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December 18, 2014STUDY: NEW FACTS ON PENSION COVERAGE IN CANADA, 2012 In this study, data from the 2012 Longitudinal and International Study of Adults (LISA) are used to examine the pension coverage of employed Canadians aged 25 to 54. While the study focuses on defined benefit plans, under which benefits correspond to a set amount or are determined with a formula providing a pension unit for each year of service, an information is also available on defined contribution plans, in which the value of accumulated contributions is applied upon employee retirement to provide pension income.
In 2012, majority (60.2%) of pension plans were defined benefit plans, over one-third (35.9%) were defined contribution plans, and remaining 3.9% were hybrid/mixed plans, which have both a defined benefit and a defined contribution portion.
One-quarter of employed men and one-third of employed women aged 25 to 54 were covered by a defined benefit pension plan in 2012. Women had higher coverage rates because they were more likely than men to be employed in sectors with higher rates of pension coverage. These sectors included educational services, health care and social assistance, and public administration, which employed 42% of women and 17% of men in 2012.
Pension coverage by defined benefit plans was higher in larger workplaces. Almost half (46%) of men working in workplaces with over 1,000 employees were covered by defined benefit plans, as compared with 14% of men working in workplaces with 10 workers or less.
Since workers in larger firms and highly educated individuals are better paid than those in smaller firms and with a lower level of educational attainment, higher wages were also associated with higher pension coverage rates. Among those in the top 10% of wage earners, 60% of female employees and 37% of male employees were covered by a defined benefit pension plan. This compared with less than 7% among men and women in the bottom 10% of wage earners.
Among employed university graduates, 42% of women and 30% of men were covered by a defined benefit plan in 2012. This compared with defined benefit coverage rates around 18% among men and women with a high school diploma or less.
Young university graduates were also more likely to be covered by a defined benefit plan than their less-educated counterparts. In 2012, 35% of female university graduates and 22% of male university graduates aged 25 to 34 were covered by a defined benefit plan, compared with 15% of females and 9% of males in the same age group with a high school diploma or less.
Those with a university education, which were covered by a defined benefit plan, were also entitled to more generous benefits. Of all university degree holders with defined benefit plans, 96% had plans where the pension formula was based on “average best earnings” or “final average earnings”. This compared with 69% among defined benefit plan members who had a high school diploma or less.
To view the article "STUDY: NEW FACTS ON PENSION COVERAGE IN CANADA, 2012", click http://www.statcan.gc.ca/daily-quotidien/141218/dq141218b-eng.htm .