DB Coverage Keeps Dropping
Shift to DC plans continues.
BY Staff with files from Benefits Canada | February 5, 2014
The proportion of active registered pension plan (RPP) members in DB plans has declined to 73% from 83% in the 10-year period between 2001 and 2011.
And the reduction in DB coverage in the private sector has plunged to 51% from 74% in a decade while it has remained stable at 94% in the public sector.
“Since 2004, there has been a trend, particularly in the private sector, to convert DB plans into plans where employees are covered by either a DB or a DC component,” notes the report.
RPP coverage in the public sector decreased slightly to 86% in 2011 from 87% in 2001, while the number of active members increased to 3.1 million from 2.5 million.
In the private sector, RPP coverage declined to 24% from 28%, while the number of active members remained constant at around three million.
The proportion of employees covered by an RPP has declined by two percentage points to 38% over the 10-year period, while the number of active RPP members has increased to 6.1 million from 5.5 million.
The report says “the number of employees has grown at a faster pace, which explains the decline in the proportion of employees with an RPP.”
It notes that the number of tax filers contributing to RRSPs decreased to six million from 6.2 million between 2001 and 2011. The share of the labour force contributing to an RRSP also decreased to 32% from 39% over the same period.
However, the share of adult tax filers who are tax-free savings account (TFSA) holders has increased every year since its inception.
By the end of 2011, about 8.2 million Canadians had opened a TFSA compared with 6.7 million at the end of 2010 and 4.9 million at the end of 2009. The share of adult tax filers that have a TFSA increased to 31% in 2011 from 19% in 2009.