Participation in private retirement savings plans,  1997 - 2008

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Pension and Wealth Section1 Income Statistics Division
Statistics Canada

by Karim Moussaly


Amidst the financial crisis and changes in the labour market, retirement savings plans are subject to greater scrutiny. The retirement income system in Canada stands on both public and private retirement savings plans. This article describes the coverage of Canadian workers by private retirement savings plans. Using cross-sectional tax data from the T1 Family File, we describe the coverage of Canadian employed tax filers aged 15 or more by employer-sponsored pension plans (EPPs) and whether or not they contributed to Registered Retirement Savings Plans (RRSPs) in 1997,2000,2003, 2006 and 2008. The share of employed tax filers participating in either type of plan declined from 54% in 1997 to 50% in 2008  and this is mainly driven by a decreasing share of employed tax filers contributing to a RRSP. The share of employed tax filers participating in an EPP remained fairly stable over the period.


The population of Canada is ageing:  the median age in Canada increased from 35.2 years old in 1996 to 39.3 years old in 20082.  This results in a larger share of the population getting closer to retirement.  How are Canadians getting financially prepared for retirement? Retirement income may come from what are commonly refered to as the 'three pillars' of retirement income protection (Baldwin, 2006)3.  Pillar 1 consists of the federal Old Age Security (OAS) and Guaranteed Income supplement (GIS) programs. Retirement income from pillar 2 consists of income from the Canada and Québec Pension Plans (C/QPP).  Pillar 3 consists of income generated from private retirement savings plans, the most common being Registered Retirement Savings Plans (RRSPs) and employer-sponsored pension plans (EPPs)4

This article focuses on savings habits in the third pillar.  The tax system provides incentives to save for retirement in the plans that are part of the third pillar.  By encouraging savings for retirement, these vehicles allow averaging income over one's lifetime.  In this article employer-sponsored pension plans (EPPs) refers to Registered pension plans(RPPs) and deferred profit sharing plans(DPSPs).

Using the complete T1 Family File for the first time allows a cross-sectional descriptive analysis of employed tax filers who reported a pension adjustment (PA) amount, which reflects the benefits accrued for the employee in an EPP, and/or who contributed to a RRSP in 1997, 2000, 2003, 2006 and 2008. 

Section 1 provides a brief description of the tax treatment of retirement savings plans in Canada, which is followed by a description of the data in section 2Section 3 presents characteristics of employed tax filers participating in a private retirement savings plan as well as those who do not participate in any of the private retirement savings plan considered in our analysis.


  • The share of employed Canadian tax filers participating in a private retirement savings plan was 50% in 2008, slightly down from 54% in 1997. This decline reflects mostly a drop in the share of employed tax filers contributing to a Registered Retirement Savings Plan from 41% in 1997 to 34% in 2008.  The share of employed tax filers participating in an employer-sponsored pension plan remained stable at 32% over the period.

  • The rate of participation in employer-sponsored pension plans increased for women from 32% in 1997 to 34% in 2008, while declining for men from 33% to 31% over the period.  In 2008, the number of EPP members was higher for women than for men, while it was lower for the previous years. 

  • Participation in private retirement savings plan is the highest for 'prime-aged' workers (those aged between 35 and 54 years old): 63% of them participated in such a plan in 2008.  However, the rate of participation in employer-sponsored pension plans declined slightly for this age group between 1997 and 2008, while it increased or remained fairly stable for the other age groups.

  • The rate of participation in private retirement savings plans remained stable in the lowest income quintile between 1997 and 2008, while it declined within each of the other quintiles.  The rate of participation in employer-sponsored pension plans increased for the three lowest income quintiles and decreased for the two highest income quintiles over the period.  However, the increases in the lowest income quintiles were offset by decreases in participation rates in Registered Retirement Savings Plans, as all income quintiles registered decline.

  1. We thank the following people from Statistics Canada for their suggestions and support:  Bruno Pépin, Karen Dorman, John Nicoletta and Brian Murphy from the Income Statistics Division, Michel Palardy and Francine Monette from the Small Area and Administrative Data Division and Grant Schellenberg from the Social Analysis Division.  We would also like to thank Bob Baldwin for his useful comments.  Any error remain our own.
  2. Source:  Statistics Canada, CANSIM table  051-0001. 
  3. The 'three pillars' classification comes from work conducted by the World Bank in the 1990's that has since been refined.  Some authors use different definitions of the three pillars.
  4. Dividing the third pillar into workplace pension plans and RRSPs reflects distinction in the Canadian tax law (Baldwin 2006, p.384).
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