Research Briefs - Elderly Immigrants Income Sources and Composition

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Colleen Dempsey, Citizenship and Immigration Canada

Colleen Dempsey is a Research Officer with Citizenship and Immigration Canada.

Introduction

This article examines the income experiences of elderly immigrants in Canada. The findings presented here are taken from a larger study under way in the Strategic Research and Statistics Division at Citizenship and Immigration Canada. The complete study investigates the demographics, labour market experiences, and income situations of elderly immigrants in Canada. It distinguishes between immigrants who come to Canada in an older age group and those who reach an older age group after spending time in Canada. The results presented here focus on the differences in income sources and composition between three groups of elderly immigrants: those who landed in Canada aged 40-49 years, 50-59 years, and 60 years or older.1 Results are presented for each elderly group and for the largest immigration categories within each group.

Data and Definitions

Two general types of income are investigated in this analysis. The first is referred to as market income, which represents income available to the working age population. Market income includes income from employment earnings, self-employment earnings, investment, Employment Insurance, and social assistance. The second income type is referred to as retirement income, which represents income available exclusively to the elderly. Retirement income includes income from the Canada Pension Plan/Quebec Pension Plan (CPP/QPP),2 Old Age Security (OAS), the Guaranteed Income Supplement (GIS) and Allowance, Registered Retirement Savings Plans (RRSPs), and private pension plans. A brief description of a few of the retirement income sources is required since eligibility requirements may affect immigrants’ access to them.

Sources of Income

It is not feasible to present the results here for each category of immigrant in each of the three elderly groups. Thus, this discussion is limited to findings for the elderly groups as a whole and for the immigrant categories that represent the largest share of each elderly group.3 Table 1 presents the immigrant category composition of the elderly populations used in this analysis.

Figure 1 shows the percentages of the long-term elderly population with no income, market income, retirement income, or both market and retirement income.4 Although the percentage is decreasing with additional years spent in Canada, the majority of long-term elders rely solely on market income until 15 years after landing. The decline in the proportion relying exclusively on market income is paralleled by an increase in the proportion receiving either retirement income or both types of income. Over the observed period, the percentage of the long-term elderly population with only market income falls from about 70% to 30%, while the percentage receiving some or all of their income from retirement increases from 20% to 70%, with roughly 20% relying exclusively on retirement income in the 20th year.

These findings are very similar to those observed for long-term elders who landed in Canada as skilled principal applicants (25% of this population). The population of skilled principal applicants fully relying on market income exhibits a similar decline over the observed period, while the proportion relying on retirement income or both income types increases. However, throughout the entire period, the proportion of skilled principal applicants with only market income remains 10% higher than the proportion for all long-term elders. Correspondingly, the proportion of skilled principal applicants with only retirement income is 10% lower.

The results for the entire population of long-term elders are notably different from those observed for long-term elders who landed under the family class as parents or grandparents (25% of this population). The proportion of parents and grandparents relying solely on market income exhibits the same decline over the 10-year period; however, it is 20% to 25% below the proportion observed for all long-term elders. Coinciding with this, 15% to 20% more of the parents and grandparents rely fully on retirement income. Additionally, up until 15 years after landing, the proportion of parents and grandparents with no source of income is 10% higher than the proportion observed for all long-term elders.

Figure 2 presents the percentages of the short-term elderly population with no income, market income, retirement income, or both market and retirement income. During the first five years after landing, 70% of short-term elders rely exclusively on market income. After the five-year mark, this percentage begins to decrease as the percentage possessing retirement income increases. Ten years after landing, only 35% of short-term elders rely on market income alone. In the 10th year, 50% receive some or all of their income from retirement sources, and this percentage continues to increase. After 14 years, over 90% of the short-term elderly population is in receipt of some source of retirement income, with between 30% and 40% relying solely on retirement income. Also noteworthy is the decline in the proportion of shortterm elders with no source of income. During the first seven years after landing, the proportion with no source of income is between 20% and 30%. After 11 years, this falls to less than 10% and after 20 years, all short-term elders are in receipt of income from at least one source.7

TABLE 1 Disaggregation of Elderly Populations by Immigration Category
Immigration Category Long-Term Elders (%) Short-Term Elders (%) Immediate Elders (%)
Economic – skilled principal applicant 24.6 9.2 3
Economic – skilled spouse or dependant 8.9 2.2 0.4
Economic – other 12.2 6.2 1.2
Family – parent or grandparent 25.3 61.7 76.6
Family – other 10.9 5.5 3.4
Refugee 16.8 6.5 3.8
Retired 1.2 8.1 11.3
Other 0.1 0.6 0.3
Total 100 100 100

Source: IMDB.5

FIGURE 1 Percentages of the Long-Term Elderly Population with No Income, Market Income, Retirement Income, or Both Market and Retirement Income in Tax Year 20006

Percentages of the Long-Term Elderly Population with No Income, Market Income, Retirement Income, or Both Market and Retirement Income in Tax Year 2000

FIGURE 2 Percentages of the Short-Term Elderly Population with No Income, Market Income, Retirement Income, or Both Market and Retirement Income in Tax Year 2000

Percentages of the Short-Term Elderly Population with No Income, Market Income, Retirement Income, or Both Market and Retirement Income in Tax Year 2000

FIGURE 3 Percentages of the Immediate Elderly Population with No Income, Market Income, Retirement Income, or Both Market and Retirement Income in Tax Year 2000

Percentages of the Immediate Elderly Population with No Income, Market Income, Retirement Income, or Both Market and Retirement Income in Tax Year 2000

These results are nearly identical to those for the short-term elders who landed under the family class as parents or grandparents (62% of this population). One difference is that, during the first 10 years after landing, the proportion with no source of income is 5% higher for the parents and grandparents. The only other difference is observed at 10 to 12 years after landing where, for parents and grandparents, 10% less of the population relies solely on market income and 10% more relies on retirement income. These differences are partially explained by examining the income sources of the second and third largest components of the shortterm elderly population.

The short-term elders who landed as skilled principal applicants (9% of this population) also exhibit similar findings to those of the entire population. However, there are a few notable differences. First, the skilled principal applicant population with no income during the first 10 years after landing is 10% to 20% lower than that observed for all short-term elders. Second, at 10 to 12 years after landing, the proportion of skilled principal applicants with market income is 10% to 15% higher than that for all shortterm elders, and the proportion with retirement income is 10% lower.

The short-term elders who landed as retired immigrants (8% of this population) have income sources very similar to those observed for the skilled principal applicants. The only difference is that from the 10-year mark, the share of retired immigrants with only retirement income is even lower – 20% lower than that observed for the total population of short-term elders. This coincides with 10% more retired immigrants having both sources of income.

Figure 3 presents the percentages of the immediate elderly population with no income, market income, retirement income, or both market and retirement income. During the first seven years after landing, about half of the immediate elders receive income from market sources. This is the lowest proportion out of all three elderly groups. After seven years, this percentage begins to decrease as the percentage with retirement income or income from both sources begins to increase. By the 10-year mark, only 10% of immediate elders rely exclusively on market income. Eleven years after landing, three years earlier than is the case for short-term elders, over 90% of the immediate elderly population receive some or all of their income from retirement sources, with about 30% of the population relying solely on this source of income. Similar to short-term elders, immediate elders exhibit a decreasing proportion with no source of income within the first 10 years after landing. However, during these years, this proportion ranges from 25% to 40%, about 5% to 10% higher than the proportion of short-term elders with no source of income.

FIGURE 4 Percentages of Average Annual Income from Private and Public Market Sources, and Contributory and Non-Contributory Retirement Sources, for Long-Term Elders in Tax Year 2000

Percentages of Average Annual Income from Private and Public Market Sources, and Contributory and Non-Contributory Retirement Sources, for Long-Term Elders in Tax Year 2000

These findings are identical to those observed for the immediate elders who landed under the family class as parents and grandparents, a result not surprising since parents and grandparents make up over three quarters of the population of immediate elders. In contrast to short-term elders, the differences in income sources experienced by immediate elders in other immigrant categories are not large enough to affect the results for the entire population. Immediate elders who landed as retired immigrants, for example, account for 11% of this population and show some differences in income experiences. During the first 10 years after landing, the proportion of retired immigrants with only market income is 15% to 20% higher than that of all immediate elders, and the proportion with no source of income is 15% to 20% lower. Additionally, following the 10-year mark, the proportion of retired immigrants with both sources of income is 5% to 10% larger than that of the total immediate elderly population and the proportion relying exclusively on retirement income is 5% to 10% lower. Despite these differences, the results for the entire population of immediate elders truly reflect the experiences of the parents and grandparents in this elderly group.

Composition of Income

Figures 4 to 6 present the composition of average income for long-term, short-term, and immediate elders, respectively. In this analysis, average income is disaggregated into four components: private and public market income, and contributory and non-contributory retirement income. Private market income (M-Private) includes employment earnings, self-employment earnings, and investment income. Public market income (M-Public) includes income from Employment Insurance and social assistance. Contributory retirement income (R-Cont) includes income from CPP/QPP, RRSPs, and private pension plans. Noncontributory retirement (R-NonCont) income includes income from the OAS and GIS.

FIGURE 5 Percentages of Average Annual Income from Private and Public Market Sources, and Contributory and Non-Contributory Retirement Sources, for Short-Term Elders in Tax Year 2000

Percentages of Average Annual Income from Private and Public Market Sources, and Contributory and Non-Contributory Retirement Sources, for Short-Term Elders in Tax Year 2000

Figure 4 presents the disaggregation of average income for long-term elderly immigrants. In the first 15 years after landing, 80% or more of long-term elders’ average income comes from private market sources. From years 16 through 20, this share decreases by 15 percentage points, while the share of income from contributory and non-contributory retirement sources increase by five percentage points each.

These results are similar to those of the skilled principal applicants in this population. The only differences are that, for the skilled principal applicants, the share of private market income is about 5% to 10% higher throughout the observation period and the share of non-contributory retirement income is about 10% lower.

The parents and grandparents in this population illustrate different results. First, the share of private market income is remarkably lower than that for all long-term elders. It begins at 70% but quickly declines to 46% and 17% in the 15th and 20th years, respectively. Second, the share of public market income is roughly 10% higher in each year than it was for the entire long-term elderly population. Finally, the share of noncontributory retirement income is substantially higher than that for all long-term elders. After 12 years, it makes up 21% of average income and increases rapidly such that after 20 years, income from noncontributory retirement sources makes up 60% of the income parents and grandparents receive.

Figure 5 presents the disaggregation of average income for short-term elderly immigrants. In the first year after landing, short-term elders receive roughly 85% of their income from private market sources. However, this share decreases steadily and after 15 years, falls to 26%, 50% lower than the share observed for the longterm elderly population. Over the same period, the share of income from contributory and non-contributory retirement sources increases by 15 and 50 percentage points, respectively. The trend continues and after 20 years, the share of income from private market sources is 14%, while the shares from contributory and non-contributory retirement sources are 23% and 60%, respectively.

These results are generally similar to those of the parents and grandparents in this population, with only a few differences occurring after 10 years. From the 10-year mark and on, parents and grandparents have a 10% to 15% lower share of income from private market sources, a 5% to 10% lower share of income from contributory retirement sources, and roughly a 15% higher share of income from non-contributory retirement sources.

In contrast, over the same period, the skilled principal applicants in this population have a 10% to 15% higher share of income from private market sources, a 10% to 20% higher share of income from contributory retirement sources, and a 20% to 30% lower share of income from noncontributory retirement sources. The retired immigrants in this population experience income situations similar to the skilled principal applicants. However, they have a slightly lower share of income from private market sources offset by a higher share of income from contributory retirement sources.

Figure 6 gives the disaggregation of average income for the immediate elderly population. In the first year after landing, immediate elders receive roughly 60% of their income from private market sources, a share 25% lower than that observed for shortterm elders. The lower share from private market sources is offset with a 20% higher share from public market sources. The share from private market sources continues to decrease each year and after 15 years, it has fallen to 17%. Over the same period, the share of income from non-contributory retirement sources increases by 40 percentage points. By the 20-year mark, the share of income from private market sources is 11 percent, while the shares from contributory and non-contributory retirement sources are 23% and 63%, respectively.

FIGURE 6 Percentages of Average Annual Income from Private and Public Market Sources, and Contributory and Non-Contributory Retirement Sources, for Immediate Elders in Tax Year 2000

Percentages of Average Annual Income from Private and Public Market Sources, and Contributory and Non-Contributory Retirement Sources, for Immediate Elders in Tax Year 2000

FIGURE 7 Number of Immediate, Short-Term, and Long-Term Elders Captured in the IMDB in Tax Year 2000

Number of Immediate, Short-Term, and Long-Term Elders Captured in the IMDB in Tax Year 2000

These results are, again, much like those of the parents and grandparents in this population, with only a few differences occurring after 10 years. From this point forward, parents and grandparents have a 5% lower share of income from private market sources, a 10% lower share of income from contributory retirement sources, and a 10% higher share of income from non-contributory retirement sources. In contrast, during this period retired immigrants in this population have a 15% to 20% higher share of income from private market sources, a 20% to 25% higher share of income from contributory retirement sources, and 35% lower share of income from non-contributory retirement sources.

Conclusion

It is clear that differences in the sources and composition of income exist across the three groups of elderly immigrants. With respect to income sources, there is evidence of a relationship between the length of time spent in Canada and reliance on certain sources of income. Long-term elders rely on market income most heavily and for a longer period. Consequently, fewer long-term elders receive income exclusively from retirement sources. Short-term elders are less reliant on market income; however, they are still more reliant than immediate elders.

There also appears to be a relationship between immigration category and reliance on particular sources of income. For example, skilled principal applicants exhibit more reliance on market income, while parents and grandparents show more reliance on retirement income.

In the case of income composition, differences across the elderly groups and immigration categories are also observed. Similar to the results observed in the examination of income sources, there appears to be a relationship between the length of residency in Canada and the composition of income. Long-term elders receive a larger share of their income from private market sources than either of the other two elderly groups. This is especially true for skilled principal applicants within this group. Although, short-term elders have a lower share of income from private market sources, this share remains higher than that for the immediate elder population. The lesser degree of reliance on market income for the short-term and immediate elder groups may be partially explained by the larger component of parents and grandparents in these groups. Parents and grandparents in both groups were found to receive substantially larger shares of their average incomes from non-contributory retirement sources.

Further research is required to investigate the relationships observed in this analysis. A more in-depth look at the characteristics of elderly immigrants and the economic experiences of their families will allow for a better understanding of the income situations of elderly immigrants in Canada.

References

Baker, M., and D. Benjamin. 2002. “Are Elderly Immigrants a Burden?” Prepared for the conference, Canadian Immigration Policy for the 21st Century, Kingston, Ontario, October 2002.

Basavarajappa, K.G. 1999. “Distribution, Inequality and Concentration of Income among Older Immigrants in Canada, 1990.” Statistics Canada, Analytical Studies Branch, Working Paper No. 129.

Canada, Social Development Canada. 2004a. Overview of the Old Age Security Program. Ottawa, Ontario. <www.sdc.gc.ca/asp/gateway.asp?hr=/en/isp/oas/oasoverview.shtml&hs=ozs>.

———. 2004b. Guaranteed Income Supplement. Ottawa, Ontario. <www.sdc.gc.ca/en/isp/pub/oas/gismain.shtml>.

———. 2004c. Canadian Pension Plan: Retirement Pension. Ottawa, Ontario. Cat. No. SD12-1/1-2004E. <www.sdc.gc.ca/en/isp/pub/factsheets/retire.pdf>.

Notes

  1. Throughout this analysis, the elderly population is defined as those aged 60 years or older in a given tax year. The elderly immigrant population is divided into three groups: “long-term elders” who landed in Canada at age 40-49, “short-term elders” who landed at age 50- 59, and “immediate elders” who landed at age 60 or older. Defining the elderly population as 60 years or older was done for a few reasons. First, this is the age that most Canadians can initiate their CPP/QPP, which is a common source of income for many elderly Canadians. Second, related literature has also chosen age 60 or older to define the elderly population; therefore, results found here may be compared (Baker and Benjamin, 2002; Basavarajappa, 1999). Third, a preliminary analysis on the employment behaviour of immigrants found very similar patterns between immigrants 60 and older and immigrants 65 and older. Choosing the 60 and older population increases the sample size for the analysis and thus, strengthens the statistical results.

  2. The CPP/QPP is a contributory pension that is related to an individual’s lifetime earnings. Although there are no special provisions for immigrants, their benefits will be directly related to the length of time they have worked in Canada. To qualify, an individual must have made a minimum of one valid contribution to the Plan and be at least 65 years of age. It is possible to qualify for a reduced pension between the ages of 60-64 if a person stops working or earns less than the current monthly maximum CPP/QPP payment.

    The OAS is a non-contributory pension related to an individual’s years of residence in Canada. It is available to Canadians 65 years of age or older who have a minimum of 10 years of residence in Canada after reaching age 18. A full OAS pension is only available to those who have lived in Canada for 40 years or longer. A person who cannot meet the requirements for the full OAS pension may qualify for a partial pension. A partial pension is earned at the rate of 1/40th of the full monthly pension for each year an individual has lived in Canada after reaching age 18.

    The GIS is another non-contributory pension and is available to residents of Canada who receive a full or partial OAS pension. Guaranteed Income Supplement benefits may begin in the same month as OAS benefits. To qualify for GIS, a person must be in receipt of an OAS pension and have an annual income not exceeding a specified amount. Sponsored immigrants from countries with which Canada has agreements are not eligible for GIS during their sponsorship period (up to a maximum of 10 years). The OAS and GIS are activated on approval of an individual’s application, with GIS requiring individuals to reapply on an annual basis.

    The Allowance is a non-contributory pension available to the spouse or common- law partner of a pensioner receiving the OAS and/or GIS, or to a survivor. Canadian citizens or permanent residents between the ages of 60 and 64 who have lived in Canada for at least 10 years are eligible to receive the Allowance. To qualify, the combined annual income of the couple, or the annual income of the survivor must not exceed the specified limits. The Allowance stops when the recipient reaches age 65 and becomes eligible for the OAS. Sponsored immigrants wishing to apply for the Allowance face the same eligibility requirements as those applying for the GIS.

    In addition to these retirement sources, the Guaranteed Annual Income System (GAINS) is available to residents of Ontario 65 years of age or older. More information on GAINS can be found on the Ontario Ministry of Finance’s Web site: < http://www.trd.fin.gov.on.ca>. Similar programs may also exist in other provinces.

  3. Findings for each immigration category will be presented in the larger report being produced by the Strategic Research and Statistics Division of Citizenship and Immigration Canada. The anticipated release date for this report is early 2005.

  4. Individuals with no source of income may have filed taxes to receive certain tax credits (e.g., GST credit).

  5. The primary source of data used in this analysis is the longitudinal Immigration Database (IMDB). The IMDB is managed by Statistics Canada on behalf of a federal-provincial consortium led by Citizenship and Immigration Canada. The IMDB combines administrative records on immigration with taxation information to form a comprehensive source of data on the labour market experiences of the landed immigrant population. The IMDB covers the period 1980-2000, providing data on about 2.5 million immigrants in Canada. To be captured in this sample, an individual must have filed a tax return at least once during the period 1980-2000.

  6. In figures 1 to 6, it is important to recognize that the size of the elderly cohorts examined changes across years since landing, as existing elders exit the population and new elders enter. Figure 7 presents the cohort sizes for each elderly group in tax year 2000 by years since landing. All information reported in figures 1 to 7 is taken from the IMDB.

  7. Although long-term elders could not be observed until 11 years after landing, a similar pattern for the proportion with no income was seen from the 11-year mark.

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