Employers understand how offering employee benefits, especially retirement benefits, can help support their employees who are also facing the negative impact of inflation and economic uncertainty. Employers are worried about their employees’ mental health (84%) and financial stress from economic instability (84%), and almost all agree that employees who are less financially stressed experience better mental health (94%) and wellness (94%). The majority (86%) also believe it is important for businesses to offer benefits that reduce employees’ financial stress and see offering retirement benefits as a cost-effective way to do so (82%).

This is particularly noteworthy as most employers (92%) believe business productivity is dependent on employee productivity and agree that offering retirement benefits improves employees’ mental health and reduces burnout (82%), while improving employee productivity (71%).

The findings suggest investing in retirement benefits is also more likely to improve employee productivity than investing in other areas, such as compensation. Of those employers who invested in their employees in the past year:

• 57% of those who invested in retirement benefits report better-than-normal employee productivity
• 31% of those who improved compensation report better employee productivity
• 12% of those who did not invest in their employees report better employee productivity

Offering retirement benefits, especially defined benefit (DB) pension plans, provides employers with a competitive edge when it comes to employee attraction and retention. Most employers who offer a DB pension (88%) say doing so has helped them recruit and retain talent.

Employers also understand their employees’ desire to build a secure, lifetime retirement income. Most employers (82%) believe their employees would choose to contribute 9% of their salary, with contributions matched by their employer, to a DB pension. What’s more, 83% of employers say that if their organization were to offer a DB pension, they would match at least 3% of their employees’ salaries in contributions, with over a third (35%) of employers willing to contribute 7% or more.

Cost is identified as the top consideration for employers who do not offer retirement benefits (64%, compared to 35% of those who offer them). Yet, nearly half (45%, +4 pts from 2024) of employers who do not offer retirement benefits agree that – regardless of economic conditions – companies could provide good pensions if they wanted to.

Notably, employers who do not offer retirement benefits are less likely to be influenced by competition for talent (7%) or employee demand (16%) than employers who offer them (31% and 28%, respectively).

Looking ahead, Canadian employers remain concerned about the impacts of economic uncertainty (77%), a recession (71%, +8 pts from 2024) and Canada-U.S. relations (67%) on their organization in the coming year. While they navigate these challenges, most employers (75%) believe businesses have a responsibility to offer a pension plan that workers can access for an adequate income in retirement.

Yet retirement benefits remain inaccessible for many Canadian workers, posing challenges for Canada’s retirement income system. Most employers (84%) agree that workers who cannot contribute to a workplace pension will become a burden on the taxpayer, while 86% believe Canada is facing an emerging retirement income crisis – a consistent sentiment since 2022.

A strong majority of employers also recognize the economic benefits of expanding access to workplace pensions:

• 88% of employers believe all workers should have access to an affordable retirement savings arrangement.
• 87% agree that governments can save money by supporting pensions that are more efficient and affordable.
• 82% agree that without good pensions in place, the economy will suffer.