Retirement

	Retirement: not a pot of gold for some retirees Photo: Antoine Chrétien

Officially, Canadians are retiring younger, thanks in part to more incentives for early retirement from employers and a multitude of pension plans. Despite this, our retirees are frequently drawn back into the paid work force. Maybe it's the need for a little extra money, or maybe they miss the companionship of their colleagues and some intellectual stimulation. Whatever the reason, many retirees, especially men, are going back to work part time, either to work for themselves or for others.

Pensions

Since 1966, the Canada Pension Plan (CPP) has covered all employees and those self-employed between the ages of 18 and 70 who have a minimum income, except for those in Quebec, who contribute to the Quebec Pension Plan (QPP). Individuals who pay into the plan are eligible to collect monthly benefits starting at age 60. The CPP system ran into problems from 1994 to 1998 when the benefits paid by the program exceeded the total income. In order to assist in maintaining the program, contribution rates were scheduled to increase rapidly from 1998 to 2003 to a maximum combined rate for the employer and employee of 9.9%.

Beyond government-sponsored plans, some Canadians are also covered under Registered Pension Plans (RPPs) sponsored by their employers, something that was first established at the end of the 19th century. The percentage of the labour force belonging to RPPs declined in the 1990s from 37% in 1991 to 33% in 1999. After declining through most of the 1990s, the number of RPP members has been increasing since 1997. By the end of 2000, over 5.4 million paid workers were members of one of the 15,355 registered pension plans, an increase of 2% from 1991.

Those who want more retirement income than the government- or employer-sponsored pension plans will provide have been purchasing registered retirement savings plans (RRSPs) since 1957. These plans provide income-tax breaks during their working years as an incentive to save for retirement. The percentage of the labour force contributing to RRSPs increased from 32% in 1991 to 40% in 1999, making it more popular than RPPs by the end of the decade.

Over $66 billion was contributed to the three major retirement income programs (C\QPP, RPPs and RRSPs) in 1999, a 47% increase over 1991 in constant dollars. By the end of 2000, almost $1.16 trillion was accumulated in these three programs. Despite RPP proportion of contributions having fallen from 43% in 1991 to 29% in 1999, they still account for 70% of the total accumulated.

In 1999, about 71% of Canadian family units had some form of private pension assets, with a median value estimated at $50,000. The remaining families had no private pension assets, and as such the income from CPP/QPP will be essential for their retirement.