OSFI releases statistics on pension and savings plan coverage in Canada
The Office of the Superintendent of Financial Institutions (OSFI) recently released a fact sheet titled Registered Pension Plans (RPPs) and Other Types of Savings Plans – Coverage in Canada. The fact sheet was issued by the Office of the Chief Actuary of OSFI, and was assembled using information available from Statistics Canada and the Canada Revenue Agency.
The fact sheet summarizes the following key trends on pension and savings coverage in Canada:
- The total number of active RPP members increased from 5.8 million to 6.3 million from 2006 to 2016; however, the proportion of employees covered by a RPP in Canada remained at 38% over the 10-year period (dropping by approximately 1% on an unrounded basis).
- Women represent just over 50% of active RPP members in 2016. This proportion has risen steadily over the past thirty years – women represented 35% of active RPP membership in 1986, 44% in 1996, and 48% in 2006.
- The proportion of active RPP members participating in a contributory vs. non-contributory plan increased from 81% to 88% from 2006 to 2016.
- The proportion of public sector employees participating in RPPs increased from 84% to 86% from 2006 to 2016 (with 3.3 million active public sector RPP members in 2016), while private sector RPP coverage decreased from 26% to 23% from 2006 to 2016 (with 3.0 million active private sector RPP members in 2016).
- The proportion of active RPP members in defined benefit (DB) plans decreased from 80% to 67% from 2006 to 2016. This decrease was far more drastic in the private sector (67% to 41% from 2006 to 2016) compared to the slight decrease in public sector DB plan coverage (93% to 91%).
- In 2016, there were 1.6 million members of employer-sponsored group Registered Retirement Savings Plans (RRSPs) and/or Deferred Profit Sharing Plans (DPSPs), excluding active RPP members also participating in a group RRSP and/or DPSP. If this group of plan members is combined with active members of RPPs, the proportion of employees covered by a tax-assisted plan in Canada in 2016 is 47%. The proportion of employees who are active members in an RPP is 38%.
- The number of tax filers who contributed to an RRSP decreased from 6.2 million to 5.9 million (from 27% to 23%) from 2006 to 2016. This decrease was observed across all age groups. There is a trend for this percentage to increase for higher-income earners – 60% of tax filers earning $80,000 or more in 2016 contributed to RRSPs.
- The number of tax filers who contributed to a Tax-Free Savings Account (TFSA) increased from 4.5 million to 7.8 million (from 19% to 30%) from 2009 to 2016.
The proportion of active employees covered by RPPs in Canada has remained similar from 2006 to 2016, but coverage by DB plans has decreased significantly in the private sector. Public sector coverage by DB plans has declined only slightly over the same period. Overall, nearly half of employees in Canada are covered by an employer-sponsored pension or taxassisted retirement savings plan.
The statistics published in the fact sheet are consistent with the ongoing trend of many private sector employers finding ways to manage their costs and de-risk, often converting the plans they sponsor from DB RPPs to another form of tax-assisted savings for their employees. Given the fact that these statistics are based on data up to 2016, it will be interesting to see how these trends continue to develop in response to recent reforms to pension funding rules, which have relaxed DB pension funding requirements for many employers.