With typical homes unaffordable in every major Canadian city, iA Financial Group wants employers to help close the gap one paycheque at a time
Three decades ago, the average home in Canada cost roughly six times the average annual salary. Today the figure is closer to ten.
For employees in their twenties and thirties, assembling a down payment while servicing other obligations — such as student debt and rising rents — has become one of their most pressing financial concerns.
iA Financial Group, one of Canada’s largest insurance and wealth management companies, is positioning a workplace savings product as a partial response. The insurer argues the First Home Savings Account, or FHSA, is an underused channel for employers to help staff with one of their largest financial goals, and that doing so carries a business rationale rather than a purely altruistic one.
Daniel Werbrouck has worked in the pension and group benefits industry for more than 35 years. The FHSA, introduced by the federal government in 2023, has become a focus of his work. He describes the account as a hybrid of two existing registered plans, the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA). In this emerging space, iA is among a small number of providers offering it in a group setting, and one of the few capable of fully integrating it into a comprehensive employer-sponsored program.[DW1]
How the account works and why the group version differs
The FHSA lets eligible Canadians who have not previously owned a home contribute up to $40,000 over their lifetime toward a first purchase, subject to an annual limit of $8,000. Contributions are deductible against income, investment growth accumulates tax-free, and money withdrawn for a qualifying home purchase is not taxed. An account holder who never buys a home does not forfeit the balance; it can be transferred into an RRSP or a Registered Retirement Income Fund (RRIF) without triggering tax.
That treatment distinguishes it from the older Home Buyers’ Plan, which permits a withdrawal from an RRSP but requires repayment over 15 years. Werbrouck notes that a buyer can draw on both an FHSA and the Home Buyers’ Plan for the same purchase, increasing the size of a down payment.
Werbrouck distinguishes between the individual FHSA and the group version on two points. The first is cost. Group plans generally carry lower management fees than retail accounts, and over time that difference compounds into higher net returns for plan members.
The second, which he considers more important, is the mechanics of saving. Payroll deduction routes money into the account before it reaches the employee’s bank account, removing the monthly decision to set funds aside.
“A paycheque is very elastic,” he said. “People spend what they have. But if they pay themselves first and it goes straight into their FHSA, it’s saved right away.”
The payroll approach also delivers the tax benefit immediately through reduced withholding, rather than as a refund the following spring.
The case to employers
Werbrouck positions the group FHSA within a wider competition for talent, where compensation alone has become a less reliable draw. Benefits packages across many sectors have converged on a similar baseline of health coverage and a matching retirement contribution, and an employer looking to stand out has fewer obvious moves left.
“They’re in competition for hiring the same person from three different companies,” he said. “So if they have it and their peers don’t, that’s a differentiator.”
The retention argument follows from the same logic. Recruiting and onboarding a new hire carries real cost, and the employees most likely to use an FHSA tend to be early in their careers, precisely the group an employer has the most to gain from keeping.
“It’s people that you want to keep for a long time, because hiring an employee is expensive,” Werbrouck said. “If they have programs that are attractive to them, they might stay longer.”
Werbrouck also draws a line from household finances to workplace performance. Financial strain, he says, does not stay at home. He argues that easing some of it is a contribution to productivity an employer captures directly.
“Less stress means a more productive employee,” he said, “and probably a longer tenured one.”
The administrative commitment, by his account, is modest. A group FHSA slots into an existing group savings arrangement much as any other registered plan would. To make it even easier, iA’s group benefits teams work with plan sponsors and their advisors to assess whether the product fits a given workforce and to design the communications that drive enrolment.
Knowing the audience
The larger task is engagement, and here he describes a pattern familiar across the savings industry. Employees do not naturally seek out financial planning, partly because the goals feel remote against the demands of a given month.
While the FHSA’s eligibility concentrates its appeal among younger and newer staff, that focus isn’t a shortcoming Werbrouck argues. An employer that understands the makeup of its workforce can position the benefit where it will land, and the analysis required to do so, he says, is straightforward.
“People spend more time planning their next holiday than their retirement,” he said. “That plan is so abstract, whereas the holiday is coming up in six months.”
There has been a sea change in how retirement planning is treated, however. While the persistent challenge is getting plan members to use the resources available to them — for example. iA makes salaried financial advisors available — headway has been made. He recalls that when he entered the industry in the early 1990s, retirement plans were valued once a month and plan members were given little choice in how their money was managed. Today, plan members can transact online, choose among a wider range of investments, and draw on more financial education than was available a generation ago.
Optimistic for a similar response to tackle down payments, despite the affordability pressures Werbrouck remains broadly optimistic about the options available to younger savers.
His advice to younger workers is to open an FHSA early and treat the contribution as a fixed line in their budget. His advice to employers still weighing the product is to examine their own turnover figures and the makeup of their workforce before concluding it does not apply to them.
This article was produced in partnership with iA Financial Group
[DW1]A corriger. Quelque chose comme” ...iA is among a small number of providers offering it in a group format, and also one of the very few that can include it into a true employer program….” Ce que je veux dire ici, il y a seulement nous, Desjardins et Sun qui l’offre en ce moment. Par-contre, pour Sun, les fonds et frais sont differents pour le FHSA que le restant du programme de l’employeur.
