I will speak to how the system has performed as a whole in achieving its objectives, focusing on the situation of women. Then I'll delve further into the private pillar and the questions you had about pension coverage and DB and DC plans.
In general, income levels for seniors have been growing. In 1980 the median after-tax income for seniors in a family of two or more was $33,600. This increased to over $40,000 in 2005. For unattached senior women, median after-tax income increased from $13,300 in 1980 to $19,100 by 2005. For unattached male seniors, the increase was from over $14,000 to over $20,000 in that same period.
The incidence of low income among seniors has decreased sharply for all family types since 1980. The percentage of seniors living below the after-tax low-income cut-off in 1980 was 21.4%, and by 2007 it had decreased to 4.8%. When we look at seniors living alone, men and women experienced a similar trend. In 1980 the percentage of unattached senior women living in low income was 57%. It was 47% for unattached men. By 2007 only 14.3% of unattached women lived below the low-income cut-off. Unattached men were doing slightly better at 13%. Looking to the future, this downward trend could continue among women, given their increasing participation in the labour force and contributions to CPP, registered pension plans, and RRSPs.
Sources of retirement income differ by age. Women rely more heavily on the public system than men, but the makeup of women's retirement income has been changing over time. There has been a general shift within the income sources in retirement that basically reflects paid labour force participation. Between 1980 and 2005, women's reliance on the public system remained the same, around 52%; however, it shifted from primarily OAS and GIS to work-related pension. It went from 13.7% from the CPP in 1990 to 20% in 2005. In other sources of income women have also experienced a shift, with increased income from registered pension plans and RRSPs, from 11.6% in 1990 to 27.3% in 2005.
Changes in labour force participation have played the primary role in the changes in the composition of women's retirement income. In 1976, 46% of women aged 15 or over were part of the paid workforce. By 2008 this had increased to 63%. For men the trend is a slight decrease in that time period, from 78% to 73%, but most striking is the increase in women aged 25 to 44 participating in paid labour: 54% in 1976, up to 82% in 2008.
With these increases in labour force participation we have seen increases in registered pension plan coverage and RRSP contributions for women. In 1979, 36.1% of women working in the labour force were members of an RPP. By 2006 this had increased to 38.9%. However, overall RPP coverage for workers dropped from 45.8% to 38%. This is because men's coverage has fallen from 52% in 1979 to 37.5% in 2006. Basically, the RPP coverage rate among women has surpassed that of men in 2007.
Perhaps more important, when you look at the length of time workers contribute to an RPP, using the Lifepaths microsimulation model, we see that 15% of women aged 65 in 1990 had contributed to an RPP for at least 15 years, compared to 29% for men, a substantial gap in 1990. Since then, however, this gap has been shrinking and is projected to continue to do so. This model projects that by 2017, 33% of women aged 65 will have contributed to an RPP for at least 15 years compared to 36% of men, a much smaller difference.
When we look more closely at RPP coverage, there are different trends when comparing defined benefit plans and defined contribution plans. DB plans provide more predictable lifetime benefits, generally based on years of service and usually as a fixed percentage of salary. Defined contribution plans are individual accounts into which employers and employees contribute. The pension received by an employee in a DC plan depends in part on the investment returns earned. Overall, DB coverage has declined from 43.5% in 1979 to 30.6% in 2006, while coverage in defined contribution plans has grown from 2.4% in 1979 to 6% in 2006. In 2006, 32.3% of women in the labour force were members of a defined benefit plan compared to 29.1% of men. So again, it was slightly higher than among men.
We've also seen an increase in RRSP contributions for both men and women since the 1980s. The proportion of women aged 35 to 39 contributing increased from 9% in 1981 to 31% in 2001. During that time period, the proportion of men aged 35 to 39 contributing rose from 21% to 38%. So although there remains a gap between men and women, it has been narrowing significantly over time.
Now I'll just speak briefly to your questions about the role of government within the system.
The Government of Canada is responsible for the first pillar of the RIS and shares responsibility for the second and third pillars with the provinces. The Government of Canada is a co-steward with provincial governments of both CPP and the CPP tri-annual reviews. Administering or delivering the plan is the Government of Canada's responsibility.
For the third pillar, the Government of Canada, through the Department of Finance, is responsible for setting the overall incentive structure for RPPs and other savings vehicles through the tax system. RPP regulation is divided among the two levels of government. The Government of Canada, through the Office of the Superintendent of Financial Institutions and the Department of Finance, is responsible for all federally-regulated employer plans (approximately 7 % of all plans currently) while the provinces are responsible for the remainder of plans in Canada. Examples of federally-regulated plans include: pension plans for some federal crown corporations, banks, companies involved in inter-provincial and/or international transportation, and communications companies. More detailed information on this issue is available from officials with the Department of Finance.
In conclusion, to date, Canada's retirement income system has done very well in achieving its key objectives, and in increasing pension security among all seniors, both men and women. Looking at women specifically, the overall trends are positive. Senior women's incomes have been growing and their poverty rate has declined dramatically over the last two to three decades. It is a fact however, that the majority of seniors remaining in low income are women, largely given their lack of past labour force participation. For example, in 2005, 80% of unattached low-income seniors were women. Nonetheless, the situation is likely to improve over time given that more and more Canadian women are contributing to and benefiting from work-based pensions such as the C/QPP as well as employer-sponsored pensions and RRSPs. As we have indicated, the pension coverage and savings gaps between women and men have been shrinking and are likely to continue to do so.
Madam Chair, and members of the committee, this concludes our opening remarks, and we welcome any questions.