The fundamental issue you're getting at here is, what are the implications for retirement for individuals who do not have coverage within a registered pension plan? Somewhat surprisingly, the issue of income replacement rates for people who do and do not have pensions has not been addressed up until now, largely because of lack of data and the longitudinal data of the duration that we need to address that question.
But on that point, we could ask what the implications are for retirement of having or not having pension coverage. Last year we released the 2007 General Social Survey, and in that release we focused on non-retired Canadians who were 45 to 59 years and we asked them a whole battery of questions about what their plans and expectations were around retirement.
What we found was that pension coverage was associated with a number of plans and expectations. Individuals who did not have a pension plan were far more likely to say they did not intend to retire. There was a difference of about 12 percentage points between those two groups. Of those who said they planned on retiring, those who did not have a pension plan were far more likely to express uncertainty or to say they didn't know about the timing of their retirement.
Clearly, if you have a defined benefit plan and you know at age 60 you will get x% of your salary, it will add certainty to one's retirement plans. And similarly, among those who stated a planned age of retirement, the likelihood of saying they were going to retire before age 60 was 17% of those who did not have a pension, but 39% of those with a pension. So the age of retirement and the age at which people leave the labour force is fundamentally different for those with and without pensions.
Finally, we asked these near-retirees: at the time you expect to leave the workforce, do you think your retirement will be more than adequate, adequate, barely adequate, or not adequate to maintain your standard of living? What we found was that 74% of people with pensions said they expected their retirement income to be adequate or more than adequate, compared to 60% of those with no pension. So that was a difference of about 14 percentage points. Quite clearly, there are differences.
In another study we have currently under way, we're just looking at a very narrow cohort of individuals using the tax file data. These are people who did or did not have RPP coverage in 1991 when they were 55. And by the time those individuals were 70 to 72 years of age, the difference in the proportion who were retired and who had left the workforce was 5 to 15 percentage points, depending on where they were in the income distribution. So quite clearly there are implications.
The final point I would draw from that last study, though, was that of those individuals who had left the workforce--those with no RPP, they had retired--we didn't find a significant difference in the earnings replacement rate achieved by RPP members and non-members. RPP non-members were far less likely to be retired--as I've just said, there was a difference of 5 to 15 percentage points--but of those who had left, at age 70 to 72 they were replacing a comparable share of their earnings that they had had at 55 years.
That's only one study, and given the importance of that issue, it certainly warrants more and deeper analysis, and that's certainly an important question to keep pursuing.