The next generation of retirees in Canada could face a significant pension gap, and women are the ones who are at a direct disadvantage.
While the gender pay gap is a well documented issue – a 2023 study found that Canadian-born women still earn 9.2 per cent less than their male counterparts – its consequences are now known to extend well beyond a woman’s working years.
Ontario’s Pay Equity Office found that retired Canadian women receive just 83 cents for every dollar of retirement income collected by men. While this isn’t a new problem, the gap persists despite women’s increased participation in the workforce and progress on the gender pay gap.
“It’s a significant problem because women are participating in the labour market more,” says Kadie Philp, Commissioner and CAO of the Ontario Pay Equity Commission. “They are historically earning more, but they are still not achieving equity. In fact, the pension position is worsening. So we wanted to understand why.”
Part of the answer lies in how pension plans were originally designed. When they were created, they reflected a nuclear family model with a male breadwinner at the centre, based on the assumption that his wife would benefit from his pension in retirement.
“I think it reflected social normative thinking at that time, with absolutely no forethought on how things would change over time,” Philp says, pointing out that the structure of pension plans haven’t kept up with changes not only in who is in the labour force but how women often exit and enter the workforce more often.
Oftentimes, when you’re not working, you can’t contribute to your pension plan and when you return to work, you’re given a limited time to make up your pension contributions. Meanwhile, if you’re part-time, you may not even be eligible for a pension at all.
This is leaving women at a double disadvantage. Lower earnings over their careers mean less money to contribute to retirement, while time away from paid work for motherhood or caregiving can further reduce their pension contributions.
“If we say as a society, ‘Well, we don’t value women’s reproductive labour or labour at home, so we’re not going to contribute to her pension over time’ That’s a pretty strong value statement in terms of how we see contributions in the economy,” added Philp.
Moving the needle
This is why Celine Chiovitti, Chief Pension Officer at the Ontario Municipal Employees Retirement System (OMERS), one of the biggest pension plans in the province, initiated an audit in 2022. She found that there were three main issues: there was a large cohort of part-time employees, mostly women, who didn’t have access to the pension; women took more time away from the workplace than their male counterparts and from pension contributions; and the third was the general wage gap.
“We opened up the plan to non-full-time employees, and said, ‘if you work for any municipality as an employee, you have the option of enrolling in the plan’ and since 2023, we’ve rolled over 100,000 non-full-time employees, predominantly [younger] women,” she says.
Chiovitti says that OMERS also changed how contributions work when a woman takes parental leave.
“You’re off for a period of time from 12-24 months. You then come back to work and you haven’t made any contributions through that entire period,” she says. “You come back to work and you get a letter that says, “Oh, welcome back to work. You have three months to make up all of those lost contributions,’ which, for many people, it’s a big chunk of their money that they can’t afford to do [at that time].”
Now women who are planning to take parental leave can opt to keep making contributions through their leave and when they return to work, they have a longer period to make up the contributions.
“It doesn’t necessarily make it less expensive, but it extends the period of time and we’ve taken away the barriers,” Chiovitti says.
Both Philp and Chiovitti say that a lot of today’s pension policy is a result of a ‘that’s how it is’ mentality and while it can be difficult to change ingrained structures, there is a lot that can be done in the current system.
Chiovitti says starting by figuring out what to solve and challenging the status quo can lead to making changes in the current system that can help disadvantaged groups.
As for Philp, she says the solution is tripartite.
“The government has to reevaluate its policy tools number one… and catch up with the modern labour market and the rates of participation from women and men. Employers have to look at the way that they structure their pensions…their leave policies, their repayment policies for leaves, [and] their benefits packages for men versus women,” she explains.
“And…I think women have to be educated on this and understand and advocate for themselves, prioritize themselves, and invest in themselves unapologetically. Talk to your employer, talk to your benefits provider, and educate yourselves.”
Renée Sylvestre-Williams
