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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