The Daily. Monday, December 10, 2001

Employer-sponsored pension plans

Membership in employer-sponsored Registered Pension Plans (RPPs) rose 3.5% from 1997 to 1999, the first upturn in the biennial trend since 1991. This growth was due mainly to a strong economy led by job creation during 1998 and 1999.

At the end of 1999, nearly 5.3 million workers belonged to 15,557 RPPs. Despite this recent growth in membership, the proportion of paid workers belonging to these plans was practically unchanged from 1997 at 41%.

RPPs covered about 2.9 million men and 2.4 million women in 1999, or 42% of all men and 39% of all women in the paid workforce.

The number of men participating in RPPs rose 2% from 1997 to 1999, the first increase since 1991. This was due primarily to a favourable employment market for men in 1999.

The increase among women was more than twice as large. Their membership rose 5% between 1997 and 1999, due mainly to employment growth during the period. Participation among women has generally climbed since the late 1980s, because of the increase in the number of women in the paid workforce and the extension of coverage to part-time workers.

Note to readers This release is based on the latest biennial report, available today, on employer-sponsored pension plans, or Registered Pension Plans (RPPs). Pension plans in Canada, January 1, 2000 provides information on terms and conditions, membership and contributions. RPPs are one important component of Canada's retirement saving system. Other components include the government-sponsored programs (Canada and Quebec Pension Plans, Old Age Security, Guaranteed Income Supplement and Spousal Allowance), as well as Registered Retirement Savings Plans. RPPs are established by employers or unions for their employees. There are two basic types of RPPs: defined contribution and defined benefit plans. A defined contribution plan is an RPP that specifies the employee's contributions, if the plan is contributory, and the employer's. In contrast, a defined benefit plan is an RPP that defines the benefits to be paid according to a formula stipulated in the plan text. The employer contributions are not predetermined, but are a function of the cost of providing the promised pension. The statistics in this report are derived largely from administrative data provided by the 10 pension supervisory authorities, nine provincial and one federal. The reference date for data relating to the number of RPPs and their terms and conditions is January 1 (in this case January 1, 2000), the effective date of most new plans or amendments to existing plans. Contributions and membership data are as of the plan year-end in the previous calendar year, in this case December 31, 1999. In this text, because the focus is on membership, we refer to the reference period as 1999.

Largest share of total assets held in RPPs

At the end of 1999, about $995 billion had been accumulated in the three main retirement income programs: RPPs, Registered Retirement Savings Plans (RRSPs) and the Canada/Quebec Pension Plans (C/QPP). Two-thirds of that amount was held in RPPs, 26% in RRSPs and 5% in the C/QPP.

RPPs contain the majority of assets because of the nature of the different retirement programs. Even though access to an RPP depends on whether an individual's employer offers one, contributions to the plan must be made regularly.

In contrast, although RRSPs are available to almost all workers in Canada, contributions are not mandatory and can fluctuate in amount from one year to the next.

Highest annual contributions made to RRSPs

In 1999, Canadians contributed $68 billion to these three retirement income programs. RRSPs accounted for 41% of that amount, RPPs made up 28%, and the C/QPP, 31%.

From 1989 to 1999, the assets accumulated in RRSPs have increased 172%, and RPPs have gained 126%.

Since 1994, RRSPs have consistently surpassed RPPs both in number of contributors and in total annual contributions. However, participation in RRSPs slowed considerably from 1997 to 1999. The amount contributed rose only about 1% during that period, compared with biennial increases of 20% to 28% since 1991.

Contributions to RPPs, however, peaked in 1993 at $20 billion and have not reached that level since. In 1999, $19 billion were contributed to RPPs.

Coverage above national average in five provinces

Five provinces had RPP coverage on December 31, 1999 above the national average of 41%. Leading the way was Newfoundland, where 50% of paid workers belonged to an employer-sponsored pension plan.

Proportion of paid workers covered by a Registered Pension Plan

December 31, 1999

Following were Manitoba (49%), Saskatchewan (48%), Quebec (43%), and Nova Scotia (42%). Coverage has been higher than the national average in these five provinces since 1991.

Except in Manitoba, the majority of RPP members in these provinces worked in the public sector, where unionization and pension coverage are high. In Manitoba, where most participants work in the private sector, coverage is high because, if an RPP is available, membership is compulsory. Manitoba is the only province that has such a requirement.

Coverage was below the national average in Alberta, Prince Edward Island, New Brunswick, British Columbia and Ontario. Except for Prince Edward Island and New Brunswick, these provinces have the highest percentages of RPP members in the private sector, where unionization is less prevalent.

Coverage is low in Prince Edward Island because it is the only province with no legislation governing registered pension plans.

Membership up in both public and private sectors

Employment growth was concentrated in the private sector in 1999, although it also affected the public sector. After declining for most of the 1990s, public-sector employment has been climbing steadily since the middle of 1998. In 1999, this expansion of employment in the private and public sectors also led to an increase in RPP membership in both sectors.

From 1997 to 1999, RPP membership grew 5% in the private sector. In the public sector, the gain was much smaller (+1%). Over the same period, private sector membership rose for both women (+8%) and men (+4%). In the public sector, the entire increase was due to the growing number of women belonging to RPPs.

In recent years, several defined benefit plans have been converted into defined contribution plans, although defined benefit plans remain popular. On December 31, 1999, 85% of RPP members belonged to defined benefit plans, unchanged from 1998.

A table with data on the labour force and paid workers by sex covered by an RPP is also available, free of charge, on Statistics Canada's Web site (). On the Canadian statistics page, choose The people, then Labour, employment and unemployment, then Employment Insurance and pensions .

Pension plans in Canada, January 1, 2000 (74-401-XIB, $31; 74-401-XPB, $41) is now available. See How to order products.

To obtain custom tabulations, for more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (1-888-297-7355; 613-951-7355); income@statcan.gc.ca) Income Statistics Division.