Helping newcomers achieve better outcomes

Capital Accumulation Plan Income Tracker (CAPit) – October 2025

The CAP Income Tracker assumes members have made annual contributions at a rate of 10% starting at age 40 and will receive maximum Old Age Security (OAS) and Canada/Quebec Pension Plan (CPP/QPP) payments. For many newcomers to Canada, however, this is not the case. Saving for retirement often falls to the bottom of the priority list as they struggle with the immediate financial pressures associated with the cost of housing, supporting family, paying for education, and in many cases, sending money back home. This reality can be especially difficult for those who arrive in mid-career or are closer to retirement age. As of September 30, 2025, close to 30% of Canada’s workforce has been in the country for less than 25 years which means fewer contributions to workplace and government pensions.

To make matters even more challenging, Canada’s retirement and income tax system is complex and may be unfamiliar. Newcomers may not fully understand, for example, that government pensions like CPP and OAS may not be enough to support their retirement goals without personal savings. Even for those who arrive with retirement savings, understanding how all the pieces fit together and how to draw retirement income tax effectively can be overwhelming, if not impossible, without support and guidance.

Leveraging government and employer programs

When money is tight, traditional advice like saving 10% of your income is often not practical. However, where money is available for savings, strategically leveraging government and employer-sponsored programs can help newcomers achieve better outcomes.

For example, RRSPs can help reduce taxable income and grow savings more quickly, while TFSAs allow for flexible, tax-free withdrawals if money is needed before retirement. For newcomers in their peak earning years, RRSP catch-up contributions provide a valuable opportunity to accelerate savings. Delaying the start of CPP or OAS can also boost monthly benefits which is an important option worth considering for those able to work a few more years.

Employer-sponsored retirement programs like defined contribution pension plans and group RRSP plans often include matching contributions that can significantly increase retirement savings, even for those who join later in life.

Supporting with financial literacy and personalized tools

Understanding how savings, pensions, and government benefits work together through culturally relevant financial education, personalized planning tools, and trusted advice can help bridge knowledge gaps about Canada’s retirement and income tax systems and improve retirement outcomes.

Saving for retirement while juggling competing priorities is not easy. Many Canadians, but particularly those who are new to Canada and our financial systems, struggle with the impact of financial worry in their personal and professional lives. The good news is with a mix of realistic goal setting, smart use of available programs, and access to the right resources, employers can help newcomers remain productive and engaged at work while working toward their financial and retirement goals.