How has Canada's decades-old gender pension gap changed?

Women in Canada received an average of 18% less in retirement income than men in 2020, according to new analysis

How has Canada's decades-old gender pension gap changed?

The results of new research suggest it’s not just the wage gap that women should be worried about.

In a new analysis of data from Statistics Canada, Ontario's Pay Equity Office (PEO) found that compared to men, women in Canada received 18% less income in retirement on average in 2020. This gap is 3% larger than the 15% gap seen in 1976, the earliest year for which data is available.

While the Gender Pension Gap (GPG) has changed over the years, it has not shrunk. In fact, the PEO says it continues to be a major global phenomenon.

Among the 34 members of the Organization for Economic Cooperation and Development (OECD), the average GPG was 25.6% as of 2021, the PEO said.

Every province in Canada is experiencing a GPG, with Alberta experiencing the widest gap in 2020 at 23% and Prince Edward Island experiencing the narrowest gap at 13% domestically.

The narrowest gap between Japanese women and Caucasian men is 24%, and the largest gap between West Asian women and Caucasian men is 64% when examining the gap through an intersectional lens.

Read more: Why your female clients may retire 30% less wealthy

"We see that the Gender Wage Gap (GWG) has narrowed with time. Meaning, 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,” said Kadie Ward, Commissioner and Chief Administrative Officer of the PEO. “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.”

Over the years, both the GWG and the labour force participation of women have decreased in Canada. Women are contributing financially to their pensions as they work and earn more money. And yet, compared to men, women receive a significantly lower retirement income.

The scarce research on the GPG point to several reasons behind its persistence.

Deeply ingrained gender norms and discriminatory practices may help to explain the gap, as pension payouts are largely dependent on the financial contributions of employees.

After having children, women are more likely than men to leave the workforce (temporarily or permanently), work fewer years over the course of their careers, work part-time to balance caregiving responsibilities, and make less money overall than men (due to the GWG).

The GPG can be viewed as one of the GWG's many repercussions on the long-term economic security of women.

Read more: How the gender pay gap adds up over women's lifetimes

"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,” Ward said.

Referring to the recent International Day of Older Persons on October 1, she added: “[T]here is no better time to call attention to not only the contributions of women around the world but the need for equal pay, better social protections, and shared domestic work between men and women.”