Tax credit may benefit millions of small business employees without workplace retirement plans.

A C.D. Howe report says more than nine million Canadian workers lack workplace retirement plans and proposes a federal tax credit to help small employers cover set-up costs and employer contributions.

A new C.D. Howe Institute report finds more than nine million working Canadians do not have access to a workplace retirement plan. Small and mid-sized employers are far less likely to offer plans than larger firms, the report says. It estimates fewer than 19 per cent of employers with five to 499 employees offer a plan, compared with nearly half of comparable U.S. employers. Nearly two-thirds of private‑sector workers were employed by small and mid‑sized businesses in 2024, and only 37 per cent of private‑sector employees participate in a workplace retirement plan. Report highlights: - The report proposes a two-part federal tax credit: a set-up credit to cover qualifying plan start-up costs up to $5,000 a year, and an employer contribution credit of up to $1,000 per eligible employee for workers earning less than $150,000; employers could claim both credits for up to three years. - Eligibility would cover businesses with one to 99 employees, and the proposal would also be available to not‑for‑profits that do not already offer plans and to startup companies that are not yet profitable. - The authors estimate 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 federal cost of $1 billion to $2 billion. - The proposal draws on U.S. experience under the 2019 SECURE Act and 2022 SECURE Act 2.0, which the report notes coincided with roughly 150,000 new 401(k) plans in the United States between 2018 and 2023. Summary: The report's authors say the proposed tax credit is intended to lower start-up and contribution costs and increase employer‑sponsored coverage among small businesses. Undetermined at this time.