Executive summary

In spite of the importance of registered pension plans (RPPs) in discussions of Canada's retirement income system, very few studies have examined the financial outcomes experienced by registered pension plan (RPP) members and RPP non-members. One exception is Ostrovsky and Schellenberg (2009), which provides a broad overview of financial outcomes, focusing on average incomes and average replacement rates achieved by RPP members and non-members.

This study builds on the Ostrovsky and Schellenberg (2009) analysis by examining the range of outcomes experienced by male RPP members and non-members—specifically, the distributions of earnings replacement rates achieved by each group. The earnings replacement rates of RPP non-members are far more dispersed than those of RPP members, reflecting a greater diversity of financial outcomes. Larger shares of RPP non-members than members have earnings replacement rates below various thresholds (e.g., less than 0.50 or less than 0.60), but, at the other end of the distribution, larger shares also have earnings replacement rates of 1.0 or more. While the average earnings replacement rates of the two groups are comparable, the median earnings replacement rates of RPP non-members are lower than those of RPP members. Among retired men from the middle of the earnings distribution, the median replacement rates of RPP non-members are seven to nine percentage points lower than the median replacement rates of RPP members.