{"id":271984,"date":"2026-02-03T15:09:07","date_gmt":"2026-02-03T15:09:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/271984\/"},"modified":"2026-02-03T15:09:07","modified_gmt":"2026-02-03T15:09:07","slug":"tax-credit-could-help-millions-of-small-business-employees-without-workplace-retirement-plans-report-says","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/271984\/","title":{"rendered":"Tax credit could help millions of small business employees without workplace retirement plans, report says"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Shoppers walk through a storm as they exit Toronto’s Eaton Centre on Boxing Day, 2025.Sammy Kogan\/The Canadian Press<\/p>\n

More than nine million working Canadians don\u2019t have access to a workplace retirement plan, largely because small and mid-sized employers are far less likely to offer them, according to a new C.D. Howe Institute report. To address that gap, the report proposes a targeted federal tax credit, similar to a program in the U.S., to help small businesses cover the cost of setting up and contributing to retirement plans.<\/p>\n

The report<\/a>, released Tuesday, estimates that fewer than 19 per cent of small and mid-sized employers with five to 499 employees offer a workplace retirement plan, compared with nearly half of comparable employers in the United States.<\/p>\n

That shortfall affects a large share of the work force. Nearly two-thirds of private-sector workers were employed by small and mid-sized businesses in 2024, according to data<\/a> from Innovation, Science and Economic Development Canada. Only 37 per cent of Canadian private-sector employees participate in a workplace retirement plan, compared with 53 per cent in the United States, according to the report.<\/p>\n

Workers without access to a workplace plan are generally less prepared for retirement, said Keith Ambachtsheer, co-author of the report and director emeritus of the International Centre for Pension Management at the University of Toronto\u2019s Rotman School of Management. <\/p>\n

Canada\u2019s 20 most livable cities for retirement<\/a><\/p>\n

When people save for retirement independently, contributions tend to be inconsistent, more expensive and shaped by behavioural biases, compared with employer-sponsored plans that automate saving and benefit from lower fees, Mr. Ambachtsheer said. It is also harder to rely more heavily on personal savings as life expectancy increases and the cost-of-living rises.<\/p>\n

Cost is the main reason small employers don\u2019t offer retirement plans, said Alex Mazer, co-author of the C.D. Howe report, and co-founder and CEO of Common Wealth, a fintech that provides group retirement plans. \u201cThey often have a perception that it\u2019s more complicated or more costly than it is,\u201d he said.<\/p>\n

In a 2024 Healthcare of Ontario Pension Plan survey of more than 750 employers, cost was the top reason respondents cited for not offering retirement benefits to employees.<\/p>\n

The Canadian tax credit proposed in C.D. Howe\u2019s report would have two parts: a set-up credit and an employer contribution credit. <\/p>\n

The set-up credit would cover qualifying plan start-up costs, up to $5,000 a year. The employer contribution credit would provide up to $1,000 per eligible employee for employer contributions to a newly offered plan, for workers earning less than $150,000. Employers could claim both credits for up to three years. <\/p>\n

Businesses with between one and 99 employees would be eligible, aligning with Statistics Canada\u2019s definition of a small business.<\/p>\n

The authors estimate that the tax credit would cut the cost of offering a retirement plan by nearly half for a typical small employer over the first three years. Over five years, the program could expand coverage to between 125,000 and 500,000 additional workers, at an estimated cost of $1-billion to $2-billion over that period, according to the report.<\/p>\n

Beyond retirement savings, workplace pension plans have become an important tool for attracting and retaining workers, Mr. Ambachtsheer said.<\/p>\n

A 2025 study by HEC Montreal found that private-sector workers in Canada would be willing to accept a 6.3-per-cent reduction in earnings to hold a job with a pension plan.<\/p>\n

C.D. Howe\u2019s proposal draws on recent legislation in the United States, where the federal government expanded tax incentives for small employers under the 2019 SECURE Act and the 2022 SECURE Act 2.0 legislation, which allows eligible U.S. employers to receive similar tax credits related to set-up costs and employer contributions. <\/p>\n

Between 2018 and 2023, roughly 150,000 new 401(k) plans were created, with nearly two-thirds launched between 2021 and 2023, according to the report.<\/p>\n

The Canadian proposal differs in some key areas, said Mr. Mazer. \u201cIt tries to take the things about the U.S. program that have worked well and then improve on them and adapt them to the Canadian environment.\u201d<\/p>\n

It would be available to not-for-profits that do not already offer retirement plans, as well as startup companies that are not yet profitable, he said. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Shoppers walk through a storm as they exit Toronto’s Eaton Centre on Boxing…\n","protected":false},"author":2,"featured_media":271985,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[114,268,85,46,266,267,3681],"class_list":{"0":"post-271984","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-il","11":"tag-israel","12":"tag-personal-finance","13":"tag-personalfinance","14":"tag-r-fp"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/271984","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=271984"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/271984\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/271985"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=271984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=271984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=271984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}