Question:
Is there a gender pension gap in Canadian Defined Benefit pensions?
Answer:
Yes. And the gap is larger for higher socio-economic groups.
The gender pension gap is the term given to the difference between retirement income received by men and women from a certain pension system. This gap exists (in the favour of men) in virtually all retirement income systems around the world. In 2021, an OECD study showed Canada’s total gender pension gap to be 22%. The gap is influenced by various factors including differences in pay, career lengths (including career breaks), and part time work.
The chart below shows the median pensions of men and women aged 65 who retired in normal health, highlighting a gender pension gap of 41% 1 in our dataset. The gap is larger when we focus on the highest socio-economic group in our data and smaller when we focus on the lowest socio-economic group.
Source: Calculations using normal health pensioners aged 65 over the period 2017 to 2019 in Club Vita’s Canadian dataset.
Key takeaways
- The gender pension gap observed in Club Vita’s data is larger than that recorded by the OECD for the Canadian population as a whole. This could be because:
- Our data only covers pension benefits provided by defined benefit pension plans. The benefits analyzed by the OECD will include government benefits (e.g., CPP, QPP, OAS) and alternative savings. Government benefits may be acting to smooth out some level of inequality at the national level.
- Club Vita’s data is a subset of the Canadian pensioner population consisting of pensioners who were previously part of a defined-benefit pension plan, and therefore are more likely to be of a higher socioeconomic status. The very poorest section of society where neither men nor women have significant incomes may also bring down the national level of inequality.
The key questions are:
- What is the societal impact of a significant gap in income for men and women in retirement?
- What can we do to reduce the gender pension gap?
- What does this mean for longevity? A male pensioner aged 65 receiving the median pension (~$28,000) will have a life expectancy around 2.5 years shorter than a female pensioner aged 65 receiving the median pension (~$16,400). How much longer would women live if the gender pension gap was reduced?
What do you think?
1 Calculated as the difference between the median annual pension of men and women over the median annual pension of men. The data consists of normal health pensioners aged 65 over the period 2017 to 2019.
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