Many Canadians are anxious about their financial future. Almost a third (28%) of people approaching retirement age say that they’ll have to continue working during retirement to support themselves, while 13% of unretired Canadians believe they’ll never retire.
With the recent high levels of inflation, longer life expectancies and uncertainty around market performance, it’s no surprise that retirement has become a top concern for many Canadians.
If you’re one of the 38% of Canadian workers who have a company pension, you might feel that it will have you covered. However, it’s important to know that having a workplace pension doesn’t guarantee a secure retirement.
While a company pension is certainly a significant asset, it’s unlikely to be enough to ensure a comfortable retirement. The reality is that workplace pensions have changed a lot in recent decades. Even if you have one, you still need to know how much money it will provide you with and if it will be enough to support the kind of retirement lifestyle you want.
Understanding your company pension
There are two main types of company pension plan: defined benefit and defined contribution. Recognizing which type you have and how it functions is crucial for evaluating your retirement readiness.
Typically, a defined benefit pension provides you with a specific monthly amount for the rest of your life, based on your salary and years of service. For example, you might receive 2% of your average salary for each year you worked. These plans are often seen as the gold standard because they offer predictable, guaranteed income that lasts a lifetime (and which is often adjusted for inflation).
In contrast, a defined contribution pension doesn’t guarantee a fixed payout. Instead, both you and your employer contribute a set amount or percentage into an investment account. The amount you receive in retirement depends entirely on how much was contributed and how well those investments performed over time. While defined contribution plans offer flexibility and transparency, they come with more uncertainty, especially as market fluctuations can significantly impact the final balance.
In Canada, defined contribution pensions have slowly replaced many defined benefit pensions, especially in the private sector. Fifty years ago, around 90% of private-sector workers with a company pension had a defined benefit plan. That figure is now just 40%. This is why it’s so important to know the kind of pension plan you have, and what it’s likely to be worth when you retire.
To have a better understanding of the income you’re likely to get from your company pension, talk to your plan administrator. They’ll help you estimate what kind of retirement income you can realistically expect.
Figuring out your total retirement income
Even if you do have a defined benefit plan, calculating your total pension income is crucial. Many people assume their pension will provide an amount comparable to their pre-retirement income, but this is often an overestimation.
To help discover if your company pension will be enough to provide you with a comfortable retirement, ask yourself:
- If you have a defined benefit plan or defined contribution plan, what monthly income can you expect to receive?
- What kind of retirement lifestyle do you see yourself enjoying? Do you intend to travel often, downsize your living space or take up costly hobbies?
- What is your target retirement date? Early retirement might lower your pension benefits and require additional savings.
Considering these questions is essential for your retirement planning, as they can reveal whether your company pension will be enough or if you need extra funds.
Government retirement income: CPP/QPP and OAS
Most Canadians will receive retirement income from government programs like the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) and Old Age Security (OAS).
CPP/QPP retirement income is based on your earnings and your contributions to the plan during your working life. The maximum monthly CPP payment for someone who begins receiving it at age 65 is around $1,433 (for 2025). However, most people receive less than the maximum, with the average amount for new beneficiaries being just $848. You can find out how much you’re likely to receive for CPP at your My Service Canada Account (for QPP, go to Retraite Quebec’s My Account).
OAS payments are based on the number of years you’ve lived in Canada as an adult. If you’ve lived here for 40 years or more, you’ll receive the full benefit (which was $740 per month for new recipients in 2025). If you’ve lived in Canada for less than 40 years, your benefit will be reduced by one-fortieth for each year below 40 (though you must have lived here for at least 10 years to receive any payment).
If you need to boost your CPP and/or OAS retirement income, you can defer the time you start to receive it. For example, if you start receiving CPP at age 70 instead of 65, you’ll receive an additional 42%, and if you delay OAS until you reach 70, you’ll receive an extra 36% (both are for life).
Boosting retirement income with personal savings
Most people need additional savings to ensure they have sufficient retirement income, even with a company pension and government benefits. This is where comprehensive retirement planning becomes critical.
Two of the most effective tools for building retirement wealth are Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs). RRSP contributions are tax-deductible (meaning they reduce your taxable income) and grow tax-free until you make withdrawals. TFSA investments grow tax-free and can be withdrawn tax-free.
Both of these savings plans can be crucial in helping provide you with adequate income to ensure a comfortable retirement. Income from TFSAs can also be used to reduce your tax liabilities (withdrawals are not considered income) and prevent possible OAS clawbacks.
Creating a comprehensive retirement plan
The key to saving enough for a comfortable retirement is to have a financial advisor who can create a truly comprehensive retirement plan for you. According to the IG Financial Confidence Index, people who have a financial advisor are far more likely to feel prepared and on track to meet their financial goals than those who don’t have one; 74% versus only 47%.
The IG Living Plan covers every aspect of your financial life, including retirement planning. Within that, it brings together your collective retirement income, including:
- Your company pension (defined benefit or defined contribution).
- Projected CPP/QPP and OAS payments.
- RRSP and TFSA balances and retirement income strategies.
- Considerations of your ideal retirement lifestyle.
Also, the plan allows you to look at “what if” scenarios, to stress-test your retirement plan against a range of potential events, such as a market downturn just before retirement, a change in your retirement age or increased health care expenses. Not only does this help you test the resilience of your plan, but it also allows you to make the necessary adjustments before it’s too late.
Find out if your company pension will be enough
As we’ve seen, knowing if your company pension will be enough depends on your personal goals, other sources of income and how well you’ve prepared. A company pension is a strong foundation, but it rarely provides all the money you’ll need; for that, you’ll need comprehensive retirement planning.
Contact your IG Advisor to go over your full financial situation. They can help you determine whether your current financial plan will support the retirement you’re hoping for and help you make any necessary adjustments if you’re falling short. If you don’t have an IG Advisor, you can find one here.
Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Advisor.
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