirement income solutions that combine guaranteed income streams with options for liquidity and legacy planning can provide both security and autonomy.

Digital tools should be designed with accessibility in mind, recognizing that older adults may face barriers such as limited digital literacy or sensory impairments. Incorporating human support, such as financial coaching and community-based advisory services, can effectively bridge these gaps.

Beyond financial security: the broader dimensions of wellbeing

While financial preparedness remains a cornerstone of retirement planning, it is only one dimension of wellbeing. Emotional health, social engagement, physical wellness and purposeful activity are equally critical. Research from the Canadian Institute for Advanced Research (CIFAR) underscores that retirees who maintain strong social ties and engage in meaningful activities report higher life satisfaction and better health outcomes.

Embracing a new paradigm

Redefining retirement through a human-centred lens calls for collaboration across sectors — financial services, health care, social policy and community organizations. By prioritizing the lived experiences and aspirations of older Canadians, we can build a retirement landscape that is not only financially sustainable but also enriching, inclusive and empowering.

To address the changing needs of today’s retiree clients, financial services providers and policymakers must implement strategies that not only maintain but also improve financial security, offer personalized support and ensure services remain accessible for this increasingly discerning and influential group.

Financial institution strategies:

• Personalize retirement products and services: Deploy AI and sophisticated data analytics to develop solutions tailored to each client’s risk tolerance, financial situation and retirement objectives. For example, predictive modelling can be employed to recommend optimal savings levels or portfolio allocations, and personalized guidance can be delivered through digital tools or financial coaches.
  
  
• Modernize risk models: Revise traditional frameworks to take account of longevity risk, inflation and evolving economic conditions. Include scenario analysis and stress testing so clients learn how their retirement income might be influenced by longer lifespans or market fluctuations.
  
  
• Promote product innovation: Create flexible, hybrid retirement savings vehicles that incorporate features such as automatic contributions and adjustable withdrawal options. For underserved markets and workers in the gig economy, provide portable plans that follow individuals as they change jobs and allow for variable contribution amounts depending on fluctuating income. For instance, develop a retirement account that accepts micro-deposits from numerous employers and permits withdrawals for emergency needs without penalties.
  
  
• Expand AI-enabled digital platforms and tools: Offer real-time budgeting support, retirement income projections and scenario planning. These tools help clients visualize their financial futures, make informed decisions and enhance financial literacy, for example by simulating the effects of increased savings or early retirement.
  
  
• Encourage cross-sector partnerships: Working together with health care providers, insurance firms, technology companies and community organizations to deliver integrated retirement solutions. Examples include bundled offerings that combine financial planning, health monitoring and insurance protection, or community-based programs that address social engagement alongside wealth management.
  
  
• Prioritize data privacy and cybersecurity: Implement robust safeguards to protect sensitive client information in all AI-powered services. Ensure compliance with privacy regulations and educate clients about how their data is used and protected.

Policymaker strategies:

• Reassess and update retirement policies: Update retirement policies to reflect shifting demographic realities by expanding access to affordable, portable pension schemes such as PRPPs that specifically target small business employees and gig workers. Set a measurable goal to increase participation of these groups.
  
  
• Launch a nationwide digital financial literacy campaign: Roll out a coordinated campaign using digital platforms to reach a set target of retirees within a given period. 
  
  
• Encourage multi-stakeholder collaboration for holistic retirement support: Establish regular forums and working groups that include federal and provincial governments, financial institutions, technology companies, health care providers and community organizations. The aim is to codesign and implement comprehensive retirement solutions with a target of launching at least two integrated pilot projects addressing retirees’ financial, social, and health needs.

Conclusion: rethinking today’s retirement strategies

Reimagining existing retirement strategies is essential not only for individuals but also for Canada’s long-term socioeconomic prosperity. The approaches we’ve outlined address the dynamic and rapidly changing retirement landscape. By prioritizing innovation, inclusivity and cross-sector collaboration, financial institutions and policymakers can build a future-forward and equitable retirement system, one that provides Canadian retirees with the security, confidence and dignity they deserve as they transition into later stages of life.

Three takeaways

Summary

Canada’s retirement landscape is undergoing a profound shift. Rising debt, illiquid assets, and longer lifespans are challenging traditional models, while a historic wealth transfer creates new opportunities. Financial institutions and policymakers must act now by developing flexible products, modern risk practices, and integrated policies that secure sustainable retirement income. Collaboration and innovation will be key to ensuring retirees thrive and Canada’s economy remains resilient.

About Susan Pimento

Susan Pimento brings deep experience to the conversation on modern retirement strategies in Canada. With over 30 years of senior leadership in banking and frontline lending — including serving as Vice President at a Schedule I bank — she now advises financial institutions and policymakers on how to modernize retirement solutions and engage Canada’s fastest-growing, wealthiest demographic: adults 55+.

As the founder of Retire with Equity, she provides retirement intelligence and research that influence how Canada’s financial sector addresses its fastest-growing demographic. In Your Retirement Reset: How to Convert Home Equity into Financial Security (ECW Press, September 2026), she explores how home equity can be strategically converted into retirement income — challenging an industry that has long overlooked Canadians’ largest asset and arguing it should be part of every retirement conversation and product development.

Contributors:

• Susan Pimento, Co-author and author of Your Retirement Reset: How to Convert Home Equity into Financial Security (ECW Press, September 2026)
• Priya Datta, Senior Consultant - Technology Consulting
• Danielle Delle Monache, Consultant - Business Consulting