With governments failing to improve the retirement savings system, there’s an opportunity, if not a duty, for financial advisors to step into the breach.

The federal Department of Finance recently released legislation to create a new workplace pension option, known as pooled registered pension plans. PRPPs represent the feds’ latest attempt to address the problem of insufficient retirement savings by Canadian households. It’s hoped that the new PRPPs will fill the gap, in which traditional workplace pension coverage is declining and private alternatives (such as RRSPs) have seemingly failed to ensure that Canadians are adequately preparing for retirement.

To be sure, the problem is real. According to the latest data from Statistics Canada, less than a third of Canadian workers are covered by a workplace pension plan, and that proportion is shrinking. Of those that do have a pension, defined-benefit plan coverage is declining. And, yet, only 26% of eligible taxpayers made an RRSP contribution in 2010.

So, rather than expanding the Canada Pension Plan, the government has chosen to introduce PRPPs, which are being touted as a new, low-cost savings option for Canadian workers. The government’s direction pleases the financial services industry — particularly the big banks and insurance firms — which would much rather have this business for itself than see an expansion of the CPP.

For a number of reasons, it seems likely that PRPPs won’t do much, if anything, to solve the problem of insufficient savings. There is no requirement for employers to contribute to these plans, no assurance that PRPPs really will cost less than the existing options (such as RRSPs and TFSAs) and it appears that they will be less flexible as well.

If the government isn’t going to expand the CPP, it’s clear that this savings shortfall will have to be addressed by households — and, by extension, their advisors. The imperative to promote higher savings rates, and to structure more cost-effective portfolios, has never been more critical.

Independent, conscientious advisors may be all that stand between the negligence of governments and the avarice of Bay Street.