Sexism in our retirement system persists

Have you seen Janette Bertrand, radiant, on the cover of magazines Elle Quebec And Vero these last few days? At the dawn of its 100^e anniversary, it reminds us that it is more likely than ever to live to a very old age and in good health. This is encouraging, but its presence in the public space also reminds us that we may all have to finance 30 or even 35 years of life in retirement.

This is even more true for women. Half of those who are 65 years old today will live beyond 91 years. And one in four will reach the ripe old age of 96. For men, it is not very different: two years must be subtracted from these predictions.

I couldn’t help but think of all the women who will follow in Janette’s footsteps in the coming decades as I read a recent study by the Office of Pay Equity on retirement income. We learn that the income gap between men and women has not improved over time.

On the contrary, it was 15% in 1976, while it stands at 17% today. It even exceeded 25% for around ten years. It’s the world turned upside down.

“The gender pension gap is rooted in the fundamental architecture of Canada’s retirement income system,” concludes report author Dr.^D Elizabeth Shilton, an employment lawyer and researcher interested in pension policies. Logically, as women have entered the workforce and earned better wages, the gap should have narrowed, but it has not.

To understand what happened, we must remember that the Canadian retirement system is based on three pillars: federal benefits (Old Age Security and Guaranteed Income Supplement), provincial benefits (Quebec Pension Plan) and personal savings, which includes retirement plans offered by employers.

When we look only at the third pillar, the gender income gap reaches 28%. In other words, for every $100 of income obtained by men, women only receive $72. And as we see in the graph below, its relative importance continues to grow over time.

This change has benefited both women and men. “The rising tide of private pensions has lifted all boats,” writes the D^D Shilton. But this is not good news for the gender pension gap. » Because it is the most inequitable pillar of the three.

The benefits paid by Ottawa are not influenced by earned income, while the QPP mitigates the impact of certain years of low income (maternity leave, part-time) by removing them from the pension calculation. Gaps still remain, since 55% of Quebecers receive a monthly QPP pension of $700 or more, compared to only 31% of women.

The day when men and women earn the same salaries, a large part of the problem will be solved, even if we know that mothers invest less than fathers, due to lack of time^⁠1. But we should also tackle the other factor that harms retired women: the number of paid hours in their career.

As we know, women more often leave the job market for long periods than men for their children, because of their role as caregivers or the symptoms of their menopause.^⁠2.

I asked actuary Pierre Bergeron, a pension expert and partner at PBI, if he saw a solution. “It’s all a question of values. It’s a societal decision,” he replied. We could ensure that absences for family reasons do not reduce the future amount of the pension. Benefits would continue to accumulate, as is the case when a person is disabled in the majority of defined benefit (DB) plans. “But for that, someone has to pay. If it’s not the woman, it will be the employer. So we go around in circles, because it’s part of the overall compensation. »

Another issue for women, notes Pierre Bergeron, is the proliferation of group RRSPs within companies, even more disadvantageous for women than DB plans since you only get out what you put in. With compound interest, contributions in the early years are higher than those at the end of your career. Since we don’t give birth in our fifties, mothers are skipping some of the most important contribution years.

Ultimately, more women find themselves living in poverty in old age. Among those aged 75 or over, 21% live on low income, which compares to 14% of men. A difference of 50%. The Pay Equity Office rightly describes this data as alarming.

The good news is that Canada is one of the most equitable countries. In the 34 OECD countries, retired women earn on average 26% less than men, according to a study carried out in 2021. In Japan, the gap reaches 47%. I like to believe that if we have succeeded in covering a large part of the road, we are capable of going even further, as Janette told herself all her life by multiplying projects to break down prejudices and sexism.

1. Read the column “Mothers don’t have time to save”

2. Read the column “Menopause dramatically reduces women’s income”