Women's retirement situation looks bleak but we know the solution

Glaring results from survey can be addressed by pensions, says head of plan services

Women's retirement situation looks bleak but we know the solution

Research from the Healthcare of Ontario Pension Plan (HOOPP) released last week shone a light on just how dire the Canadian retirement savings situation is, especially for women. The study found that 22 per cent of Canadians have no savings at all. It also found that 33 per cent of men and 49 per cent of women have less than $5,000 in savings. The gender gap in savings grows all the more stark as women approach retirement age. The study found that one third of women between ages 55 and 64 have no savings at all.

Ivana Zanardo accepts that this stark gender imbalance, against a backdrop of broadly bleak retirement savings across genders, is a product of the myriad factors that hold back women’s earnings and savings capacity. The head of plan services at HOOPP highlighted the ways that women are held back to earning only 71 cents to each dollar their male counterparts make and why that leaves them so poorly prepared for retirement. She says, however, that despite these bleak outlooks we actually already know what the solution is.

“We’ve consistently head that Canadians know the answer to this issue and that is better access to retirement savings plans,” Zanardo says. “We’ve heard two thirds of Canadians tell us that they’re willing to give up some pay to have a pension or a better pension than we have today. We do this research because we’re in the pension business and we talk pensions every day, we know the value of a good pension and the impact that it can have on an individual and especially for women.”

The gender pay gap highlighted by HOOP’s study is particularly acute when it comes to retirement. Zanardo explains that women will statistically earn less and work less than men. Women tend to take more leaves to raise families, care for aging parents, or meet other obligations. Those leaves will both inhibit earnings in the short-term and significantly impact savings plans. Even women who are eligible for pensions can loose out on crucial contribution periods due to the leaves they take.

The study also highlighted that women are more likely to prioritize day to day expense management over retirement savings. Whether as a product of lower earnings or traditional gender roles in family financial management, the end result is lower savings rates and a greater likelihood of working longer than desired or financial reliance on a spouse or other family members in retirement. 

While Canadian workers may know that greater pension access may improve this situation, it’s Canadian employers who expect they would have to pay for that. Zanardo says, however, that the employer view on pension benefits is shifting in Canada. Employers are recognizing that financial insecurity and a lack of long-term savings can negatively impact employees’ mental health and productivity. Moreover, there are attraction and retention implications to these plans. Zanardo says that advocates for pension access need to keep working to convince employers, government, and regulators to improve overall pension access.

Even if pension access is gradually improving, access to defined benefit pension plans remains more limited. Given the likelihood that inflation rests higher in the next decade than it did in the last, a defined contribution plan has some significant limits. That is especially the case for women who tend to live longer than men, while having less savings. While Zanardo says that a DC plan is “better than nothing” she advocates for a “Canada model pension plan” which involves pooled savings and greater protections against rising costs.

Zanardo highlights HOOPP’s own success in addressing some of these issues for their members. She notes that over 80 per cent of HOOPP’s plan members are women and one third of their members are part-time workers, two demographics who don’t typically have the best pension access. She notes that they also provide the capacity for members to take a leave of absence without a gap in their retirement savings.

As plan sponsors look at the results of this survey and the work being done to address issues around pension access, Zanardo hopes that they will continue to ensure they build plan access for all.

“Plan sponsors should continue to provide retirement savings for their members, and continue to look at theirs plans to ensure they are providing access to everyone,” Zanardo says. “This is a lot about ensuring we get the word out so that people are talking to their organizations and we can help close that gap.”