A multi-employer defined contribution (DC) pension plan that allows every employer - including the self-employed - to automatically participate would greatly increase pension coverage for Canadians, according to a senior executive with Sun Life Financial.

Tom Reid, Senior Vice-President, Group Retirement Services, said that with three to five million Canadians not having access to an occupational pension plan, we need to improve the retirement, savings and income system in Canada, opening the door to expanded workplace participation for all Canadians.

Under the proposal, Reid says employers who decide to join the DC plan would select a qualified provider and all the firm's employees would automatically be enrolled. He said that the gentle push of automatic enrolment (which has proven to be an overwhelming success in other countries) and low fees will lead to widespread participation - along with a significant increase in the Canadian retirement savings rate.

He added that Canadian group plans, on average, pay lower fees to their pension plan providers than those in the United States which average 93 basis points compared with 60 to 70 basis points across Sun Life's Canadian group retirement business.

While there have also been suggestions for expanding government-run plans, Reid believes that the private sector solution is the right one for solving the current shortfall in retirement savings.