A recent survey has revealed a troubling trend in Canadian retirement planning: a significant portion of the population is voluntarily passing up what amounts to free money, potentially leaving themselves financially vulnerable in their later years. While the adage "there's no such thing as a free lunch" often holds true, employer-matching contributions to Registered Retirement Savings Plans (RRSPs) present a rare exception that too many are ignoring.
The Costly Mistake of Missing Matches
Financial experts identify the single most damaging error in retirement planning, particularly among younger Canadians, as failing to capitalize on employer-matching programs. This isn't about selecting poor investments or timing the market incorrectly; it's about leaving substantial sums of guaranteed money untouched. According to industry data, approximately 10 to 20 percent of eligible Canadians decline these matching offers, effectively turning down a 100 percent return on their investment before any market gains.
Survey Reveals Generational Divide
A comprehensive study conducted by Sun Life Financial Inc. in collaboration with Ipsos during the summer of 2025 examined plan members with employer-sponsored savings programs. The research, which surveyed 1,981 individuals aged 25 to 75, found that while 90 percent of participants took full advantage of matching contributions, a persistent minority continues to miss out.
Bernadette Chik, leader of the defined contribution advisory business at Mercer Canada, notes that participation rates typically range between 80 and 90 percent, even with automatic enrollment programs. "Even when we see some plans that default people in at the full rate, people peel it back," Chik observed. "Getting to 100 percent participation is very difficult."
The Simple Mathematics of Matching
The financial benefit of employer matching is straightforward and substantial. In the Sun Life survey, the maximum employee match reached 5.6 percent of salary. For an individual earning $100,000 annually, contributing $5,600 to their retirement plan would trigger an identical $5,600 contribution from their employer—effectively doubling their investment immediately. This guaranteed return surpasses what even the most successful investors might achieve through traditional market investments.
Understanding the Reluctance
Several factors contribute to why Canadians, particularly younger workers, hesitate to participate in these beneficial programs. Toronto-Dominion Bank's recent research highlights a stark generational contrast: only 43 percent of Generation Z contributes to RRSPs, compared to 79 percent of baby boomers and 68 percent of millennials.
Key reasons for this reluctance include:
- Short-term job expectations that make retirement planning seem irrelevant
- Perceptions that retirement funds are inaccessible until distant future dates
- Lack of immediate financial resonance with long-term savings concepts
Chik notes that some employers are adapting their communication strategies to address these concerns. "Some employers are trying to be smarter with how the plan is communicated and moving away from calling it a retirement plan to a flexible savings plan," she explained. "Over the last 20 years, the rigidity of these programs has changed."
Accessibility Concerns Addressed
A common misconception that deters participation is the belief that matched funds are permanently locked away. While deferred profit sharing plans (DPSPs) typically restrict access to employer contributions until employment ends, Canada Revenue Agency regulations ensure these funds ultimately belong to the employee. The evolving flexibility of retirement savings vehicles means participants have more options than many realize.
The Retirement Reality Check
As Canadians spend countless hours seeking investment optimization strategies, the most reliable wealth-building opportunity often goes untapped. Employer matching represents not just free money but a foundational component of retirement security. Those who decline these contributions effectively choose a more limited financial menu during their retirement years, potentially sacrificing comfort and stability that could have been guaranteed through simple participation.
The message from financial professionals is clear: rejecting employer RRSP matches is equivalent to refusing a guaranteed financial advantage that could determine whether retirement is spent in comfort or constraint.
