I'm going to talk for the next little while about security of pension benefits.
As background, James took you through some of the numbers concerning people in Canada who participate in pension arrangements in the public sector and the private sector. I will take a separate cut at this and look at the number of people who participate in defined benefit pension plans. Those are benefits whereby you basically come to retirement, a formula is run through, and an amount of income is provided to you for the rest of your life. Roughly speaking, in Canada there are about 4.5 million people covered by those kinds of pension arrangements.
There are almost half a million other people who are covered by combination types of arrangements that are part “defined benefit” and part “defined contribution”. Defined contribution is something that works just like your RRSP. So there are about five million working Canadians who are covered by a pension arrangement that provides a known level of income for the balance of their life.
Of the balance of working Canadians, about one million participate in defined contribution pension plans--that is, pension arrangements from their employer that work like your RRSP balance. The remaining 11 million-plus Canadians either have nothing or save for retirement through RRSPs. So you have over 12 million Canadians in total who are not participating in defined benefit pension plans; that's over two-thirds of the working population.
There are a number of issues for that group. For women in particular, we need to think about the fact that they live on average longer than men. Their requirement for savings through these defined contribution arrangements is larger than that for men. That's an additional risk, separate and apart from the fact that as individuals save for retirement through defined contribution arrangements, they need not to consider that they'll live the average length of time, but to consider how long they as an individual will live, which in essence tends to require over-saving: if you live longer than the average, you're in trouble if you've saved to live just for the average length of time.
Let me put some numbers around this. We've heard about the financial troubles of pension plans, particularly as we went through last year. But we've had a couple of perfect storms in the financial markets in this decade alone, in which we've seen defined benefit pension plans move from a situation where they had on average, at the end of 2000, more than enough assets to provide for their liabilities—about 108% assets relative to liabilities at the end of calendar year 2000, and this is from public company financial statements—to, at the end of last year, about 85% assets relative to liabilities. So we've had a 25% drop in the average.