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A new analysis published by Ontario’s Pay Equity Office (PEO) finds that while the gender wage gap has closed with time, the gender pension gap has not. The Gender Pension Gap (GPG) is the difference between retirement income received by men and women. There are different ways to measure the GPG: for Canada, the PEO calculated the gap as 18% in 2020, while the OECD measured it at 21.8% in 2021. The PEO calculated the gap using Statistics Canada gender-disaggregated data of Canada’s sources of retirement income: Old Age Security and Guaranteed Income Supplement (state social pension); Canada Pension Plan/Quebec Pension Plan (mandatory contributory pension plan); and Private Retirement Income (voluntary contributions).[1]

Women in Canada, on average, received 18% less retirement income than men in 2020. This gap is 3% higher than the 15% gap observed in 1976, the earliest year for which data is available. While the GPG has fluctuated over the decades, it has not narrowed. The widest gap can be seen for private retirement income, which was 28% in 2020. This means that for every CAD 1 of private retirement income a senior man receives, a senior woman receives CAD 0.72.

A natural assumption would be that with increased wages, the pension gap would also begin to close with time, but this does not appear to be the case.

Unfortunately, the GPG is a persistent global phenomenon; the average GPG across 34 OECD member countries was 25.6%. Across Canada, a GPG can be observed in every province, with the narrowest gap in Prince Edward Island at 13% and the widest gap in Alberta at 23% in 2020. When looking at the gap through an intersectional lens, a GPG is observed in all visible minority groups in Canada, with the narrowest gap between Japanese women and Caucasian men at 24% and the widest gap between West Asian women and Caucasian men at 64%.

The PEO noted that the Gender Wage Gap (GWG) has narrowed with time. That is, women’s wages in Canada have steadily increased with time to be closer to that of men’s, although the gap has not closed completely. A natural assumption would be that with increased wages, the pension gap would also begin to close with time, but this does not appear to be the case.

Indeed, Canada’s GWG has narrowed over the decades and women’s labour force participation has increased. As more women work and earn an income, they are also contributing financially towards their pensions. And yet, women continue to receive significantly less retirement income than their male counterparts.

Although the GPG is still an under-researched topic, there are several possible explanations for why it persists. As pension payouts largely depend on the financial contributions of workers, deeply-seated gender norms and discriminatory practices may help to explain the gap. 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 to juggle caregiving responsibilities, and generally earn lower wages than men (the GWG). For example, we know that women are much more likely to go on parental leave compared to men. Under some employer pension plans, employers do not contribute when the employee is on leave. This means that women lose out on the opportunity to make significant pension contributions, especially if they are on extended leave and may not be able to afford to “buy back” those contributions. The GPG can therefore be seen as one of the compounded impacts that the GWG has on women’s long-term economic well-being.

We need to continue to call to attention to the contributions of women around the world. But we also need equal pay, better social protections and shared domestic work between men and women to address the gender wage gap’s compounding effects and the persistence of the gender pension gap.

The impacts of the GPG should not be dismissed. Aging in poverty is linked to food insecurity, housing insecurity and overall poor health outcomes, including higher rates of mortality.

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.

We need to continue to call to attention to the contributions of women around the world. But we also need equal pay, better social protections and shared domestic work between men and women to address the gender wage gap’s compounding effects and the persistence of the gender pension gap.

[1] Individuals may use 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.​

Find out more about the 2022 OECD Pensions Outlook!