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Member, Beacon International Group, Ltd.
The number of Canadian employees in employer-sponsored pension plans increased slightly in 2006, but the overall percentage of employees in employer plans continues to decline, according to Statistics Canada, the federal government's research agency.
Canada's 18,594 employer-sponsored pension plans added almost 78,000 new members in 2006--the most recent figures available--up 1.4% from 2005, according to a census of these plans, which was released last week. About 5.8 million employees are covered by employer-sponsored pension plans in Canada.
The percentage of Canadian employees covered by pension plans, though, declined to 38.1% in 2006 from 38.5% in 2005 because membership in employer plans has grown at a slower pace than the rate of employment, according to Statistics Canada.
The number of employees in defined benefit plans dropped by nearly 10,000 to 4.6 million. Membership in defined contribution plans increased by more than 6,100 employees to about 893,000 workers.
Most of the growth in employee pension coverage occurred in so-called combination plans--those with both defined benefit and defined contribution features. Enrollment in those plans increased by 88,300 to about 132,000 employees.
The underfunding of defined benefit pension plans since the early part of the decade may be an important factor behind the increase in combination plans, Statistics Canada said. To reduce their future financial obligations, some employers have added a defined contribution component to their existing defined benefit plans.
The proportion of underfunded plans, though, dropped considerably, falling to 45% from 57% in 2006, due to increased employer contributions, according to Statistics Canada.