With many women at risk of outliving their retirement savings, employers can help by educating female employees about their investment options, says Michelle Connell, a chartered financial analyst and owner of Portia Capital Management.
Since women are often the primary caregivers, she says they tend to put less money into their retirement accounts than men over their lifetimes. And the ongoing coronavirus pandemic is likely making things worse. Since the onset of the pandemic, many women have turned down promotions, taken fewer hours or left the workforce altogether because lockdowns and restrictions have made it more difficult for them to juggle work and family obligations, she notes.
The pension gap between men and women is a long-term problem. According to a report released by Mercer Canada in May, women retire with 30 per cent less wealth than their male counterparts. It showed that women, on average, experience a savings rate gap of nearly one per cent (0.81 per cent), which means they need to work two years longer than men to be ready for retirement.
The report also pointed to several factors contributing to this disparity, such as a persistent gender pay gap and the fact that women have a higher likelihood of experiencing interruptions during their career, particularly now as the pandemic continues to wreak havoc on the economy and everyday life.
Many pension plans are limited and don’t offer a breadth across asset classes, says Connell. “They lack innovation, technology or small cap. I don’t see a strong international or emerging market offering and those are the areas of opportunity that are going to help a portfolio make more than the four to five per cent in estimated returns over the next 10 years.”
So if women aren’t putting enough savings away, if they’re making less money than their male counterparts and if they’re not taking on enough risk with their portfolios, there’s a chance they’ll outlive their savings, she says. On top of those factors, women tend to live longer than men so they need their retirement funds to last longer. In 2018, Statistics Canada reported life expectancy at birth over the past century in Canada had risen substantially to 79.8 years for males and 83.9 years for females.
In addition to implementing fair pay policies, it would be prudent for employers to provide education, either directly or through their insurer, to help women understand their investment options, says Connell.