Canada’s gender pension gap is growing as Canadian women received an average of 18 per cent less retirement income than men in 2020, according to a report by Ontario’s pay equity office.
It found the gap is more pronounced among women in visible minority groups (37 per cent), among sources of private retirement income (28 per cent) and is three per cent higher than the 15 per cent gap observed in 1976, the earliest year for which data is available.
“This means women have been receiving less retirement income for at least 44 years, so the gender pension gap has persisted even though women’s labour force participation has actually increased and the gender wage gap is narrowing overtime,” says Kadie Ward, commissioner and chief administrative officer at Ontario’s Pay Equity Commission.
Employers can help narrow the gap by conducting internal reviews of their compensation structures to ensure they’re providing pay equity, she says, adding that workplace pension plans should be structured so women taking parental leave aren’t missing out on contributions.
“[Women are] often not able to buy back those contributions for affordability reasons. I would encourage employers to look at their pension plans and how women may be able to contribute during leaves or periods of part-time work. And I would advise women to speak to their employers about their pension plan and consider the full scope of how their earning potential right now pays into their pension payouts later.”
One of the main reasons for the gender pension gap is societal gender norms, says Ward. “From a social expectation point of view, women are more likely to take time off for caregiving responsibilities or work part time because of the default expectations that women take on unpaid care. This forces them out of the paid labour market and, with a system based on contributions, they’re earning less and thereby contributing less.”
The gender wage gap — measured at 27 per cent in 2020 — will also have a long-term impact on the pension gap, as Canada’s pension system is largely dependent on contributions made by employees over the course of their working years, she adds, noting differences in risk aversion and financial literacy may also contribute to the pension gap.