Canada Life launches more flexible workplace savings options for Gen Z employees

Canada Life has launched more flexible workplace savings options aimed at Generation Z employees.

According to the company, workers can set money aside for shorter-term goals while their employer’s matching contribution still goes into retirement savings.

The insurer is also offering employers a toolkit with an assessment, communications guidance, templates and short-form video. It said it will run a campaign on TikTok encouraging young people to save for the long term.

The launch follows joint research with Deloitte Canada into how the country’s youngest workers think about money and the future.

According to Canada Life, the research suggests that cost-of-living pressure is only part of the reason young workers struggle to save for retirement. Uncertainty about the future makes it harder for them to picture retirement at all.

Gen Z respondents were twice as likely as the rest of the population to consume dystopian content several times a week, and significantly more likely to talk about existential concerns. Consuming that content was correlated with a lower likelihood of owning or enrolling in long-term savings products. The research doesn’t show that one causes the other.

Young workers are saving, but they are also withdrawing from retirement savings more often. The report finds that Gen Z employees withdraw from their RRSPs 12% more often than millennials did at the same age, and 42% more often than Gen X.

The researchers found that young workers responded best to messages built around resilience, agency and empowerment, rather than fear.

“Asking young employees to plan decades ahead can be difficult when the next 10 years feel uncertain,” said Kate Nazar, senior vice president of workplace retirement and savings at Canada Life.

The new plan options are the most significant part of the announcement for employers and their advisors. Traditional group retirement programs encourage employees to lock money away until retirement, which the research suggests many young workers find hard to relate to. Canada Life’s approach separates the two. Employees can direct their own savings toward near-term goals while the employer contribution stays focused on retirement.

That could ease a common tension in plan design. Employers want young staff to take part and value the benefit, while sponsors want plans to deliver retirement income. Allowing short-term saving inside the program may increase participation and reduce costly early withdrawals from registered plans. However, it also means less of the employee’s own money is being saved for retirement.

For group retirement advisors, the research gives younger employers in particular a reason to revisit how their plans are designed and communicated. Most of that is in the communications. The findings suggest that warnings about falling behind on retirement may push young workers away, while messages that emphasize control and flexibility are more likely to get them saving.

Canada Life has not said whether the flexible options carry additional fees, or which plans and employer sizes are eligible.