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Study: Shifting pensions

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1991 to 2006

In 2006, defined-benefit pension plans remained the predominant type of employer-sponsored plan but another type of plan has been gaining ground since 1991, especially in the private sector.

In 1991, defined-contribution plans covered 14% of members in private-sector plans. But by 2006, this proportion had nearly doubled to 27%. During this time span, defined-contribution private pension plans added 381,900 members.

At the same time, membership in defined-benefit plans in the private sector decreased by 279,200, bringing their share to 73% in that sector, down from 86% in 1991.

The situation was much different in the public sector. Membership in defined-contribution plans increased slightly, but they remained a small minority.

Analysis indicates that changes in industrial structure, plan size, and the distribution of participants by sex and province did not appear to have a role to play in the increased prevalence of defined-contribution plans. In fact, these factors should have encouraged the growth, albeit slight, of defined-benefit plans.

Note: A defined-benefit plan sets 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 employer, as well as by the employee if the plan is contributory. Although defined-contribution plans have some advantages for employees, their increased prevalence suggests a transfer of risk from employers to workers since 1991.

This report is based on an annual census of all registered pension plans in Canada, the Pension Plans in Canada Survey. Although the coverage of all plans decreased by about 19% between 1991 and 2006, other studies suggest that group Registered Retirement Savings Plans (RRSP) coverage, which is not included in this survey, increased over this period. Defined-contribution plans and group RRSP provide similar levels of investment risk and portability.

Definitions, data sources and methods: survey number 2609.

The article "Shifting pensions" is now available in the May 2009 online edition of Perspectives on Labour and Income, vol. 10, no. 5 (75-001-X, free), from the Publications module of our website.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (613-951-4660;, Labour and Household Surveys Analysis Division.