Only 38.1% of paid workers had a registered pension plans in 2006
Ottawa (4 July 2008) – The percentage of Canadian workers covered by registered pension plans (RRP) declined marginally in 2006, according to the most recent Pension Plans in Canada Survey released by Statistics Canada today. Only 38.1% of paid workers had a registered pension plans in 2006, down marginally from 38.5% in 2005. During this period, coverage for women increased, while membership of men declined.
The irony of this slight percentage decline is the fact that the number of workers covered by a pension plan has increased by 77,000 for a total membership to 5.8 million in 2006. The reason for this is that the actual growth in pension plan membership has still been far slower than the rate of growth of paid workers as measured by Statistics Canada's Labour Force Survey. Consequently, there has been a continuous decline of the proportion of paid workers with a registered pension plan.
The gains in membership numbers within Canada's 18,594 pension plans in 2006 were distributed evenly between the public sector, which added 39,400 members, and the private sector, which added 38,300, despite the fact that the public sector only accounts for less than 10% of all registered pension plans. Most levels of government in the public sector added members during the period.
Gains come from women
The gain in membership in registered pension plans during 2006 came from women. Membership rose by about 82,200 among women, but it fell by about 4,500 among men, for a net gain of 77,700. Of the 5.8 million total membership, women accounted for 2.8 million, or 48.5%, while men accounted for 3.0 million, or 51.5%. In 2000, women accounted for 45.1%, and men, 54.9%
Increases for women were shared between the public and private sectors
For the first time, the proportion of women members with defined benefit (DB) plans exceeded the share of men. The vast majority of RPP members belong to these plans, which are RPPs that define the benefits to be paid according to a formula stipulated in the plan text.
In 2006, 83% of women had a defined benefit plan, compared with 77% for men. This can be explained by the fact that most members in the public sector have a defined benefit plan and the proportion of women working in the public sector is higher than men.
Membership of defined benefit pension plans declined slightly
For a second year, membership of defined benefit (DB) pension plans declined slightly. However, these plans still remain the main type of plan, with nearly 80% of all memberships.
Gains in membership came from defined contribution (DC) pension plans contributed to the growth, with an increase of 6,100 members. The largest growth, however, came mainly from combination plans which added just over 88,000 members in 2006. Combination plans have both DB and DC contribution components.
DB plans are far superior than DC plans in that they guarantee a specific income at retirement, based on earnings and the number of years worked A DC plan that does not promise an employee a specified benefit upon retirement. Benefits depend on the performance of investments made with contributions to the plan.
Major membership gains in British Columbia and Alberta
British Columbia experienced the largest increase in membership in 2006, with a gain of 27,000, followed by Alberta, where membership was up by 25,600.
In 2006, membership in British Columbia totaled 675,000, below the peak of 689,000 reached in 2000. Membership in Alberta continued its upward trend, which started almost 10 year ago, peaking at 562,000 in 2006.
Since 2000, membership in Alberta has increased by just over 100,000. The strong performance of Alberta's economy over the last few years has been an important factor contributing to the growth in membership. However, the number of paid workers grew faster than pension plan membership.
Membership was up by 20,650 in Ontario and by 19,800 in Quebec.
Contributions on the rise
In 2006, total employee and employer contributions to RPPs climbed by $6.4 billion, or 17.1%, to a record high $43.8 billion.
Following low returns on investment early in 2000, employers continued to inject money into DB plans to ensure adequate financing. Employer contributions accounted for 72% of the total, up from 70% in 2005. Increases mainly came from special payments for unfunded liabilities and solvency deficiencies, which increased by 44% to $10.9 billion.
The market value of assets (for both active members and retirees) in employer pension plans amounted to nearly $1.1 trillion in 2006.
Pension Plans in Canada Survey is Statistics Canada’s annual census of all RPPs in Canada. It provides information on the terms and conditions of RPPs, membership in them and contributions made by and on behalf of the members.