Employees often want to save for retirement-but behavioral barriers like inertia, complexity, or decision fatigue get in the way. Applying behavioral science tools (defaults, nudges, gamification) in retirement plan design helps people save more consistently and with less friction. For employers, this means stronger financial wellness for teams and measurable business impact.
Canadian Retirement Landscape: Why Behavioral Design Is Necessary
Registered pension plan (RPP) membership in Canada surpassed 7.2 million people in 2023, growing by 4.2% over 2022. Coverage is still under 40% (about 37.7%) for paid workers, indicating many employees are not enrolled in employer plans. (Statistics Canada / HRD Canada, 2025 & Global News (2025))
RRSP contributions totaled $54.2 billion in 2022, but the proportion of tax filers contributing dropped to 21.7% that same year. Younger and middle-age groups saw the sharpest declines. (Statistics Canada, Registered Retirement Savings Plan contributions, 2022 )
In Ontario, many Defined Contribution pension (DCP) plans under FSRA supervision have adopted automatic features (auto-enrollment or auto-escalation) for eligible employees or as go-forward defaults for new members. (FSRA Guidance: Automatic Features in Defined Contribution Pension Plans, 2021 )
These figures show both a gap (many employees are not adequately enrolled or contributing) and momentum (some plans are using behavioral design). Smart plan design based on behavioral science can help close that gap.
Tools Employers Can Use
Automatic Enrollment & Auto-Escalation
Use defaults to enroll eligible employees or gradually ramp up contribution rates over time. As noted, many Ontario DC pension plans use these features under FSRA guidance. These defaults leverage human inertia-if the path is the easy one, most follow it.
Establish choices and defaults in the plan.
Establish default investment options (e.g. target-date funds), limit the number of choices to reduce overwhelm, and use clear defaults for contribution rates. Since many employees stick with defaults, these design decisions matter.
Simplified Enrollment & Nudges
Reducing complexity in forms and providing nudges (like reminders or verbal prompts) boosts enrollment.
Behavioral Nudges & Digital Reminders
Use timely prompts (email, payroll reminders), framing (what saving 5% vs. 10% might mean in retirement), and social proof (highlight that many peers are contributing). These tools help convert intent into action.
Gamification & Incentives
Introduce saving challenges, progress visualizations, or small rewards tied to increasing savings or milestones. These make saving more engaging.
Practical Steps to Begin Implementation
Map the Current Employee Savings Landscape
Review existing participation and contribution rates for all retirement programs (RPPs, RRSPs, DCP plans). Identify coverage gaps, employee groups with low savings rates, and any points where enrollment or contributions drop off. This baseline will guide where behavioral tools can have the greatest impact.
Review Legal and Regulatory Requirements
Check pension legislation, provincial guidance, and any collective agreements to confirm which automatic features (e.g., auto-enrollment, auto-escalation) are permitted. In Ontario, for example, FSRA guidance outlines how DCP plans can implement automatic enrollment and escalation features within existing regulatory frameworks.
Design and Set Defaults Thoughtfully
Select default enrollment rates, default escalation schedules, and default investment options that balance savings adequacy with employee affordability. Defaults should be easy to stay with but equally easy to opt out of, ensuring employees feel supported but not forced.
Simplify Enrollment and Communication Materials
Redesign enrollment forms to reduce complexity and jargon. Provide clear, transparent communication explaining how defaults work, how to opt out, and what data is used. Visual aids such as projected retirement income graphs can help employees understand the impact of their contributions.
Pilot the Behavioral Interventions
Begin with a small, controlled group-such as new hires or a single department-to test different default contribution rates, escalation schedules, and behavioral nudges. Use reminders, peer comparisons, and visuals showing projected savings to gauge what drives the best results. Collect participation data, opt-out rates, and employee feedback to refine the approach before rolling it out organization-wide.
Measure, Learn, and Adjust
Track participation levels, contribution rates, and opt-out data alongside employee survey feedback. Use these metrics to evaluate the success of defaults, nudges, and communications. Adjust contribution rates, messaging strategies, or escalation schedules based on evidence rather than assumptions.
Scale and Embed Over Time
Expand successful interventions across the organization in phases, using the lessons learned from pilots to fine-tune defaults and communication strategies. Keep employees informed throughout the rollout so they understand each change and its purpose.
Ensure Equity, Transparency, and Trust
Monitor outcomes across different demographic groups to ensure no employees are unintentionally disadvantaged. Maintain strict privacy standards and communicate openly about all defaults, data usage, and opt-out processes so employees trust the system and feel in control.
What This Means for Organizations
Organizations that bring behavioral science into retirement design see real differences:
Higher participation & better retirement readiness: More employees start saving earlier and contribute at rates that will lead to more secure retirements.
More efficient spend: Less administrative overhead, fewer unused or underutilized plan features, and better return on benefits dollars.
Stronger employer brand: Employers who offer smart, supportive retirement programs are more attractive to recruits and viewed as more caring and forward-thinking.
Adaptability to shifting needs: With behavioral tools, you can adjust defaults, contributions, or communication as economic or workforce conditions change.
Deeper insights for strategy: Data from nudges, enrollment behavior, savings rates feed into wider financial wellness and total-rewards planning.
How PACE Consulting Supports You
PACE Consulting helps organizations explore retirement plan strategies—like automatic enrollment, simplified communications, and digital tools—that align with evolving workforce needs.
Through benchmarking, education, and plan design insights, we support employers in building programs that improve engagement and retirement readiness.
Ready to build a retirement plan that helps your employees save more consistently and with less friction? We can help you design a strategy that works for them, and for your business.
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered financial or legal advice. Consult professional advisors for specific guidance related to your organization. While we strive for accuracy, we assume no liability for any errors or omissions.
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