Canada’s Pension Predicament
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Canada’s Pension Predicament
Full Report
January 2007
Lucie Charron, Policy Analyst
In 1970, one in five Canadians were over the age of 50. By 2008, it is projected that one in three Canadians will fall into this category. Canada’s aging demographic situation is becoming more and more important. In terms of public policy development, the implications of our aging population span over a wide variety of issues, which include retirement and pensions.
Although there has been increased attention on this issue over the past decade there is not an abundance of research or data available on pensions in Canada. The likely cause for the increased interest in this issue is two-fold: 1) the current demographic situation, which entails more early retirements and a lower fertility rate and; 2) the economic challenges that have accompanied our rather robust economy over the last 5 to 10 years, namely the acute shortage of qualified labour and greater international competition due to globalization. These are factors that have heightened the importance of the aging population in Canada.
The purpose of this paper is to provide insight on the widening gap that exists between public and private sector retirement trends and pension plans. It is also meant to shed some light on the complexity of Canada’s retirement income system. The paper is divided into the following sections: I) latest trends on early retirement; II) incentives to retire; III) brief statistics on pension coverage for Canadians; IV) employer-sponsored pension plans; V) current issues with defined-benefit pension plans; and VI) conclusion.
