The gap in pension contributions has widened sharply between families at the top of the earnings scale and those at the bottom during the past two decades, according to a new study from Statistics Canada.

In 1986, two-parent families with husbands aged 35 to 54 who were in the top 20% of the earnings distribution contributed an average of $8,000 to RRSPs and employer-sponsored registered pension plans (RPPs). By 2003, the average contributions of their counterparts had increased substantially to $11,300.

In contrast, contributions of two-parent families with husbands aged 35 to 54, who were in the bottom 20% of the earnings distribution, averaged $1,200 both in 1986 and 2003.

As a result, the gap in family contributions to RRSPs and RPPs between rich families and their lower-income counterparts widened over the last two decades.

Among two-parent families with husbands aged 35 to 54, contributions to RRSPs and RPPs averaged $5,300 in 2003, up from $3,900 in 1986. Most of the increase was due to increased RRSP contributions by husbands.

Similar patterns were observed among lone-mothers aged 35 to 54. For those in the top one-fifth of the earnings scale, contributions to RPPs and RRSPs rose from $3,600 in 1986 to $4,900 in 2003. However, for their counterparts in the bottom one-fifth, contributions in 2003 amounted to only $200, less than the level of $300 in 1986.

Likewise, among unattached men and women aged 35 to 54, contributions rose in the top one-fifth, but stagnated in the bottom one-fifth.

“As a result, the degree to which family units, that is two-parent families, lone-parent families and unattached individuals, are prepared financially for retirement has likely become increasingly unequal since the mid-1980s,” it noted.

The increase in inequality in retirement contributions occurred in conjunction with the growth of inequality in family earnings between 1986 and 2003, Statscan explained. During the period, average earnings of two-parent families with husbands aged 35 to 54, who were in the top 20% of the earnings distribution, rose from $123,000 to $170,000. In contrast, those of their counterparts located in the bottom one-fifth stagnated at around $25,000.

The study also found that the percentage of husbands contributing to RPPs fell between 1986 and 2003. However, because of their growing labour force participation and their growing tendency to hold jobs with good pay and fringe benefits, wives have been increasingly contributing to RPPs during that period. Consequently, pension coverage of two-parent families fell less than it did among husbands.

Since the mid-1980s, the proportion of husbands aged 35 to 54 contributing to an RPP fell 9 percentage points, dropping from 43% in 1986 to 34% in 2003. Meanwhile, 29% of their wives contributed to an RPP in 2003, up from 20% in 1986. Rather than simply offsetting the decline in husbands’ propensity to contribute to RPPs, this increase raised the proportion of two-parent families in which both partners contribute to RPPs by 3 percentage points.