Great. Thank you very much for having us here this afternoon.
The deck that you have in front of you is organized into two broad sections. In the first few slides we focus on working-age women and men in the paid labour force and the proportion of them who belong to an employer-sponsored pension plan or a registered pension plan, in slightly different terms. We're going to consider data from three different sources, focusing on the trends in pension coverage drawn from each of those data sources to piece together the best picture we can.
In the second part of the presentation we're going to shift our focus from working-age women who may or may not have pensions to women aged 65 and over and the income that they receive. There the key story is that over the past 25 years we've seen quite a profound shift in the working lives of women, as evidenced in their increasing labour force participation and their contributions to retirement savings programs, and these changes are reflected in the amounts and sources of income they receive.
If you turn to the first line graph, data on pension coverage can be drawn from a number of sources, each of which have various strengths and limitations. We were going to consider three of those sources. This chart is based on administrative data compiled on all registered pension plans in Canada, and it shows the share of paid workers aged 17 to 64 who have pension coverage.
Among men, as shown in the blue line, there has been an ongoing decline in pension coverage rates in Canada over the last 15 to 20 years, from around 47% to 48% in the late 1980s to about 38% in 2007. Among women, there was an increase in pension coverage rates between the mid-eighties and the early to mid-nineties, and as you see here, these data suggest that the pension coverage rate for women has remained fairly stable, at around 39%, over the last decade.
Turning to two other sources of data on the next table, which are taxation data and household survey data, what I want to do is focus on the trends within age groups and focus particularly on the trends and coverage rate between 1997 and 2006-07.
Considering, first, men on the right-hand side of the table, data from the taxation date in the surveys confirmed the downward trend in pension coverage rates, particularly among men 35 to 44 and 45 to 54 years, and you see here a magnitude of decline in the range of four to six percentage points over the last decade. When we look more closely at men aged 25 to 34, we see that pension coverage rates have stabilized or perhaps increased very modestly.
When we look at taxation data for women on the left-hand side of the table, we see that the tax data show again stability in the pension coverage rates among women 35 to 44 and 45 to 54 years. Although the survey data show something of an increase for women, this could do with the way that respondents to household surveys report group RRSPs, for example, and that's the difference between these data sources. Interestingly, both the taxation data and the survey data show increases in pension coverage rates among women aged 25 to 34 over the past decade.
Turning to the next table, in addition to trends and coverage, changes in the characteristics of pension plans have received considerable attention and public discussion. Here what we're considering is the shift from defined benefit plans to defined contribution plans. In a nutshell, a defined benefit plan is one where retirement benefits are established by a formula that's laid out in the pension plan, such as 2% per year of service based on earnings during some period, and employer contributions to the plan are not predetermined but based on actuarial valuations. A defined contribution plan is one where the contributions are based on a fixed amount or a percentage of the employee's earnings, and while contribution amounts are known, the amount of the retirement benefit is only known when the employee reaches retirement and that depends on things such as the rate of return.
Between 1991 and 2007 the number of pension plan members who belong to a defined contribution plan more than doubled, increasing from about 466,000 to 935,000. Those numbers do not include group RRSPs. Evidence from the 2005 Workplace and Employee Survey indicates that about 18% of employees have a group RRSP, which is something akin to a defined contribution plan.
There are two other points I would draw from this table.
First, among both women and men, the proportion of paid workers who have pension coverage is far higher in the public sector, well above 80%, than it is in the private sector, at 22% for women and 29% for men.
Secondly, most of those individuals who have a pension plan—over 90% in the public sector—have a defined benefit plan, while those in the private sector who belong to a pension plan less often have one. Among women, 59% have a defined benefit plan, 26% a defined contribution plan, and increasingly we're seeing the emergence of mixed plans, wherein you have characteristics of both DC and DB plans or employees within the same firm who may belong to one or the other of those plans; we see that in the mixed numbers.
Turning to the next slide, I want to shift our focus from working-age women and their pension coverage to women who are now aged 65 and over, and to the retirement income they receive. Over the past three decades, median incomes of the elderly in Canada have increased significantly. Between 1980 and 2007, the median incomes of elderly couples increased from about $30,000 to $47,000, and those are inflation-adjusted dollars. Among elderly women living alone, the median income increased from just under $15,000 in 1980 to about $22,000 in 2007.
As displayed on the next slide, women's increasing participation in the paid labour force and their contributions to retirement savings programs, such as the Canada and Quebec pension plans and registered retirement savings plans and RPPs, are one factor underlying these trends. In this slide, we consider the role played by the Canada and Quebec pension plans. On this chart, the black line shows the percentage of women aged 65 or older who receive income from CPP or QPP as measured on the percentage axis on the left. Between 1980 and 2006, the proportion of senior women in Canada receiving CPP or QPP benefits more than doubled, from 35% to 84%, and of those who are receiving benefits, the median amount, as shown by the red line and the axis on the right, increased from $3,100 to $5,500.
We can also look, as shown on the next slide, at these same trends in terms of RRSP pensions and superannuations. Again we look at the proportion of women aged 65 and over receiving income from this source and at the median amounts. As shown on the black line, the proportion of women receiving retirement income from RRSPs, pensions, and superannuations increased from 20% to 55% over this period, and the median amount received by recipients increased from $4,600 to $7,400.
Overall, the income that Canadian women now receive in old age reflects changes in their working lives and their participation in both retirement savings programs, both publicly and privately administered.
As seen on the next slide, the overall effects of these changes can be assessed by considering the total aggregate income received by all senior women in Canada. In 2006, women aged 65 and over received about $54 billion, up from about $20 billion in 1980. That overall increase, as we move towards the right of the chart, reflects increases in average income as well as the fact that there are more elderly women in Canada today now in absolute terms than there were 26 years ago. But what's particularly interesting about this chart is the growing proportion of total aggregate income received from the Canada and Quebec pension plans, as shown by the yellow area, and the growing proportion of income received from RRSPs, pensions, and superannuations, as shown by the red area.
To conclude, I want to highlight two points regarding the composition of income received by seniors.
On the next table, we look at how the composition of income received by seniors varies by where they are in the income distribution. This slide is taken from a recent Statistics Canada study that looked at seniors who had significant labour force attachment when they were younger; specifically, they had earnings of at least $10,000 at age 55.
The key point to be made here is, if we look at the column entitled “bottom quintile at age 55,” that people who were at the bottom of the income distribution at age 55 received the majority of their income from old age security, guaranteed income supplement, and the Canada/Quebec pension plans—62% of it—by the time they were aged 75 to 77. For those who were at the middle of the income distribution when they were 55, the proportion of income received from OAS, GIS, and C/QPP was around 43%, while pensions, superannuations, and other investments accounted for almost half of their income at age 75.
Finally, those who were at the top of the income distribution relied primarily on pensions, superannuation, and investments. The importance of transfers on this chart would be more evident for those at the bottom of the distribution if this study hadn't looked at people with strong labour force attachment at age 55.
From the final slide in this afternoon's presentation, we want to make the point that in spite of the growing share of income that seniors and senior women receive from retirement savings programs such as the Canada and Quebec pension plans, pensions, and RRSPs, many also receive income from the guaranteed income supplement. In 1981, 55% of women aged 65 or older received the guaranteed income supplement. In 2008, 40% did so. The share of women aged 65 to 69 receiving the GIS is indicated by the dotted red line; it's about 10 percentage points lower. This suggests that GIS receipt is higher among women who are in their seventies and eighties.
Thank you very much.
