Launching a Workplace Retirement Plan: Where to Begin and What to Watch
The decision to offer a workplace retirement plan can be easier than deciding what that plan should look like.
An organization may begin with a straightforward goal: help employees save while strengthening its overall benefits package. That quickly leads to questions about plan structure, employer contributions, investment options, administration, employee participation and long-term cost.
Benefits leaders also have to consider how retirement itself is changing. Employees are living longer, working at different ages and taking greater responsibility for complex financial decisions. Regulators are placing more emphasis on plan governance and member outcomes. A retirement program designed today needs to work well beyond its launch date.
Workplace retirement coverage remains far from universal
Nearly 7.4 million Canadians were active members of a registered pension plan in 2024, according to the latest Statistics Canada figures. Despite the growth in membership, registered pension plans covered only 37.6% of paid workers.
Ontario recorded the largest provincial increase in membership, adding approximately 37,800 members during the year. Statistics Canada
These figures count registered pension plans rather than every type of workplace savings arrangement. Even so, they demonstrate the opportunity employers have to play a meaningful role in retirement security.
For organizations introducing their first plan, the challenge is to create something employees will participate in, understand and value
and that the organization can sustain.
Begin with the outcome
Before comparing providers or investment menus, decide what the organization wants the plan to accomplish.
Possible objectives include:
Helping employees build meaningful retirement income
Encouraging consistent long-term saving
Sharing responsibility through employer contributions
Supporting employees who lack access to another workplace plan
Strengthening the organization’s total rewards program
Helping employees approach retirement with greater confidence
Supporting longer-term workforce and succession planning
These objectives influence almost every design decision that follows. A plan intended primarily to encourage saving may look different from one designed to provide a substantial portion of an employee’s future retirement income. A clear purpose also gives leaders a basis for evaluating the plan after it launches.
Choose the right structure
Canadian employers have several possible retirement and savings arrangements. Common options include a group Registered Retirement Savings Plan, an RRSP combined with a Deferred Profit Sharing Plan, and a registered defined contribution pension plan. Other pension structures may also be available depending on the organization and jurisdiction.
Each option has different implications for employer contributions, employee access to funds, administration, regulatory oversight, tax reporting and portability.
A group RRSP may offer relative simplicity and familiar individual accounts. A defined contribution pension plan provides a more formal pension structure, including locking-in rules, but brings additional regulatory and governance responsibilities. An RRSP-DPSP arrangement can separate employee and employer contributions while introducing its own plan rules.
The best choice depends on the organization’s goals, workforce and capacity to administer the program. Organizations with employees in multiple provinces should also confirm which requirements apply in each jurisdiction.
Design contributions around behaviour as well as budget
Contribution design determines both organizational cost and employee outcomes.
Employers need to decide whether they will make a base contribution, match employee contributions or combine the two. They must also establish eligibility rules, waiting periods and contribution limits.
A matching formula can encourage participation, although employees who cannot afford to contribute enough may miss some or all of the employer contribution. A base employer contribution offers broader access. Some organizations combine a base amount with an additional match.
The design should reflect how employees actually behave. A generous maximum match has limited value when participation is low or the enrolment process is difficult.
Automatic features are gaining attention for this reason. Where legislation and the plan structure permit, automatic enrolment, default contribution rates and carefully selected default investments can reduce the number of decisions employees must make at the outset.
Make the default option a deliberate decision
A long investment menu may appear to offer flexibility, but it can also make enrolment harder.
Many employees have limited interest or confidence in selecting investments. Some postpone the decision, choose based on recent performance or remain in the default option for years.
The default investment therefore deserves the same care as the rest of the plan. Benefits leaders should understand its diversification, fees, risk profile and suitability for employees at different stages of their careers. Target-date funds are one approach because their investment mix changes as the member approaches an expected retirement date, although every option requires ongoing review.
Plan design can support employees without expecting each person to become an investment specialist.
Treat communication as part of the plan
Enrolment materials are only the beginning.
Employees need to understand how much the employer contributes, what actions they need to take, how investment fees affect savings and where to find help. They also need periodic reminders to review contribution rates, beneficiaries and retirement projections.
The communication gap is significant. FSRA has reported that eight in ten Ontario respondents had not fully developed a retirement plan, while half of pension members did not read their annual pension statement. Financial Services Regulatory Authority of Ontario
A successful launch should include plain-language education, opportunities to ask questions and follow-up communication after employees have had time to use the plan.
Retirement trends benefits leaders should watch
Governance expectations are becoming more detailed
The Canadian Association of Pension Supervisory Authorities updated its capital accumulation plan guidance in 2024. The guidance addresses the responsibilities of plan sponsors, administrators and service providers, along with member communication, investment options, fees, automatic features, recordkeeping and retirement-income considerations.
Recommended system and process changes were expected to be implemented by January 1, 2026. CAPSA
These guidelines can be relevant to defined contribution pensions, group RRSPs, DPSPs and other arrangements that allow members to select among investment options. Employers should understand that appointing a provider does not eliminate the need for internal oversight.
Attention is shifting from participation to outcomes
Enrolment is an important measure, but it does not reveal whether employees are saving enough or progressing toward a realistic retirement income.
Benefits leaders are increasingly examining contribution levels, participation by employee group, investment behaviour, fees and projected outcomes. This creates a more meaningful picture of whether the plan is fulfilling its purpose.
Retirement income is entering the conversation earlier
Accumulating savings is only one part of retirement planning. Employees eventually have to turn those savings into income while managing longevity, inflation, investment risk and uncertain expenses.
Plan sponsors may face growing demand for education and support as employees approach retirement. CAPSA’s updated guidance also recognizes the importance of communication during the decumulation stage, when members begin drawing income from their savings.
Retirement readiness will affect workforce planning
Employees who feel financially unprepared may work longer than expected. That can affect succession planning, career progression, workforce costs and the timing of knowledge transfer.
In a 2026 national survey commissioned by CAAT Pension Plan, 49% of respondents worried about outliving their savings and 60% worried that inflation would erode their retirement income. CAAT Pension Plan
Retirement benefits therefore have implications beyond the benefits budget. They can influence how confidently employees make major career and retirement decisions.
Build for the years after launch
Launching a workplace retirement plan is an important step but its long-term value will depend on what happens next.
Benefits leaders should establish a regular process for reviewing participation, contributions, fees, investment options, provider performance, member communication and emerging regulatory expectations. Employee feedback can reveal where the plan is confusing or where additional guidance would help.
A well-designed workplace retirement plan gives employees a practical way to prepare for the future while giving the organization a clearer role in supporting retirement readiness.
Aria Benefits can help employers consider their retirement plan options, clarify their objectives and build an approach suited to their people, budget and long-term priorities.
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