Pension plans in Canada
Statscan - Membership in registered pension plans (RPPs) increased 1.7% in 2008 to just over 6.0 million, the first time the number of active participants has surpassed that level.
The number of registered pension plans as of January 1, 2009 remained virtually unchanged at 19,200.
Women accounted for 83% of the growth in RPP membership. In 2008, they represented 49.1% of total membership, a slight increase over 2007.
In addition, all the growth came from the public sector, where RPP membership increased 4.3% compared with a 0.7% decline in the private sector. Again, women accounted for 86% of the growth in RPP membership in the public sector.
Membership in private sector plans still represents more than one-half of total RPP membership, but its share has continued to decline. In 2008, private sector plans accounted for 51% of total membership, down from 52% in 2007.
About 4.5 million people, or 75% of those with a RPP, were in a defined benefit pension plan. The rate of participation in these plans has declined constantly from more than 85% a decade earlier.
Membership in the other most frequent type of plan, defined contribution, remained virtually unchanged at 939,200, about 16% of the total.
Membership in other types of pension plans, including hybrids and combinations, accounted for almost 10% of total membership. This type of membership showed high gains, increasing by 29.9% to 565,400 in 2008. This growth came mainly from sponsors in the private sector who added a defined contribution component to their defined benefit plans for new entrants.
About 38% of employees had a registered pension plan in 2008, roughly the same as the previous three years. However, the rate of participation in pension plans continued to increase for women, while men registered a small decline.
In the public sector, the coverage rate was 84%; in the private sector, it was just over 25%, down slightly from 2007.
Total employee and employer contributions to RPPs in 2008 exceeded $40 billion for a third consecutive year. Employers contributed 67% of the total in 2008 compared with 68% in 2007. More than 20%, or $6 billion, of the employer contributions were for unfunded liabilities.
The economic downturn that started in the fall of 2008 had an impact on market assets in RPPs. At the end of 2008, the market value was $1,016 billion, down 12% from the previous year. This also had a significant impact on the funding situation of RPPs.
In terms of solvency, the latest results, for the three-year period ending in 2008, show that about 75% of RPPs had a solvency deficiency. This means their liabilities were greater than their assets.
Note: Registered pension plans (RPPs) are established by employers or unions for employees. These data come from the Pension Plans in Canada Survey at January 1, 2009.
A defined benefit plan defines the benefits to be paid according to a formula stipulated in the plan text. The employer's contributions are not predetermined, but are a function of the cost of providing the promised pension. A defined contribution plan specifies the contributions made by the employee, if the plan is contributory, as well as by the employer.
Pension benefits paid are a function of accumulated contributions and investment returns. Membership is defined as active members of the pension plan currently making contributions to the pension plan or for whom contributions are being made.
A plan has a solvency deficiency when its assets divided by its liabilities (values determined as if the plan had terminated) is less than 1.