AUG 1: BEST FROM THE BLOGOSPHERE
August 1, 2022
More had pension coverage in 2020, but six in 10 don’t: Statistics Canada
New research from Statistics Canada shows that 57,000 more Canadians had registered pension plans in 2020 than in 2019, reports Investment Executive.
However, the article notes, 2020 – the first year of the pandemic – saw fewer workers overall due to COVID-19. So while a greater percentage of workers had pensions, the overall worker pool actually shrunk that year, the article notes.
Let’s dig into the other findings.
“Nearly 6.6 million Canadians had a registered pension plan in 2020, up by 57,000 (0.9 per cent) from 2019,” Investment Executive reports, citing Stats Canada data.
“The increases came in Quebec (33,000), Ontario (25,200) and British Columbia (16,800), while fewer workers in Alberta (-23,400) and in Newfoundland and Labrador (-3,500) had pensions,” the article continues.
Defined benefit pensions – the type where the payout is pre-determined, and is typically a lifetime pension that may offer inflation protection – represented “the lion’s share of pensions in Canada,” the publication notes. 4.4 million Canadians were covered by this type of plan in 2020, the article adds.
Defined contribution pensions – basically capital accumulation plans, where savings are invested and whatever is in the kitty at retirement is turned into income – accounted for 18.4 per cent of all registered pension plan members. The Saskatchewan Pension (SPP) is this type of plan.
Overall, the article reports, “almost four in 10 (39.7 per cent) workers in Canada were covered by a registered pension plan in 2020, up from 37.1 per cent in 2019.”
“The increase in the coverage ratio was due to a decrease in labour force numbers, attributable to the pandemic, rather than an increase in the membership in the registered pension plans,” StatsCan stresses in the article.
Participation in workplace registered pension plans has been in decline generally this century, Investment Executive reports. “This level of coverage was last seen in 2001 (40.2 per cent), then trended downward before having a peak year in 2009 (39.4 per cent), after which point it resumed its downward trend.”
There are a couple of takeaways from this article. First, it suggests that over six in 10 workers in Canada weren’t covered by a registered pension plan in 2020. That’s going to be a problem as more folks without pension coverage at work converge on their retirement years.
On the positive side, these days in the sorta-kinda post-COVID world, employers are finding it harder to attract and retain employees. Many are improving the benefits they offer their teams, including adding or upgrading pension programs. Let’s hope this more positive trend continues.
If you don’t have any kind of pension arrangement at work, fear not. There’s a great do-it-yourself option out there through the Saskatchewan Pension Plan. Any Canadian with registered retirement savings plan (RRSP) room can sign up for SPP, and you can then contribute up to $7,000 annually to the plan. If you have an RRSP, you can move those funds to your SPP account – transfers of up to $10,000 a year are permitted. Your savings are professionally invested at a low cost in a pooled pension fund, and when it’s time to stop the whole work thing, you can arrange to receive some or all of your savings as a lifetime monthly pension via SPP’s annuity program.
Be sure to take a look at what SPP has to offer!
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Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.