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Earnings and Incomes of Canadians Over the Past Quarter Century, 2006 Census: Incomes of families

Employer pensions and Registered Retirement Savings Plans (RRSPs) drive income increases for seniors

Retirement income includes pension benefits, superannuation payments or annuities generated by employer pension plans or tax-deferred private savings plans (Registered Retirement Savings Plans [RRSPs] and Registered Retirement Income Funds [RRIFs]).

Over the past 25 years, retirement income has grown faster than any other income source for seniors. In 1980, it comprised less than 15% of total income for senior couples and individuals (men and women). By 2005, the share of retirement income had more than doubled to over 30% for each group. In 2005 constant dollars, average retirement income more than tripled.

Payments from the Canada and Quebec Pension Plans (CPP/QPP) also increased for all groups of seniors. However, total income for senior couples and unattached men increased faster than their CPP/QPP benefits so that the benefits declined as a percentage of total income for these groups.

As more women reach retirement age with significant CPP/QPP entitlements, benefits have grown faster for this group. For senior women living on their own, CPP/QPP benefits jumped by almost 23%, from 2000 to 2005. As a result, the proportion of their total income represented by CPP/QPP benefits edged up, from 18.5% to 19.5%.

The other major transfer programs for seniors—Old Age Security Pension (OAS) and Guaranteed Income Supplement (GIS)—are means tested. That is, benefits can be lowered as other sources of income increase. Since other sources of income were rising for seniors, most notably retirement income, average OAS/GIS benefits fell for the first time.

Between 2000 and 2005, average OAS/GIS benefits fell by $823 among unattached senior women, $751 among unattached men and $953 among senior couples. In 2000, OAS/GIS benefits were the largest source of income for unattached seniors. By 2005, retirement income surpassed OAS/GIS benefits for both men and women.

Investment income continued its long-term slide as a source of funds for senior couples and individuals (men and women). In 1980, it accounted for 25.0% or more of total income; by 2005, this share had declined to 13.0% or less. The growing use of RRSPs accounts for this trend, since annual investment gains within RRSPs are not treated as income. Rather, accumulated gains are converted into retirement income as the plans mature.

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