Canadian women receive 83 cents in retirement income for every dollar men receive, a gap that has persisted for nearly five decades despite increased female labour force participation.
Ontario’s Pay Equity Office highlighted its 2024 research report as the March 2 RRSP contribution deadline approaches. The report, Understanding the Gender Pension Gap in Canada, found the gender pension gap stood at 17 per cent in 2021, virtually unchanged from 15 per cent in 1976.
“The gender pension gap impacts Canadians not only during their retirement; it is an indicator of gender inequity at various stages of their career,” said Kadie Philp, commissioner and chief administrative officer of the Ontario Pay Equity Commission.
The average retirement income for Canadian women in 2021 was $36,700, with a median of $29,700.
Poverty rates higher for older women
In 2020, approximately 200,000 more women aged 65 and older lived below Canada’s low-income cut-off than men. Among women aged 75 and older, 21 per cent had incomes below this threshold — 51 per cent higher than men in the same age group.
Retirement income in Canada comes from three sources: Old Age Security and Guaranteed Income Supplement, Canada Pension Plan or Quebec Pension Plan, and private pensions.
Wage gap and caregiving drive retirement disparity
The report identified several factors contributing to the pension gap. Canada’s gender income gap was 28 per cent for average annual earnings in 2021 and 11 per cent for average hourly earnings in 2020.
Women spend fewer hours in paid work and earn lower wages when they do work, according to the report. This reduces their ability to contribute to savings and retirement plans.
In 2017, 89.9 per cent of insured mothers took maternity or parental leave at reduced income, compared with 11.9 per cent of insured fathers or partners.
Part-time work affects pension eligibility
Women are more likely than men to work part-time due to caregiving responsibilities. In 2021, 24.4 per cent of Canadian female workers were part-time compared with 13 per cent of male workers.
One quarter of women reported caring for children as their reason for working part-time, compared to 3.3 per cent of men. Part-time workers may not qualify for workplace pension plans if they work fewer hours than their employer’s threshold.
The employment rate for women with children under six was 69.5 per cent in 2015, compared with 90.8 per cent for men with children under six.
Savings gap compounds retirement challenges
Among Canadians aged 35 to 64, women were more likely than men to report having no savings. Nearly half of women (49 per cent) reported having less than $5,000 in savings, compared to one-third of men (33 per cent).
The report noted Canada’s public pension system was designed for heterosexual couples with a male breadwinner. Two of the three pillars of Canada’s pension system are tied to earning power.
Three-quarters of Canadian adults are not covered by workplace pension plans, the report found.
Recommendations for closing the gap
The report recommends employers and policymakers ensure equitable pay and build inclusive pension policies that reflect today’s workforce.
Canada ranks 12th out of 47 countries in the Mercer CFA Institute 2023 Global Pension Index. The OECD calculated Canada’s gender pension gap at 21.8 per cent in 2021, compared with an average of 25.6 per cent across 34 OECD countries.
