'The pension gap has grown only by two per cent since 1976,' writes HOOPP's head of plan services
Women in the workforce have made significant strides in recent decades: the gender wage gap is shrinking and more women hold a growing share of senior leadership positions at Canadian companies. But as we celebrate International Women’s Day, there’s another gap that should get more attention – the gender pension gap.
Despite advancements made in the workplace, according to Stats Canada, women still face an annual income gap of 29 per cent. And what’s more worrisome is that we are now seeing the impact the wage gap is having on women in retirement.
We’ve conducted research at the Healthcare of Ontario Pension Plan (HOOPP) that shows women are greatly disadvantaged in their ability to save for retirement for a number of reasons.
Although more women than men are covered by a registered pension plan, they receive an average of 17 per cent less income in retirement through workplace pension payments, registered retirement savings plans (RRSPs), Old Age Security, Canada Pension Plan/Quebec Pension Plan (CPP/QPP) and other government benefits. This means women earn 83 cents of retirement income for every dollar paid to men. Even though the wage gap has been closing over time, the pension gap has grown by two per cent since 1976.
The pension gap is tied to the wage gap, which reduces women’s overall contributions into public and workplace pension plans and limits their personal savings. Aside from affecting their overall capacity to save, the wage gap also ensures women, on average, have less RRSP contribution room than men. This can have serious consequences because RRSPs are an essential retirement savings tool for many Canadians.
The wage gap is compounded by other social factors. Women are more likely than men to take time off work to have children or look after their families. Those same responsibilities contribute to the fact that women are twice as likely as men to work part-time, further reducing their ability to save for retirement.
These financial factors don’t only affect women’s retirements; they are also more likely to have less money in general. The 2024 Canadian Retirement Survey by HOOPP found that nearly half of Canadian women had less than $5,000 in savings – in fact, 28 per cent of women had no money saved at all. Women were also significantly more likely to say they didn’t have enough money coming in to set some aside in savings.
Statistics Canada data from 2020 showed about 200,000 more women than men aged 65 and older were living below Canada’s low-income cut-off. For a single person living in a city the size of Toronto, that was an annual income of less than $26,621 before tax, or less than $33,142 for a couple.
These problems extend beyond the pocketbook: increasingly research findings show that wage and pension gaps increase the likelihood of women experiencing financial stress, which in turn can put them at greater risk of developing health problems like anxiety, depression and physical conditions like heart disease.
Earlier this year, HOOPP released a report called The Health Impacts of a Pension. It found that women are seven per cent more financially stressed than men and experience six per cent lower financial well-being. But the research also showed that having a defined benefit (DB) pension plan decreases financial stress and increases well-being for Canadian workers.
It will take time, effort and collaboration across the public and private sectors to address the pension gap. Increasing the number of women in leadership positions at Canadian companies can help: HOOPP’s 2024 Canadian Employer Pension Survey found that Canadian employers with at least one woman at the executive level were nearly 20 per cent more likely than employers with no female executives to agree that eliminating the gender pay and pension gaps is important to the social and economic well-being of Canadians.
Another key step is for employers to offer workplace pensions to their employees if they don’t already do so. Improving access to workplace pensions would benefit all Canadians – especially women working in the private sector, who are much less likely to be covered by a workplace pension.
As a woman, I know how fortunate I am to participate in a world class pension. At HOOPP, 82 per cent of our active members are women so I get to see firsthand how valuable it is to provide this peace of mind to our members.
On International Women's Day, let’s all commit to do what we can to collaborate across the public and private sectors to reduce – dare I say eliminate? – the gender wage gap and offer good workplace pensions for all Canadians.
Ivana Zanardo is the Head of Plan Services for the Healthcare of Ontario Pension Plan
