Seniors rely more on registered savings, CPP

(February 18, 2003) With declining interest rates, seniors are getting less of their retirement income from private investments and more from registered savings, whether in a Registered Retirement Savings Plan or a Registered Pension Plan, says Statistics Canada.

In a report released last week, Statistic Canada analyzed the sources of retirement income from 1990 to 1999. Income from registered accounts and from private pensions rose dramatically over the period, up from 18% of income in 1990 to 29% in 1999. Also, private pension income embraced a broader swath of seniors, with more than half receiving pension income, up from 38% in 1990.

Canada/Quebec Pension Plan coverage also expanded, with 85% of seniors receiving benefits, up from 75% a decade earlier. CPP/QPP income now accounts for 20% of seniors’ income.

Public and private pensions constitute 49% of seniors’ incomes. Investment income, however, has been declining, from 23% to 13%, which StatsCan attributes to falling interest rates.

Much of their remaining income comes from Old Age Security and the Guaranteed Income Supplement. But the share of income — 98% of Canada’s seniors receive OAS, has also fallen, from 30% to 27%.

There are some seniors who are receiving employment income. Some 13% reported some employment income, but it accounts for only 6% of income.

StatsCan found that men rely more on pension plans — up to 67% had pension income, as opposed to 46% for women. Women, by the same token, rely more on OAS and private investments, which account for 35% and 15% of their income respectively.

Retirement income has increased for men by 9% over the decade, but has not changed for women.

The report also notes that RRSPs have overtaken RPPs as the chief savings vehicle for Canadians, with 40% contributing to an RRSP and 33% to a pension plan.

Filed by Scot Blythe, Advisor.ca, sblythe@advisor.ca.

(02/18/03)