Canadian defined benefit plan participants are less likely than other retirees to require supplemental income from the Canadian government, according to a study by Boston Consulting Group commissioned by four of the largest public pension funds in Canada.
BCG estimated 10% to 15% of DB participants collect the government's Guaranteed Income Supplement, compared to 45% to 50% of other Canadian retirees, according to a news release on the study.
The study was commissioned by the C$129.5 billion ($126 billion) Ontario Teachers' Pension Plan, C$60.8 billion Ontario Municipal Employees Retirement System, C$47.4 billion Healthcare of Ontario Pension Plan and C$13.3 billion OPSEU Pension Trust, all based in Toronto.
“DB retirees are far less likely to rely on government social assistance in retirement, freeing up funds for other government programs or priorities,” Jim Leech, Ontario Teachers president and CEO, said in the news release. “Their financial independence is a direct result of the pensions made possible by the asset management expertise in our DB pension plans.”
“Most people aren't aware that up to 80% of the funds used to pay defined benefit pensions come from returns on plan investments,” added Jim Keohane, HOOPP president and CEO, in the release.
The Guaranteed Income Supplement provides a monthly non-taxable benefit to retired Canadian residents age 65 or older whose pension income is below set levels established by the Canadian government.