Secure, stable, yet still coming up short?

A fear of running out of money is an understandable concern about retirement. And a new survey from Canada Pension Plan Investments points to it being widespread.

Among respondents, 59 per cent fear outliving their retirement savings.

To the person in charge of messaging for CPP Investments, the finding speaks to a lack of clear communication about CPP itself. The defined benefit plan available to all Canadian workers who have paid into it provides a guaranteed retirement income stream for life, says Frank Switzer, managing director of communications at CPP Investments.

“People can count on their CPP payment” for the length of their retirement.

At least, they can be assured CPP will be there for them for the next 75 years, as projected by the Office of the Chief Actuary, which conducts a stress test every three years.

“It’s always 75 years every three years, because that’s as far as it (a forecast) can go,” Switzer says.

Unlike many other government retirement programs around the world, notably Social Security in the United States, CPP is not facing funding challenges.

Switzer adds that’s because the federal and provincial governments made the politically difficult choice 25 years ago to increase contributions to meet future demand.

Change was needed because retirees have been growing in number and workers aren’t. When the plan was founded in 1966, nearly eight workers were contributing for every retiree. By 1997, there were less than six workers per retiree. Today, a little more than three workers are contributing to CPP for every retired Canadian.

That ratio is likely to keep falling for years to come.

That’s why contributions rates increased, exceeding current liabilities (income paid out) with the surplus invested to grow to meet future demand, likely starting in 2035, when it’s expected only two workers will contribute for every retiree.

The strategy has been successful to date with CPP Investments creating a nest-egg of more than $600 billion to meet future liabilities.

What’s more, the feds and provinces agreed in 2019 to implement another increase in contributions to boost the CPP’s coverage for future retirees.

“For someone who’s retired now or just retiring, CPP covers about one-quarter of the average wage, but for someone who’s now in their 20s, when they retire in 40 years, that’ll be worth about one-third of an average salary,” Switzer explains.

Given its stability and success, CPP is the envy of the world, with Switzer noting CPP Investments frequently receives inquiries from South American and Asian nations asking how to improve their plans’ stability.

When paired with Old Age Security (OAS), CPP covers about a one-third of the average worker income.

That said, Canada’s overall retirement system is likely not going to be enough for many retiring Canadians.

The 2025 Mercer CFA Institute Global Pension Index recently graded Canada’s retirement system a B, ranking it 16th out of 52 nations.

The index highlights the system’s shortcomings when it comes to the other two legs of the three-legged retirement funding stool. Those being workplace plans and personal savings plans like the RRSP (Registered Retirement Savings Plan).

“When it’s government plans, our system is really strong, so for coverage of low-income earners, we’re in a better shape because of the OAS, GIS (Guaranteed Income Supplement), and the Canada and Quebec pension plans,” says Hubert Tremblay, principal at Mercer Canada.

The key reason Canada’s system does not rank in the top five — like the Netherlands, in the top spot — is it does not have the same extensive workplace pension coverage.

“If you’re not covered by an employer pension plan, in the private sector especially, you need to save on your own.”

Hubert adds Canadians are not particularly good at doing that.

That’s not a character flaw. The costs of living — groceries and housing — is very high and often little is left over for long-term saving.

“There’s a gap with not enough coverage by employer plans and not enough saving by individuals,” Tremblay says.

Simply, many Canadians may not have income to live the retirement they want.

Canada need only look to higher ranking nations for solutions, Sebastien Betermier, executive director of the International Centre for Pension Management at McGill University’s Desautels Faculty of Management.

“Australia is interesting because they’ve made savings mandatory.”

Ranking seventh in the index with a B+, Australia also made changes to its system in the 1990s, creating mandatory workplace plans that started gradually with employers contributing two per cent of employee wages annually to a workplace plan, increasing to 12 per cent today.

Employees can elect to contribute, too, and another upside is plans are not-for-profit and not tied to the employer. So when workers change jobs, they stay with their plan.

Betermier adds a similar initiative in Canada would not require 12 per cent contributions by employers.

But by mandating a plan must be provided, the growing legions of low-wage and part-time workers would have access to a workplace pension. He cites the United Kingdom — 12th on the index with a B grade — as another example of positive change. In 2008, it started its Nest Pension — available to all workers with mandated contributions by them and their employers should they opt in.

At its start, only 30 per cent of U.K. workers had pensions. Today, coverage is about 80 per cent, Betermier adds.

“We could do initiatives like that here, too, with the good news being we actually have that second mover advantage, seeing how things are done elsewhere, to make any plan we develop more effective.”

Without change, it may still be Canadians will not outlive their savings.

Yet many may realize they don’t have enough after it’s far too late to do much about it.

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com