Abacus CEO explains why young Canadians value DB pensions more than homeownership
After eight years of polling Canadians about retirement security, the message has barely changed. Defined benefit (DB) pensions are what workers want most, and they're willing to make career decisions to get one.
That's the core finding from the latest survey conducted by Abacus Data and the Healthcare of Ontario Pension Plan (HOOPP), which this year expanded its scope to include a dedicated sample of more than 800 healthcare workers across the country.
David Coletto, founder, chair, and CEO of Abacus Data, believes the consistency of the findings is itself the key takeaway.
"Most Canadians continue to see retirement as being something that is a challenge for them. They're finding it hard to believe or feel that retirement security is in place," he said. "Even those nearing retirement don't feel well prepared for it. The sort of permacrisis environment has, I think, fueled that and made that much more real for people. But the second finding that's consistent remains that, overwhelmingly, Canadians generally see a defined benefit pension as being something that would help provide that security.”
Why young Canadians value pensions
Abacus’ and HOOPP’s findings reinforce Coletto’s point. Among all respondents, more than half said a DB pension is as important as pay itself. Meanwhile, younger workers, far from dismissing pensions as a relic, showed a strong attachment to the benefit.
"You could call Gen Z generation uncertain generation. They basically don't believe anything's a given anymore, including their ability to retire securely," he said, noting the affordability crisis compounds the problem. Even for those who manage to buy a home, the mortgages are larger and the timeline to pay them off is less clear.
Meanwhile, the cost-of-living leaves little room to save, and Coletto said the survey data consistently shows that day-to-day expenses crowd out long-term planning. A DB pension, in that context, removes one source of worry from an already full list.
Coletto said the assumption that homeownership is a reliable path to retirement security has eroded, particularly among Millennials and younger Canadians and recent buyers who have watched home values and interest rates swing in unpredictable directions.
"No one lives in a world in which they're assuming that they're going to get a 20, 30 per cent return on owning a home anymore, like we have seen over the last 15 years," he said. “There's no cohort within the labor market that is more attuned and aware of how unstable and uncertain the future looks like than those younger workers … They're well aware of all these things that maybe previous generations had taken for granted.”
That doesn't mean younger Canadians have abandoned the desire to own property as other Abacus research shows they still want to. But Coletto argued they are less likely to treat a home as the centrepiece of a long-term retirement plan, noting the traditional sequence - school, career, homeownership, retirement - is no longer taken for granted, which is driving demand for secure options.
"I think the two are synonymous with the idea that I have somebody, a collective group advocating on my behalf and the benefits that come from that are often the pension plan that's provided by employers in those environments," he said.
"It's no longer a safe bet, that you're going to be able to see that kind of return that many people have seen on their home and therefore they're looking for other sure bets and there's no surer bet than a good pension plan," he added.
DB pensions reinforce worker retention: findings
According to the survey’s findings, DB pensions carry outsized weight in healthcare workers' career decisions. After all, 96 per cent said workplace pensions are important to attracting and retaining workers, while 90 per cent agreed that DB pensions help keep experienced staff in place.
Among those who already have a DB pension, 89 per cent ranked it as one of their most important workplace benefits, and more than half said it is as important as pay. Over a third said they would start looking for another job if their employer stopped offering one.
Healthcare workers also showed a willingness to make trade-offs to keep or gain access to a DB pension. Nearly three-quarters said they would accept slightly lower pay to work closer to home if the pension were maintained, and 65 per cent said they would consider relocating to a less urban community.
Additionally, 37 per cent of healthcare workers with a DB pension would start looking for another job if that pension were removed.
Coletto underscored plan sponsors should read that finding as a clear signal that DB pensions work as a retention tool, particularly for workers who are in high demand, doing difficult and stressful work, and who the healthcare system cannot afford to lose.
Moreover, he argued the health human resource crisis will only deepen as Canada's population ages and the system comes under greater pressure.
“Whether you're a plan administrator or an employer, whether you're a public policy leader who's trying to figure out how to sustain a system that's going to be under even more incredible pressure, maintaining that DB plan is a surefire way to keep an important tool in retaining those healthcare workers across the country.”
Don't write the obituary of the DB plan yet: Coletto
Coletto believes the convergence of AI disruption, demographic shift as the last baby boomers leave the workforce, and rapid population aging in Canada will upend the traditional employer-employee relationship in ways that are difficult to predict. In that environment, he argued employers looking to differentiate themselves may have to revisit options they had previously dismissed — including DB pensions.
“I think it's probably premature to write the obituary of the DB plan just because of the world that we're now in and what that means for workers who are increasingly, I think, powerful in demanding certain things,” said Coletto.
Specifically, unions in the public sector will fight to preserve DB plans because their members will demand it. He also pointed to the surge in labour disruptions over the past two years — which he said have reached levels not seen since the 1980s — as evidence that workers are increasingly willing to push back when they feel insecure about the future. As long as that insecurity persists, Coletto argued, demand for the kind of protection a DB plan provides is not going away.
He also offered a hypothesis on the psychological gap between DB and DC plans. While acknowledging he didn't have data to validate the claim directly, he said the market volatility of recent years likely undermines confidence in defined contribution arrangements.
"I don't think that world is going to get any less unpredictable. I think people's instinct will be ‘I'd rather have a DC plan than nothing,’ let’s be honest. But if I had the choice, I would much rather have the security and stability that a DB plan offers," he said.
