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The Maturation of Canada's Retirement Income System: Income Levels, Income Inequality and Low Income Among Older Persons*

Published online by Cambridge University Press:  29 November 2010

John Myles
John Myles
Affiliation:
Florida State University and Statistics Canada
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Abstract

I revisit trends in the level and distribution of income among Canadian seniors in the context of what is arguably the major source of change in these trends since the end of the seventies: the maturation of Canada's public and private earnings-related pension systems. The expanded role of earnings related pensions in the 1980s and 1990s is largely the result of changes that occurred in the 1950s and 1960s. The Canada and Quebec Pension Plans (C/QPP) were implemented in 1966 and the first cohort to receive full C/QPP benefits turned 65 in 1976. Cohorts retiring after this period were also the beneficiaries of the expansion of private occupational pensions that took place between the 1950s and the 1970s. I rely on a detailed decomposition of income by source to show that the maturation of these earnings-related programs produced not only a substantial increase in average real incomes but also a substantial reduction in income inequality among older persons, due mainly to higher C/QPP benefits. Rising real incomes went disproportionately to lower income seniors contributing to the well-known decline in low-income rates among older persons.

Résumé

Je réexamine les niveaux et la répartition des revenus chez les aîné(e)s canadiens à la lumière de ce qui pourrait être la plus importante cause de ces changements depuis la fin des années 70: la maturation des systèmes de pensions public et privés contributifs fondés sur les gains au Canada. La place de plus en plus grande occupée par les pensions contributifs fondés sur les gains au cours des années 80 et 90 dépend largement des changements survenus dans les annees 50 et 60. Le Régime de pensions du Canada (RPC) et le Régime de rentes du Québec (RRQ) ont été mis sur pied en 1966 et la première cohorte à en toucher les advantages complets a atteint l'âge de 65 ans en 1976. Les cohortes qui ont pris leur retraite par la suite ont également bénéficié de l'expansion des pensions privées résultant de leur emploi qui ont été établies entre les années 50 et 70. Je m'appuie sur une décomposition détaillée du revenu par sources pour démontrer que la maturation de ces programmes contributifs fondés sur les gains a entraîné une augmentation substantielle du revenu moyen réel mais aussi une réduction importante de l'inégalité des revenus chez les aîné(e)s, surtout à cause de la hausse des prestations du RPC et du RRQ. La hausse des revenus réels a atteint les aîné(e)s à faible revenu, contribuant ainsi au déclin manifeste du revenu faible chez les aîné(e)s.

Keywords

IncomeInequalityPovertyPensions.Revenusinégalitépauvretépensions.
Type
Articles
Information
Canadian Journal on Aging / La Revue canadienne du vieillissement , Volume 19 , Issue 3 , Automne/Fall 2000 , pp. 287 - 316
Copyright
Copyright © Canadian Association on Gerontology 2000

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