Canada’s population is aging, with significant growth in the over-65 population expected in the coming years. As a result, demand for retirement planning advice and insurance solutions will continue to increase. Although the life expectancy of Canadians continues to rise, the population is not necessarily getting healthier and this increased life expectancy is predicted to be accompanied by many older consumers dealing with serious illnesses such as hypertension and diabetes.

Two market values that can be used to estimate the size of the retirement planning market include a value of $1.3 trillion for Canadian employer-sponsored pension funds, and assets in TFSAs of $62 billion at the end of 2013.

This report covers the drivers of the retirement planning industry in Canada, exploring trends related to ownership, amount of savings, types of retirement planning activities, most trusted sources of advice and attitudes towards personal financial management.

The majority of this report covers the subject of private pension plans such as RRSPs and TFSAs (except for a short section on government retirement programs in Market Drivers).

Canada’s retirement system is funded by three pillars: Old Age Security/Guaranteed Income Supplement; Canada/Quebec Pension Plan and tax-advantaged non-government plans such as employer pension plans, RRSPs and TFSAs. Additionally, many Canadians have private non-registered savings, investments and insurance products.

Market size information includes employer pension plans, registered retirement savings accounts, tax free saving accounts, segregated funds and annuities. It does not include savings and investments in non-registered accounts.

The amount of retirement savings covered in the section on The Consumer – Amount of Retirement Savings includes employer pension plans.

Detailed coverage of employer pension plans is not included in this report.

In exchange for a single lump sum investment, an insurer makes guaranteed regular income payments to an investor that contain both interest and a return of principal. Annuity payments can continue for the lifetime(s) of one or two people, or for a chosen period of time.

These payments are generally not subject to the same level of taxation as other sources of retirement income and, depending on the type of annuity, may be protected from creditors in the event of insolvency or lawsuit. There are many different permutations of annuities and they can be combined to create a matrix of benefits tailored to a client’s particular objectives.

These include the provinces of New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador.

The Canada Pension Plan (CPP) retirement pension provides a monthly benefit to eligible Canadians. Eligible recipients must have worked and made at least one valid contribution (payment) to the CPP to qualify for a CPP retirement pension. The CPP operates throughout Canada except in Quebec, where the Quebec Pension Plan (QPP) provides similar benefits. The Canada Pension Plan Investment Board (CPPIB) manages the CPP's assets on behalf of the CPP.

Decumulation is the winding down of financial assets to finance retirement.

DCPP is a type of Registered Pension Plan. A DCPP has no pre-determined pay-out at retirement and is based on the assets in the plan at the time of retirement. The investment risk is borne by the beneficiary not the plan. 

DBPP is a type of pension plan in which an employer/sponsor promises a specified monthly benefit on retirement that is pre-determined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. These plans are generally more prevalent in the public sector.

A DPSP is a retirement plan that allows an employer to distribute part of the company’s profits to some or all of its employees.

A technical term for stocks and shares.

The Guaranteed Income Supplement provides a monthly non-taxable benefit to Old Age Security (OAS) recipients who have a low income and are living in Canada.

An economic indicator which reflects how many privately owned new houses have started to be built over a given period.

A LIRA is an investment account designed specifically to hold locked-in pension funds for former pension plan members.

These are investments held outside of a registered account and are therefore not tax-sheltered.

The Old Age Security (OAS) pension is a monthly payment available to most Canadians aged 65 or above who meet the Canadian legal status and residence requirements.

Mutual funds that automatically adjust their asset mixes to become more conservative as investors approach retirement age.

A reverse mortgage is a home loan that provides cash payments based on home equity. Homeowners normally defer payment of the loan until they die, sell, or move out of the home.

A RRIF is an extension of an RRSP and is used to systematically draw retirement income during retirement.

An RRSP is a type of Canadian account for holding savings and investment assets. RRSPs have various tax advantages compared to investing outside of tax-preferred accounts. They were introduced in 1957 to promote savings for retirement by employees and self-employed people.

Segregated (or Seg.) funds are an investment product sold by life insurance companies. They are individual insurance contracts that invest in one or more underlying assets such as a mutual fund.

Unlike mutual funds, segregated funds provide a guarantee to protect part of the money invested (75-100%). Even if the underlying fund loses money, individuals are guaranteed to get back some or all of their principal investment provided they hold the investment for a certain length of time (usually 10 years). An additional fee is required to have this insurance protection.

TFSA is a savings vehicle whereby income earned within a TFSA will not be taxed in any way throughout an individual’s lifetime. In addition, there are no restrictions on the timing or amount of withdrawals from a TFSA, and the money withdrawn can be used for any purpose. They were introduced by the conservative government in 2009 to provide another tax advantaged saving vehicle in addition to the RRSP.

Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time (ie the term of the policy).

Universal life insurance is a policy that provides permanent life insurance coverage with an investment account.

Whole life insurance is a policy that provides coverage for the whole duration of the policyholder’s life.