'The most important thing that an employer can do is to make sure that employees understand each segment of the plan,' says CPPIB's Frank Switzer
Recent findings from Canada Pension Plan Investment Board (CPPIB) have found that Canadians are becoming increasingly uneasy about their financial readiness for retirement.
The Crown corporation responsible for managing the Canada Pension Plan (CPP) is confronting this challenge amid Financial Literacy Month to engage plan sponsors and plan members and highlight the importance of understanding how CPP functions within the broader retirement system.
Frank Switzer, managing director of communications at CPPIB, acknowledged the pension fund’s findings, noting that young Canadians under 30 and women are particularly anxious about whether they’ll have enough saved for retirement, with inflation adding another layer of concern.
Additional findings from CPP’s survey found that 59 per cent of Canadians surveyed fear outliving their savings. Still, Switzer suggests that financial literacy plays a significant role in alleviating that stress.
“Canadians are anxious about having enough money to retire,” said Switzer. “Gaining financial literacy can give a person confidence. And that confidence allows one to overcome barriers, improve their retirement savings, and reduce anxiety,” he said.
Switzer was also struck by how many respondents - nearly half - said they had someone in their lives, such as a parent or teacher, who helped them understand money. Those people reported less financial stress, suggesting that trusted guidance can make a real difference.
Switzer also noted a strong link between awareness of the Canada Pension Plan and reduced anxiety.
“Seventy-three per cent of those surveyed who are familiar with the CPP felt confident about their retirement finances, and that's compared to just 21 per cent confidence among those not familiar with the CPP,” he said. For him, that’s a sign that educating young Canadians about how CPP works could offer a stable starting point for broader retirement planning.
Switzer outlined several structural features of the CPP that are designed to build long-term retirement confidence. He pointed out that CPP provides both inflation protection and lifetime benefits, two elements that help safeguard retirees against longevity risk and rising costs.
He also noted that the plan undergoes regular oversight by the Office of the Chief Actuary, which assesses its sustainability every three years. According to Switzer, the most recent review confirmed that CPP is sustainable at current contribution rates for at least the next 75 years, the furthest the office can project. That is, assuming current contribution rates remain unchanged.
Another key factor in CPP’s stability, according to Switzer, is the way the fund is managed. CPPIB relies on a diversified investment strategy, spreading assets across different sectors, asset classes, and global regions. This approach is intended to protect the fund from volatility and help ensure it can meet its long-term obligations.
Switzer emphasized the importance of understanding that CPP provides guaranteed, inflation-protected income for life - a factor that can significantly reduce uncertainty in retirement planning. He believes it’s essential for individuals to grasp what share of their future income will come from CPP and how that fits into a broader retirement strategy.
He described a three-part framework for thinking about retirement income: government programs like CPP, OAS, and GIS as one pillar; personal savings as the second; and employer-sponsored plans as the third. Once people understand how these sources interact, it becomes easier to estimate future income, assess current financial habits, and identify any gaps.
Switzer also pointed out that as workers approach retirement, employers often provide tools or guidance to help them pull these elements together. By that stage, many people have personal savings, can check their projected CPP benefits through Service Canada, and know the value of any workplace plans. Employers typically support this process by helping employees consider their retirement goals, income sources, and expected lifestyle needs.
He also emphasized that employers should prioritize financial education to help employees better understand their retirement options. He believes that starting with the basics - like how CPP contributions are deducted and matched by employers - can lay the groundwork for greater financial confidence. From there, he suggests employers explain how additional components like DB or DC plans fit into the overall retirement picture.
He also noted that CPP currently accounts for about a quarter of an average retiree’s income, a share that's expected to increase to around one-third for younger workers in the years ahead. Understanding this baseline, along with how employer-sponsored plans and optional savings vehicles contribute, can help employees see how each piece contributes to their future income.
While CPPIB is primarily focused on delivering strong, risk-adjusted returns for the Canada Pension Plan, the organization does make efforts to improve public understanding of its role. Switzer acknowledged that a dedicated stakeholder relations team and communications staff are creating accessible educational content, particularly through the CPP Investments website.
“The most important thing that an employer can do is to make sure that employees understand each segment of the plan, what it means to them, and how it can ensure that they’re ready for their retirement when the time comes,” asserted Switzer.
He acknowledged that their ability to engage directly is somewhat constrained by the limits of their mandate. Still, the organization is actively collaborating with various external groups across the country, including those who work with financial advisors, to help spread awareness. Ultimately, the goal, Switzer said, is to help Canadians better understand how CPP fits into their retirement income and the value that CPPIB brings to managing the fund.
“CPP is the foundation for an employee’s retirement plan,” said Switzer. “They should be working with their employer, do their own research, work with an advisor or even a combination of those things to improve overall financial literacy and feel confident, so that when it's time to retire, they’re feeling good about it.”
