Canada's retirement income programs

The financial reserves in Canada's principal retirement programs increased substantially during the 1990s, although accumulation in the biggest program has leveled off since the turn of the century, according to a new long-term look at pensions.

In total, Canadians had accumulated an estimated $1.15 trillion in the three main retirement programs by the end of 2001, almost double the level of $593.6 billion in 1990, when measured in constant (inflation adjusted) dollars.

Of the total in 2001, 69% of assets were in employer-sponsored registered pension plans (RPPs), 25% in registered retirement savings plans (RRSPs) and about 6% in the Canada/Quebec pension plans (C/QPP).

The value of assets in RPPs peaked at almost $826.4 billion in 2000, then fell slightly to about $794.1 billion in 2001. This was due in part to falling stock prices that resulted in a devaluation of fund assets.

As of January 1, 2002, just under 5.5 million members, or about 40% of total paid workers, were participating in 13,861 registered pension plans.

This membership was an increase of 2.9% from 1992. At that time, RPPs covered 5.3 million paid workers, or about 45% of the total, in 18,028 registered plans.

Canadians had nearly $292.5 billion invested in RRSPs at the end of 2001, and about $64.7 billion in the C/QPP.

RPP coverage: Gap between women and men closing

At the end of 2001, about 2.5 million female workers belonged to an RPP, an increase from about 2.2 million in 1991. At the same time, the number of male workers covered by an RPP declined from 3.1 million to just under 3 million.

From the end of 1991 to 2001, the gap in the number of men and women participating in RPPs closed significantly, from almost 1 million to less than half a million members.

The increase in female membership can be attributed to the growth in their labour force participation. Among male workers, RPP membership was affected by the recession of the early-1990s.

From 1991 to 2001, the RPP membership in the private sector grew 6.7% compared with a 1.3% decline in the public sector. Both rates generally correspond to changes in the size of the workforce in each sector.

Private sector membership stood at 2.9 million at the end of 2001, compared with 2.5 million for the public sector.

Trusteed pension funds: Assets nearly tripled

The majority of assets held in registered pension plans (RPPs), about 72% in recent years, are in trusteed pension funds. These are managed by legal trustees who invest the funds in financial and capital markets. The remaining assets are held in government consolidated revenue funds, insurance companies and Government of Canada annuities.

The value of trusteed pension fund assets increased 151% during the 1990s, from $223.8 billion in 1990 to $598.2 billion in 2000. This level in 2000 represented just under three-quarters of all RPP assets.

Of the just under 5.5 million Canadians who were members of RPPs in 2000, about 4.0 million were members of trusteed plans. Contributions from members and employers are invested in the financial and capital markets.

The 1990s were a good period for trusteed pension funds, primarily because of the rise in stock prices. As measured by the Standard & Poor's/Toronto Stock Exchange Composite Index (S&P/TSX), stock prices rose 125% over the decade.

Perhaps the single most revealing statistic on the performance of trusteed pension funds during the 1990s has been the steep rise in net income during the latter half of the decade.

Net income went from an estimated $15 billion in 1990 to more than $56 billion in 2000, primarily the result of profits from the purchase and sale of stocks. As a result, some funds took a prolonged contribution holiday, from 1996 to 2000 in some cases.

RRSP contribution room increases six-fold

In 2001, the total RRSP room available to taxfilers aged 25 to 64 reached $284.9 billion, a six-fold increase from 1991. Less than 9% of available contribution room has actually been used, since the majority of taxfilers use only a small portion of their available room in a given year. Since 1991, unused RRSP room has grown much faster in the lower income groups than the higher ones.

In 2001, only 9% of taxfilers used 95% or more of their available RRSP room. The majority of these taxfilers were aged 45 to 54, or had incomes greater than $40,000.

About 40% of taxfilers using most of their room had an income of $80,000 or more, although this is down from 45% in 1999.

Not including transfers, RRSP normal contributions for taxfilers aged 25 to 64 peaked at $26.5 billion in 2000, a year marked by a strong stock market.

In 2000, women aged 25 to 64 contributed about $10 billion to an RRSP, up 8% from 1999, while men contributed $16.5 billion, up 0.2%.

From 2000 to 2001, the number of contributors declined to 5.8 million taxfilers, while contributions fell to $24.9 billion.

Definitions, data sources and methods: survey numbers, including related surveys, 2608, 2609 and 2620.

The CD-ROM Canada's retirement income programs (74-507-XCB, $195) will be available soon.

This product is an easy-to-use CD-ROM providing statistics on a complete variety of concepts related to retirement from 1990 to 2001. It presents historical data on the major retirement income programs in Canada: Old Age Security programs, Canada/Quebec Pension Plans, Registered Pension Plans and Registered Retirement Savings Plans.

The data sets are available through different types of breakdown such as province, family type, age, sex, type of plan, type of revenue and industry sector.

Data on workers covered by a registered pension plan from 1991 to 2001 and data on retirement saving through RPPs and RRSPs for 2001 are also available online in the Canadian statistics module. From the Canadian statistics page, choose The people, then Labour, employment and unemployment and Employment insurance and pensions.

For more information, contact Client Services (1-888-297-7355; 613-951-7355; fax: 613-951-3012; income@statcan.gc.ca), Income Statistics Division.