The maturation of Canada's retirement income system: Income levels,
income inequality and low income among the elderly
by
John Myles
Business and Labour Market Analysis Division
Analytical Studies
Branch research paper series, No. 147
This paper revisits trends in the
level and distribution of income among Canadian seniors in the context of what
is arguably the major source of change in these trends since the end of the seventies,
the maturation of Canada's public pension systems and the continued development
of private pension systems. The expanded role of pensions in the 1980s and 1990s
is largely the result of changes that occurred in the 1950s and 1960s. The Canada
and Quebec Pension Plans (C/QPP) were implemented in 1966 and the first cohort
to receive full C/QPP benefits turned 65 in 1976. Cohorts retiring after this
period were also the beneficiaries of the expansion of private occupational pensions
that took place between the 1950s and the 1970s.
I rely on a detailed decomposition
of income by source to show that not only did the maturation of these earnings-related
programs (public and private pensions) produce a substantial increase in average
real incomes but also to a substantial reduction in income inequality among the
elderly, due mainly to C/QPP benefits. Rising real incomes went disproportionately
to lower income seniors contributing to the well-known decline in low-income rates
among the elderly.
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