Workplace pension income will add $24.5 billion to federal coffers and $16.8 billion to the provinces in 2025, according to a new report by the Canadian Centre for Policy Alternatives.
It found pension income for seniors across Canada is adding $16.9 billion in additional income tax revenue and $2.3 billion in commodity tax revenue, while also saving $1.2 billion in old age security and $3.2 billion in guaranteed income support payments.
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The report noted a $1 increase in pension income results in governments recouping 41 cents in tax revenue and saved seniors’ supports. In 2023 and 2024, every dollar contributed by governments to their own public sector workers’ pension plans returned $2.38.
However, it also noted the landscape for retirement services has significantly changed in Canada. In the 1970s, about 90 per cent of private sector workers with a workplace pension plan in Canada were enrolled in a defined benefit plan. Today, that number has decreased to only 40 per cent. In addition, just 6.9 million working Canadians — 34 per cent of the country’s workforce — are covered by some form of registered pension plan.
In a press release, David Macdonald, senior economist at the CCPA, said the decrease in Canadian workers with a DB plan isn’t just bad for their retirement security, “but it’s also bad for the economy.”
Read: Average Canadian DB pension plan returns 5.1% in Q3 2024: report