The Gender Pension Gap (GPG) is the difference between retirement income received by men and retirement income received by women. In every member country of the Organization for Economic Co-operation and Development (OECD), men are receiving larger pensions than women and Canada is no exception. According to Statistics Canada, the GPG in Canada was 18% in 2020, while the OECD measured the GPG in Canada at 21.8% in 2021 (OECD, 2021). As a quick point of comparison, the average GPG across 34 OECD countries was 25.6%, with the lowest observed in Estonia at 3.3% and the highest observed in Japan at 47.4% (ibid).

  • A GPG exists in Canada and has not narrowed over time. The GPG was 15% in 1976 and 18% in 2020
  • The gap for private retirement income (such as workplace and personal pensions) for seniors in Canada was 28% between men and women in 2020. This means that for every $1 of private retirement income a senior man receives, a senior woman receives $0.72
  • Women consistently receive more Old Age Security and Guaranteed Income Supplement than men in Canada. As payment is calculated based on age, marital status and level of income (as opposed to contributions during working years), this may signify that women are consistently receiving lower income during retirement years and therefore qualify for more government support
  • Women in Canada are at an increased risk of living in poverty in old age. The prevalence of women who are 75 years old and over and living with low-income status was 21% compared to 13.9% of men in the same age group

As with many developed countries around the world, Canada relies on a multi-tiered pension system.

Shilton (2016) breaks down Canada’s pension system into three pillars:

Pillar One: Old Age Security (OAS) and Guaranteed Income Supplement (GIS)
OAS and GIS is a social pension that is administered by the Government of Canada. An individual must receive an income of less than $129,757 (as of 2021) to qualify and payment amounts are based on age, marital status and level of income. This means that employment history is not a factor in determining eligibility (i.e., payments are not based on contributions).

Pillar Two: Canada Pension Plan (CPP) / Québec Pension Plan (QPP)
CPP/QPP is a mandatory, public contributory pension plan administered by the Government of Canada and Government of Québec, respectively. With CPP, an individual’s pension payout is based on their earnings, their contributions, and the age they decide to start collecting their pension. The QPP is funded by contributions made by individuals who work in Québec and their employers.

Pillar Three: Private Retirement Income
Private Retirement Income comes from sources such as workplace pension plans and personal plans (e.g., registered retirement savings plans). They are voluntary, private contributory pension plans. Not all individuals purchase a personal plan and not all employers provide workplace pension plans. In fact, three-quarters of Canadian adults are not covered by workplace pension plans (Shilton, 2016, p.7).

Using this framework, the PEO presents Canada’s GPG using these three income sources.

It is important to note that some individuals may utilize private investments such as stocks, bonds, exchange-traded funds, cryptocurrency, etc. as supplementary income in old age. However, retirement is not the only reason an individual may invest in these financial products and they are not exclusively branded for/targeted at future retirees. As such, the PEO has excluded investment income from the analysis.

  • The most recent GPG observed was 18% in 2020. This means that for every $1 a man receives as retirement income, a woman (on average) receives $0.82
  • The only income source where women consistently “out-earn” men is Old Age Security and Guaranteed Income Supplement (OAS and GIS). As OAS and GIS payments are calculated based on age, marital status and level of income (as opposed to contributions during working years), this may signify that women are consistently receiving lower income during retirement years and therefore qualify for more government support
  • Women consistently earn less than men in income sources that depend on lifetime earnings and work years (Canada Pension Plan/Quebec Pension Plan and Private Retirement Income). The largest gap can be seen consistently with Private Retirement Income, which includes employer or personal retirement pensions, benefits or savings plans. This likely signals that women’s lower earnings and fewer work years (due to caregiving responsibilities) result in lower pension payments in retirement years
  • Although the GPG in Canada has fluctuated over the decades, it has not narrowed
  • The narrowest GPG that has been observed was at 7% in 1977 while the widest was observed at 29% in 1993 and 2003
  • It is unclear what has driven the GPG to narrow or widen as the GPG in Canada is still an under-researched topic
  • The Gender Wage Gap (GWG) and Labour Force Participation Gap (LFPG) between men and women in Canada have narrowed over the decades. This implies that:
    • Women are earning higher wages compared to decades before, although they still earn less than men
    • The proportion of women being employed in the formal labour market has increased over the decades
  • As pensions in Canada are largely affected by labour force participation and contribution (how much earned income you contribute to your pension over the years), the logical assumption may be that the GPG would narrow over the decades as more women enter the labour market and earn more money. However, this does not seem to be the case
  • It is important to note that any effect that the GWG or LFPG would have on the GPG (if any) would not immediately be seen as an individual’s pension is accumulated over their working years and would not materialize until they retire. For example, if a person begins their career in 1990 and works for the next 30 years, their pension contributions would span over that period and their retirement income would be seen when they retire in 2020. Therefore, the GPG in 2020 is not a reflection or effect of the GWG or LFPG in 2020.
  • The GPG exists in every province across Canada. In 2020, Prince Edward Island had the narrowest gap at 13% while Alberta had the widest gap at 23%.

Note: The Territories are not included in the income data table provided by Statistics Canada

Figure 5: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016210.

Figure 6: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016210.

  • When analyzing income of visible minority females and non-visible minority males who are 65 years old and older, a GPG can be observed in all groups, with the narrowest gap between Japanese females and non-visible minority males at 24% and the widest gap between West Asian females and non-visible minority males at 64%. In other words, for every $1 that a retired Caucasian man receives in Canada, a retired West Asian woman receives 36 cents.
  • Taking all visible minority females in Canada into account, the GPG between them and non-visible minority males is 37%. This means that for every $1 that a retired white man receives in Canada, a retired woman of colour receives 63 cents.
  • When comparing non-visible minority females and non-visible minority males, the GPG is 35%. This means that for every $1 that a retired white man receives in Canada, a retired white woman receives 65 cents.
  • Shilton (2016, p.5) notes that “available data on aboriginal status, disability, and racialization suggest that Canadians with characteristics typically associated with economic disadvantage are less likely to belong to and benefit from pension plans”

Note on data limitations:

  • It was not possible to segment the different income sources in the data table used for this analysis. Although it was possible to segment by age groups, some individuals still work beyond age 65 as a mandatory retirement age does not currently exist in Canada. Therefore, employment income in senior years is likely included in the data
  • Currently, retirement income data for persons of Aboriginal status is not available through Statistics Canada

 

    • Women are at an increased risk of living in poverty in old age. According to Statistics Canada (2020), the prevalence of women age 65-74 living with low-income status (after tax) was 14.2% compared against men of the same age bracket at 12%
    • This prevalence increases with age as 21% of women who are 75 years old and over live with low-income status compared to 13.9% of men in the same age group

The impacts of aging in poverty are significant and alarming. Low income is linked to food insecurity, housing insecurity, and overall poor health outcomes including higher rates of mortality. Dietary deficiencies resulting from food insecurity can lead to chronic illnesses such as heart disease, diabetes, and high blood pressure, which is not only associated with diminished quality of life but also added economic strain on Canada’s healthcare system. Housing insecurity can lead to chronic stress and increased risk of mental illnesses such as depression and anxiety.

In Canada, retirement income comes from multiple sources, with most of the accumulated income being directly linked to earnings over an individual’s life cycle (Shilton, 2016, p.6). In other words, an individual’s retirement income largely depends on how much they financially contribute to their pension over the course of their working life. As such, it perhaps comes as no surprise that women in Canada retire with a smaller pension than men as women are more likely to work fewer years than men over the course of their careers as they exit the labour force (either temporarily or permanently) after having children, are more likely to work part-time, and generally earn lower wages than men (this is the GWG). The GPG can therefore be seen as one of the compounded impacts that the GWG has on women’s long-term economic well-being

Women are more likely than men to exit the labour market (temporarily or permanently) after having children

In 2015, the employment rate of women with children under the age of 6 was 69.5%[i] compared to the employment rate of men with children under the age of 6 at 90.8%[ii], signaling a 21.3% gap (Moyser, 2017). Women’s employment rate increases with the age of their children but never catches up to that of men’s. As fewer women participate in the labour market, fewer will financially contribute towards their pension.

[i] Statistics Canada, Labour Force Survey, Chart 7 Employment rates of women aged 25 to 54 by age of youngest child in the household, Canada, 1976 to 2015 (statcan.gc.ca)

[ii] Statistics Canada, Labour Force Survey, Chart 8 Employment rates of men aged 25 to 54 by age of youngest child in the household, Canada, 1976 to 2015 (statcan.gc.ca)

Women are more likely than men to work part-time due to caregiving responsibilities

When looking at those employed in Canada in 2021, 24.4% of all female workers worked part-time compared to 13% of all male workers (Statistics Canada). Women’s most cited reason for working part-time was caring for children as part-time work allows more hours for domestic labour (Moyser, 2017). As Moyser reports, “one‑quarter of women reported caring for children as their reason for working part‑time, compared to 3.3% of men” (ibid). Women working part-time earn less income, resulting in lower total contributions towards their pension. Furthermore, women who work part-time may not be eligible to enroll in their workplace pension plan if their work hours fall below a certain threshold (depending on the employer’s policy).

Unpaid, domestic labour is still mostly performed by women

Women being more likely to exit the labour market and/or more likely to work part-time are both affected by the fact that unpaid, domestic labour still largely falls on the shoulders of women. In 2017, 89.9% of insured mothers in Canada took maternity/parental leave compared against 11.9% of insured fathers/partners (Statistics Canada, 2018). Due to Canada’s pension system framework, the less women contribute financially to their pensions through formal labour market earnings, the lower pension payments they will have in later life.

It is worthwhile to note that Statistics Canada (2022) estimates:

“…the economic value of unpaid household work in Canada was between $516.9 billion and $860.2 billion in 2019 depending on the valuation method used. These values amounted to between 25.2% and 37.2% of Canada’s nominal gross domestic product (GDP) in 2019, which is more than the contribution of all the manufacturing, wholesale and retail industries combined.”

The existing gender wage gap is likely contributing to the gender pension gap

The persistent GPG may be signaling the long-term, compounding effects of the GWG. In other words, the GWG not only influences women’s income now, but women’s income in old age. In 2020, the GWG in Canada measured at 27% in 2020[i] when looking an average annual earnings or 11% in 2020[ii] when looking at average hourly earnings. It would stand to reason that if women are earning less than men, their total financial contributions towards their pensions would be lower, even if women’s labour force participation rate has increased.

[i] Income of individuals by age group, sex and income source, Canada, provinces and selected census metropolitan areas (statcan.gc.ca)

[ii] Average and median gender wage ratio, annual (statcan.gc.ca)

According to Statistics Canada (2021)[i][ii], 6,593,256 individuals in Canada were active members of a Registered Retirement Plan (RRP), which is an employer-sponsored plan. When calculated as a percentage of the total working age population, this translates to 27.5%. In other words, only slightly more than a quarter of Canada’s working age population was enrolled in a workplace pension plan in 2021.

[i] The Daily — Pension plans in Canada, as of January 1, 2021 (statcan.gc.ca)

When looking at the provincial breakdown, the majority of active membership (of both sexes) in RRPs can be observed in Ontario and Quebec. Prince Edward Island and the three Territories have the lowest percentage of enrollment.

When looking at the gender breakdown of the total active membership of each province and territory, most provinces have a fairly equal distribution while the territories have a greater discrepancy.

If women and men are equally likely to be active members in workplace pension plans, then why is there such a big gender pension gap in private retirement income?

There are a few of possible explanations:

  1. Private retirement income includes not only workplace pension plans but also personal retirement pensions, benefits or savings plans. As mentioned above, only 27.5% of the working age population are enrolled in a workplace pension plan. Among the 72.5% who are not covered, their enrollment in other private retirement income sources may differ more widely and contribute to the gap
  2. Although women appear to be just as likely (or more likely) to be enrolled in a workplace pension plan, their lower earned wages may be translating into lower contributions towards their pensions, which ultimately affect payments from their pension when they retire. Indeed, women in Canada are more likely than men to belong to pension plans, but “women continue to receive only 60 per cent of the benefits received by male plan members” (Shilton, 2016, p.6).
    As an example, women in Ontario are well-represented in sectors such as public health, public education, and government services[i], all of which offer RRPs. However, the GWG and undervaluation of certain sectors (such as the care economy/nursing) may result in lower wages, lower pension contributions, and ultimately, smaller pension payments.
  3. Many pension plans are gender-blind (i.e., they do not consider the different experiences of men and women). Depending on the workplace pension plan, contributions may pause when an enrolled individual goes on parental or other types of leave (this is also the case for the Canada Pension Plan)[ii]. Time spent on leave is excluded when calculating one’s benefits. This means the individual may need to work longer/retire later to receive the same pension as someone who did not take leave. Furthermore, some employers do not match the contributions bought back for an unpaid leave. If an individual is on leave for 18 months (maximum pregnancy and parental leave period in Canada), they may have to buy back not only their own missed contributions but also the value of their employer’s contributions during the period of unpaid leave. That is a substantial amount of money an employee must contribute on their own, which they may not be able to afford. As women are significantly more likely to take leave for caretaking responsibilities, the time and contributions lost may lead to diminished returns in their pension.

[i] Labour force characteristics by industry, annual (statcan.gc.ca)

[ii] How Will Parental Leave in Canada Impact Your Finances? | National Bank (nbc.ca)

If women and men are equally likely to be active members in workplace pension plans, then why is there such a big gender pension gap in private retirement income?​​​​

There are a few of possible explanations:

  1. Private retirement income includes not only workplace pension plans but also personal retirement pensions, benefits or savings plans. As mentioned above, only 27.5% of the working age population are enrolled in a workplace pension plan. Among the 72.5% who are not covered, their enrollment in other private retirement income sources may differ more widely and contribute to the gap
  2. Although women appear to be just as likely (or more likely) to be enrolled in a workplace pension plan, their lower earned wages may be translating into lower contributions towards their pensions, which ultimately affect payments from their pension when they retire. Indeed, women in Canada are more likely than men to belong to pension plans, but “women continue to receive only 60 per cent of the benefits received by male plan members” (Shilton, 2016, p.6).

    As an example, women in Ontario are well-represented in sectors such as public health, public education, and government services[xii], all of which offer RRPs. However, the GWG and undervaluation of certain sectors (such as the care economy/nursing) may result in lower wages, lower pension contributions, and ultimately, smaller pension payments.

  3. Many pension plans are gender-blind (i.e., they do not consider the different experiences of men and women). Depending on the workplace pension plan, contributions may pause when an enrolled individual goes on parental or other types of leave (this is also the case for the Canada Pension Plan)[xiii]. Time spent on leave is excluded when calculating one’s benefits. This means the individual may need to work longer/retire later to receive the same pension as someone who did not take leave. Furthermore, some employers do not match the contributions bought back for an unpaid leave. If an individual is on leave for 18 months (maximum pregnancy and parental leave period in Canada), they may have to buy back not only their own missed contributions but also the value of their employer’s contributions during the period of unpaid leave. That is a substantial amount of money an employee must contribute on their own, which they may not be able to afford. As women are significantly more likely to take leave for caretaking responsibilities, the time and contributions lost may lead to diminished returns in their pension.

Cain, P. (2021, January 25). Death by postal code: Income still dictates lifespan in Ontario. Global News. Retrieved September 2, 2022, from https://globalnews.ca/news/1845028/death-by-postal-code-income-still-dictates-lifespan-in-ontario/

CBC News. (2015, May 8). Poverty linked to future high health-care costs | CBC News. Retrieved September 2, 2022, from https://www.cbc.ca/news/health/poverty-linked-to-future-high-health-care-costs-1.3065822

CMHA Ontario. (n.d.). Poverty and Mental Illness. Retrieved September 2, 2022, from https://ontario.cmha.ca/documents/poverty-and-mental-illness/

Mikkonen, J., & Raphael, D. (2010). Social Determinants of Health: The Canadian Facts. Toronto: York University School of Health Policy and Management. Retrieved September 2, 2022, from http://www.thecanadianfacts.org/

Moyser, M. (2017, March 9). Women and Paid Work. Retrieved August 9, 2022, from https://www150.statcan.gc.ca/n1/pub/89-503-x/2015001/article/14694-eng.htm

National Bank. (2022, February 15). Parental leave: How to get your finances in shape before baby arrives. National Bank. Retrieved September 2, 2022, from https://www.nbc.ca/personal/advice/taxes-and-income/how-parental-leave-works.html

Organization for Economic Co-operation and Development (2021). Towards Improved Retirement Savings Outcomes for Women, OECD Publishing, Paris, https://doi.org/10.1787/f7b48808-en

Pay Equity Commission. (2021, July 29). Pay Equity Office submission to the Ontario’s Task Force on Women and the Economy​. Retrieved August 26, 2022, fromhttps://payequity.gov.on.ca/en/WhatWeDo/Documents/2021%20PEO%20Submission%20to%20OTFWE_FINAL.pdf

Shilton, E. (2016). Empty promises: Why workplace pension law doesn’t deliver pensions. McGill-Queen’s University Press.

Statistics Canada. 2022. (table). Census Profile. 2021 Census of Population. Statistics Canada Catalogue no. 98-316-X2021001. Ottawa. Released August 17, 2022.
https://www12.statcan.gc.ca/census-recensement/2021/dp-pd/prof/index.cfm?Lang=E (accessed August 26, 2022)

Statistics Canada. (2022, February 28). Dictionary, Census of Population, 2021 – Private retirement income. Retrieved August 12, 2022, from https://www12.statcan.gc.ca/census-recensement/2021/ref/dict/az/definition-eng.cfm?ID=pop194

Statistics Canada. (2018, November 15). Employment Insurance Coverage Survey, 2017. The Daily – Employment Insurance Coverage Survey, 2017. Retrieved August 12, 2022, from https://www150.statcan.gc.ca/n1/daily-quotidien/181115/dq181115a-eng.htm

Statistics Canada. (2022, March 17). Estimating the economic value of unpaid household work in Canada, 2015 to 2019. Retrieved September 9, 2022, from https://www150.statcan.gc.ca/n1/pub/13-605-x/2022001/article/00001-eng.htm

Statistics Canada. (2022, July 15). Pension plans in Canada. Pension Plans in Canada. Retrieved August 26, 2022, from https://www23.statcan.gc.ca/imdb/p2SV.pl?Function=getSurvey&SDDS=2609

Statistics Canada. (2022, July 18). Pension plans in Canada, as of January 1, 2021. The Daily – Pension plans in Canada, as of January 1, 2021. Retrieved August 26, 2022, from https://www150.statcan.gc.ca/n1/daily-quotidien/220718/dq220718a-eng.htm

Statistics Canada. Table 11-10-0133-01  Registered pension plan (RPP) active members by area of employmentDOI: https://doi.org/10.25318/1110013301-eng

Statistics Canada. Table 11-10-0239-01  Income of individuals by age group, sex and income source, Canada, provinces and selected census metropolitan areas. DOI: https://doi.org/10.25318/1110023901-eng

Statistics Canada. Table 14-10-0327-02  Unemployment rate, participation rate and employment rate by sex, annual. DOI: https://doi.org/10.25318/1410032701-eng

Statistics Canada. Table 14-10-0327-03  Proportion of workers in full-time and part-time jobs by sex, annual. DOI: https://doi.org/10.25318/1410032701-eng