This article is based on a presentation by Mark Zigler at the 58th Annual Canadian Employee Benefits Conference.

More workers age 65 and over, who are eligible for pensions, are reshaping the workforce. That demographic shift carries broader consequences, according to Mark Zigler, a senior partner in the pensions and benefits group at Koskie Minsky LLP. As more employees work past traditional retirement age, pension and benefit systems are colliding with assumptions built for a workforce that no longer exists. Plans that are still built around the long-abandoned idea of mandatory retirement at age 65—once the standard mandatory retirement—now face tax, legal and human-rights challenges as employees remain working into their late 60s and early 70s. The result is a growing disconnect between modern economic realities and retirement rules rooted in policy decisions made nearly a century ago.

Why Age 65?

Zigler noted that the age of 65 became significant when the United States began implementing the Social Security program in the 1930s. Based on the average life expectancy at the time, that figure became the eligibility age for benefits. Since then, life expectancy has increased dramatically. According to the World Health Organization, the average male in the U.S. can expect to live to about age 73, and the average woman in the U.S. to age 79. Men in Canada can expect to live to age 79 and women to age 83.

In the U.S., full retirement age has been increased to a point between ages 66 and 67, depending on birth year, and benefits increase if claimed later, up to age 70. By contrast, Zigler noted that raising the Canada Pension Plan (CPP) retirement age beyond 65 is widely viewed as politically untenable, despite the program’s high cost.

Zigler, citing Statistics Canada’s Labour Force Survey, highlights a clear rise in older Canadians’ workforce participation. Among those age 65 and over, employment has increased from 4% in 1976 to 6.6% in 1994, and today it stands at roughly 15%. Participation is higher among men (19.3%) than women (11.2%), but the overall trend is consistent: Older workers are making up a growing share of the labour force.

Retirement patterns have shifted. The average retirement age of Canadians was 64.9 in 1976 and 60.9 in the late 1990s, amid generous pension and early-retirement incentives. It has since rebounded to age 65 as of 2023, and it is expected to rise further.

The scale is significant: Roughly 600,000 Canadians ages 65-69 and more than 350,000 age 70 and older are still working. Out of a workforce of about 19.75 million, that’s roughly 5%.

This is no longer limited to professionals or executives. Older workers are active across settings—from services and construction to manufacturing and the public sector—putting pressure on pension and benefit systems designed for retirement at age 65.

Reasons for Working Longer

Zigler referenced a Statistics Canada survey suggesting that there is no single reason people choose to work longer. Better health and longer life expectancy play a role. About 12% continue working by choice, to stay active and engaged. Another 9% do so out of financial necessity. For some, particularly among immigrant populations, continued employment also helps build eligibility and increase benefits in public programs, such as Old Age Security (OAS) and CPP, as well as private plans, particularly for those deferring retirement to age 70.

Taken together, Zigler observed, the data points to a structural change: Canadians are working longer, and pension systems are having to adjust.  This trend often conflicts with the need to create opportunities for younger workers. The result is rising tension among unions, employers and policy makers.

In British Columbia, the issue came to a head in a case involving longshore workers. A union policy placed pensioners at the bottom of the hiring list, prioritizing members under age 70 who were not yet collecting pensions. The rationale was straightforward—direct work to those without income. But a human rights tribunal ruled the practice discriminatory on the basis of age, despite the income gap between the two groups.

Pension Plans and the Older Worker

On the regulatory side, the rules remain firm. Under the Income Tax Act and most provincial pension laws, workers can’t defer their pensions past age 71. While employees can continue working, accruing benefits, and deferring payouts between ages 65 and 71, that ability ends at 71.

What’s changed is not the framework, but the scale. More workers are staying on the job later in life, forcing pension systems, employers and unions to confront questions they were not designed to answer.

Under the current tax law, pension accruals are not permitted after age 71, a longstanding rule built into most plans. What has changed, Zigler notes, is not the rule itself, but the growing number of older workers affected and the increasing pressure on plans to adapt.

Working pensioners under age 71 may continue accruing benefits, but plan provisions vary. Some require members to choose between drawing a pension and continuing to work to earn additional pension credits. Others allow retirees to draw a pension while working, sometimes offering a refund of contributions instead of new accruals.

These arrangements have fueled debate over double-dipping and, in some cases, triple-dipping, terms critics use for receiving a salary and a pension simultaneously. Opponents argue that pensions are intended to replace income after retirement, making concurrent earnings contentious, particularly among younger workers.

In practice, many public sector plans restrict overlap. Zieger pointed to plans such as the Ontario Teachers’ Pension Plan and public service plans, which typically require reducing or offsetting pension payments for those who return to work. Multi-employer plans are generally more permissive, reflecting ongoing shortages of skilled labor and the need to retain experienced workers.

Zigler observed that from the pensioner’s standpoint, pensions are earned. Drawing one while continuing to work isn’t double-dipping, but combining deferred and current pay. From the perspective of many pensioners, they should receive the full value of their labour. Greater controversy arises with triple-dipping—when salary and pension are paired with new employer contributions.

Historically, many pension plans have rejected this third layer, viewing additional contributions as supporting the plan as a whole, especially where benefits such as early retirement are subsidized. In this model, pensions are a shared system rather than individual accounts.

Pensioners often take a different view. If contributions are made on their behalf, they argue, that value should accrue to them—whether through benefits or refunds. In practice, outcomes vary by plan and collective agreements.

What’s Changed?

Until recently, employers in multi-employer plans could continue making pension contributions on behalf of workers over age 71, with those contributions typically retained by the plan unless a refund mechanism existed.

Zigler explained that policy changed with the 2021 federal budget, which amended tax law to prohibit, after 2022, contributions for a worker over age 71 from being used to benefit other plan members. As Zigler noted, this forced parties back to the bargaining table. Some agreements were updated to redirect contributions to other benefits, such as health plans. Others created spillover trusts to pay funds directly to affected workers. In some cases, employers paid cash in lieu of contributions, but many agreements remained silent.

Silence Led to Disputes

 Some employers argue that if contributions could no longer be permitted, they were under no obligation to pay anything at all. Others continued to set funds aside, but without a clear direction. With no explicit language, the issue has increasingly been resolved through litigation and arbitration.

One recent case that Zigler cited, LiUNA 506 v. GES Canada Exposition Services Limited, illustrated the issue. Sixteen employees over age 71 were affected. Although the union had established a spillover trust to distribute funds annually to these workers, the collective agreement had not been updated to reflect that arrangement. The employer refused to pay, arguing the agreement required contributions only to the pension fund and that such contributions were now illegal for these workers. With no provision allowing payments elsewhere, the employer argued, no payment was required.

The arbitrator disagreed. While contract language is central, interpretation must reflect context and original intent. When negotiated, both sides understood that all employees would benefit, regardless of age. The legal change did not alter that underlying bargain. In labour relations, the arbitrator noted, collective agreements are not interpreted as strictly commercial contracts, and allowing the employer to withhold payments would create an unintended windfall.

Although contributions to the pension fund for employees over age 71 would violate tax law, the arbitrator held that the employer’s broader obligation remained. The arbitrator directed the parties to negotiate a lawful alternative and retained jurisdiction over the matter. The dispute was ultimately resolved with payments made into the spillover trust. The amount at issue, roughly $10,000-$12,000, was modest, but the principles were significant.

The growing presence of older workers is exposing structural limits in pension and benefit systems built for a different era. As participation past age 65—and even age 70—becomes more common, governments, employers and unions will need to revisit rules that no longer align with workforce realities.