Canada’s Alarming Lack of Non-Profit Retirement Security

Helping Those Who Help

Why It Matters

Nearly two million Canadians have dedicated their lives to doing good in the non-profit sector. However, these same workers face a troubling retirement savings gap. How can we give these people the support they deserve?

A huge number of Canadians have dedicated their careers and their lives to the noble calling of helping others. Whether through a local YWCA that offers social services, a food bank, or an environmental non-profit, many workers are prioritizing “mission” and “meaning” in their careers over pay cheque and retirement benefits.

But while they’re helping others live healthy and financially secure lives, is there more our governments and social sector employers can do to help them?

Let’s take Lucy, for instance, as an example of a non-profit employee living with financial insecurity. She’s worked tirelessly in the non-profit and charitable sector for 30 years. Today, she runs a small women’s shelter in Winnipeg that offers care and support to women and families in moments of great crisis, vulnerability and poverty.

Lucy puts in long hours, bears great responsibility, and faces stressful, sometimes physically threatening situations on a daily basis. For this, she earns a modest pay and no benefits. 

Close to her 60th birthday, Lucy has less than $5,000 in savings she can use for her fast-approaching retirement. Sure, she’ll receive some public benefits through the Canada Pension Plan (CPP) and Old Age Security (OAS) programs, but not enough for a decent standard of living in retirement. 

In short, Lucy spent her life helping poor, vulnerable people — yet she now fears that she’ll be poor and vulnerable in her retirement years. This just isn’t right.

Lucy’s situation is all too common. Nearly two million Canadians work in the non-profit and charitable sector across the country.

Of those, we at the Common Good Retirement Initiative estimate there are 850,000 non-profit employees across Canada – about half the sector — who do not have access to a workplace retirement plan. Many others have low-quality or high-cost plans that don’t serve their needs. These employees tend to work for small and mid-sized organizations, which often rely on uncertain, project-based funding that makes it hard to offer good benefits. 

In the non-profit sector, incomes are low and work is often precarious. Program staff in the sector earn an average of about $45,000 a year; support, part-time and casual staff often earn much less. Many employees are freelancers or gig workers, with nearly half of non-profit workers in part-time or contract arrangements, compared with less than 20% of workers in the rest of the economy. And the majority of these workers are women like Lucy, who generally earn less than men but live longer. This means they need more savings in retirement.

This is a cross-generational challenge too. Many older workers approach the end of their careers with too little in savings to show for it, while younger workers are urgently seeking meaningful work, but wonder why they have to sacrifice so much to choose it over a job at the bank.

Governments have taken some important steps to help workers save for retirement, such as the expansion of the Canada Pension Plan (CPP). But the other pillars of Canada’s retirement savings system let down non-profit sector workers. Very few today can access sturdy, defined benefit employer pensions. Individual savings plans like Registered Retirement Savings Plans and Tax-Free Savings Accounts are an option, but it’s hard to save when you earn little, don’t have employer backing, and see high account fees eat away at what savings you do have.

We need to find new ways to “help those who help” in the Canadian non-profit and charitable sector. In countries like the United Kingdom and United States, new portable benefits and collective retirement plan models have been introduced to help workers adapt to the changing nature of employment today – and to prepare for the future of work we’ll see tomorrow.

What social infrastructure are we building to make it affordable for people doing important, high impact work on behalf of other Canadians? How can we ensure that people like Lucy can live the middle-class lifestyle that they deserve, with income security during their working years and in their golden years?

With Canada’s long track record in workforce and retirement innovation — CPP, TFSAs, and the Working Income Tax Benefit, to name just a few programs and benefits — we should be leading in adapting our workforce policies and benefit models to the shifting job market and growing income security challenges Canadian workers face.

At Common Good, we believe we all owe it to those who’ve dedicated themselves to helping others to ensure they can live and retire with dignity.