Canada should raise retirement age to 67 to address labour shortages: report

First at five we look into a new report that suggests boosting the age of retirement from 65 to 67.

A new report by C.D. Howe Institute suggests Canada should gradually raise the normal retirement age to 67 in order to address labour shortages and help sustain pension systems.

The public policy think-tank based out of Toronto says the change would put Canada in line with successful international models.

“Life expectancy has increased by 10 years. So, this is important to consider all these factors and inform individuals, they need to live longer, they need financial support for longer life after retirement,” said Parisa Mahboubi, senior analyst with C.D. Howe Institute.

However, delaying access to pensions is an idea not everyone agrees with.

“If you’re going to start pensions later then you have to make sure for those people whose health fails earlier, they are not affected by it,” said Bill Vangorden, seniors advocate.

In Canada, employment opportunities are limited for seniors – especially on the East Coast where unemployment rates are highest for the group.

That’s one reason why the report also calls on provincial governments to adopt targeted policies to support older workers, such as:

• flexible work arrangements
• part-time career opportunities
• self-employment options, particularly in regions like the Atlantic provinces, where senior participation is notably low

The study also suggests Canada should invest in high-quality training programs for underrepresented groups, focusing on digital skills and job search strategies.

Canada’s labour workforce grew steadily since 1976 but experienced a decline in 2020 due to the pandemic, according to C.D. Howe Institute.

“By 2024, Canada had 22.1 million people in the labour force, an increase of about 1.9 million from 2019, mainly driven by the expansionary immigration policy that the country has followed until recently,” reads the report.

“Immigrants accounted for 56 percent of this increase in the labour force, while non-permanent residents made up 32 percent.”

While the labour force has grown over time, the study also notes the labour force participation rate (LFPR) has trended downward over the last two decades.

“This trend is largely driven by an aging population, as participation rates drop sharply after age 54 and continue to decline with age,” the report reads.

“While the LFPR among prime-aged workers (25-54) reached a record high in 2023, the overall rate remained below pre-pandemic levels and declined further in 2024, reaching 65.5 percent despite high levels of immigration.”

C.D. Howe Institute says three factors contributed to this decline are:

• a lower participation rate among youth
• a substantial increase in the older population (aged 55 and over)
• a decline in the latter group’s participation rate

In terms of training a potential older workforce, the institute recommends offering older workers opportunities, like digital skills and job search strategies.

With files from CTV Atlantic’s Hafsa Arif.