Data sources, methods and definitions

Data sources

In this study, data from the 1999 and 2012 Survey of Financial Security (SFS) are used. The SFS is a voluntary survey that collects information from a sample of Canadian families on their assets, debts, employment, income and education. Information is collected on the value of all major financial and non-financial assets and on the money owing on mortgages, vehicles, credit cards, student loans and other debts.

This study focuses on family units with no significant business equity and whose major income recipient was aged 30 to 54 and employed as a paid worker at the time of survey collection. Because the wealth accumulation process for self-employed individuals likely differs from that other families (for example, unincorporated self-employed individuals not at risk of being covered by an RPP), families with significant business equity were excluded from the calculations. Families with significant business equity are defined as those with at least $1,000 of business equity in 2012 dollars. Of all family units with less than $1,000 of business equity, the vast majority (roughly 90%) had no business equity. Of the remaining 10 %, at least 4 in 5 family units had negligible business equity.

Definitions

Net worth: Total value of assets, minus the total value of debt, or liabilities held by family units. The value of net worth is generally understood to be the most common definition of the wealth of a family.

RPP assets: Assets corresponding to the present value of savings in registered pension plans (RPPs). These assets can be the result of past savings. As a result, those who have RPP assets were not necessarily contributing to a pension plan at the time of survey collection.

Registered pension plan (RPP): A plan the employer establishes to provide a pension to retiring employees. Regular employer contributions finance retirement benefits, and, in many cases, so do employee contributions and investment income resulting from these contributions.

Defined benefit (DB) plan: An RPP under which benefits correspond to a set amount or are determined with a formula providing a pension unit for each year of service.

Other types of plans include defined contribution plans (DC plans), which are RPPs to which the value of accumulated contributions is applied upon employee retirement to provide pension income, and hybrid or mixed plans (H/M plans), which provide the best of a defined benefit and a defined contribution option. Mixed plans provide income from both defined benefit and defined contribution portions. In hybrid plans, some degree of risk is shared between the employer and employees.