There may be presupposed to be no such factor as free lunch on this world, however an pointless variety of Canadians shall be loads hungrier at retirement as a result of they gave up that supply on a platter.
We spend infinite hours in search of methods to maximise investments, however a assured 100 per cent return by employers’ matching contributions is sitting proper in entrance of a few of us.
The one largest mistake Canadians make, particularly youthful ones, isn’t selecting the improper investments; it’s leaving enormous sums of employer-matching contributions on the desk.
When your organization affords to match your retirement funding, you’ve already gained. But, roughly 10 to twenty per cent of Canadians take a look at that assured win and switch it down, leaving these tens of millions on the desk.
A latest Solar Life Monetary Inc. survey, carried out with Ipsos in the summertime of 2025, examined Solar Life plan members with employer-sponsored financial savings plans and located that whereas 90 per cent of these surveyed took the total match, a cussed minority nonetheless missed out.
The maths is easy, even when the paperwork to affix a plan is a chore. The utmost worker match within the survey was as a lot as 5.6 per cent. When you’re pulling in $100,000 a yr and also you tuck away $5,600 into your
and your organization arms you one other $5,600, you simply doubled your cash. Attempt making that guess on the observe.
The web analysis examine surveyed 1,981 members aged 25 to 75 in the summertime of 2025.
Bernadette Chik, the chief of the outlined contribution advisory enterprise at Mercer Canada, a enterprise of Marsh & McLennan Cos. Inc., stated participation varies. The extra beneficiant the plan, the upper the participation, she stated, however 80 to 90 per cent is the vary.
“Even once we see some plans that default individuals into one on the full fee, individuals peel it again,” Chik stated, noting that some workers attempt to choose out of the very packages designed to avoid wasting them. “Attending to 100 per cent may be very tough.”
Why the hesitation? Some individuals simply don’t anticipate to have a protracted tenure on the job, and saving for retirement doesn’t resonate. Toronto-Dominion Financial institution’s latest survey discovered that solely 43 per cent of
contribute to
, in contrast with 79 per cent of
and 68 per cent of
.
The retirement mindset doesn’t appear to be as robust within the youthful demographic.
“Some employers try to be smarter with how the plan is communicated and transferring away from calling it a retirement plan to a versatile financial savings plan,” Chik stated. “During the last 20 years, the rigidity of those packages has modified.”
There’s additionally the lingering concern that your cash is locked away in a vault you may’t contact. Whereas deferred revenue sharing plans (DPSPs) typically limit you from touching the employer’s portion till you permit the corporate, the
has strict guidelines guaranteeing that cash is yours ultimately.
I’ll make my very own confession right here. Again in my early days on the Nationwide Put up, I used to be virtually a type of younger holdouts. I wasn’t signed up for the corporate’s outlined profit plan till an “old-timer” columnist, who was roughly the age I’m now, pulled me apart and requested, “What are you, an fool?”
He defined that the corporate was basically making an attempt handy me free money, and I had my arms in my pockets.
At this time, these gold-plated outlined profit plans are largely a relic of the previous within the personal sector. They’ve been changed by outlined contribution plans the place you, the worker, typically must be proactive.
However no matter kind of plan, some employers nonetheless supply employer-matched group RRSPs: You verify the field, you continue to get the money.
Group RRSPs and DPSPs have change into extra common with each workers and employers, with the thought that you would be able to entry your individual cash that you just put into them, though you would possibly face charges or withholding taxes. Some employers will even match a
contribution.
Alex Jessop, an authorized monetary planner with Meridian Credit score Union Ltd., stated he has seen these “free cash” accounts develop to $500,000 and even $1 million by the point somebody retires.
“You’ll be stunned how many individuals don’t elect to enroll in it,” Jessop stated. He admits he missed a number of alternatives early in his profession, when he was simply out of college and strapped for money.
And that’s the crux of the problem. Whenever you’re selecting between a retirement contribution and paying the hire or shopping for groceries, the long-term play seems like a luxurious.
However Chik urged a shift in perspective. A bunch RRSP could be marketed as a down fee device. Beneath the Dwelling Patrons’ Plan, you may pull out as much as $60,000 out of your RRSP in your first dwelling. That’s your employer serving to you get the keys to a entrance door.
Tannis Dawson, a vice-president and high-net-worth planner at TD Wealth, stated she struggles to discover a draw back. Positive, you pay tax when the cash comes out in your 60s, and also you may need barely much less funding flexibility than a self-directed brokerage account, however you’re beginning with a 100 per cent achieve.
“Even in these good years that the market has had, it’s arduous to make 100 per cent,” Dawson stated.
I’d say inconceivable, except you’re taking an excessive threat. If you’re one of many 10 or 20 per cent not profiting from this top-up, you may be crying at retirement.
Until you’re actually, desperately broke and dealing with high-interest debt, there isn’t a monetary justification for leaving an employer match on the desk. When you’re one of many 10 or 20 per cent passing this up, you may not be ravenous at retirement, however you’ll be envious of a number of the meal choices others have.
• Electronic mail: gmarr@postmedia.com
