Good morning, and thank you very much for inviting us.
The mandate of the National Advisory Council on Aging is to advise the Minister of Health on all matters related to the aging of the Canadian population and the quality of life of seniors.
For more than 25 years, NACA has endeavoured to bring the issue of population aging to the attention of the federal government and the people of Canada. In developing its recommendations, the council takes into account the most recent research, but it also makes a point of consulting with seniors.
Over the years, the council has developed expertise with regard to the economic condition of seniors. In 2005 NACA published a report entitled Aging in Poverty in Canada. This report looked at issues that affect the economic vulnerability of seniors and made policy recommendations to improve seniors' economic situations. In addition, our report cards, one of which will be published within the next few weeks, raise concerns related to seniors' economic status.
In terms of the issues, there have been clear improvements in the economic situation of Canadian seniors since the 1980s, both in absolute terms and relative to younger population groups. But this catching-up period is over. A substantial number of seniors, often women, continue to live under very difficult economic conditions. While Canada's combined public-private retirement income system is often considered a success story, poverty among senior women is not a rare occurrence. For a good number of senior women, the prospect of a golden retirement simply does not exist.
Compared with senior men, senior women are more likely to live below the low-income cut-offs. In 2004, 3.5% of senior men and 7.3% of senior women were below the low-income cut-offs. Almost 20% of unattached senior women were below these cut-offs.
Statistics Canada estimates that 219,000 seniors were living below the low-income cut-offs in 2004. More than 60% of these were unattached senior women.
Senior women are far more likely to depend on old age security and GIS as important sources of revenue. Close to one-half of women over the age of 80 depend on the GIS.
The OAS and GIS are not enough. Unfortunately, sometimes the OAS and GIS are insufficient to allow seniors, especially those who are unattached, to live above the low-income cut-off. In 2003 an unattached person who received only OAS and the GIS had an average annual income of $12,031, an amount much less than the low-income cut-off for urban areas, where the cost of living is high.
Our first recommendation is that the amount of the guaranteed income supplement should be increased so that the sum of the GIS and OAS is equal to or greater than the low-income cut-off, as determined by Statistics Canada.
The income gap between genders is still very evident. In 2004 the average income of women over 65 was 67% that of men. The income difference between men and women in 2004 was $10,800, virtually unchanged from 2000.
Older women tend to have lower incomes than men because they participated less in the labour force, and their wages were less, on average, if they were employed. In 2004 about one in five senior women had never worked outside the home. In addition, because women live longer, they are at a greater risk of running out of savings over their lifetimes.
Women who are divorced or separated have much lower retirement incomes than do single women and widows, as most divorced women do not claim a portion of their former spouse's pension, despite being entitled to it. Single women have likely invested in their careers and therefore have higher retirement incomes. Many widows have inherited assets from their husbands and are entitled to a survivors benefit.
Our second recommendation is that a more systematic sharing of the pension of their former spouse would improve senior women's economic security. NACA considers it important to increase the income of divorced and separated women, and reiterates the recommendation it made in 1993, that governments ensure automatic and compulsory sharing of pension rights under the CPP, employer pension funds, and retirement savings plans following divorce or legal separation.
Housing is another issue. Despite an average increase in income of 20% for seniors between 1980 and 2000, housing affordability problems decreased by only 1% between 1981 and 2001 among seniors. In 2001 almost 50% of all senior women renters living alone had core housing needs, the highest level of any household type. We recommend that provincial governments should reinstate rent control policies to benefit senior renters and fund new affordable housing units, including supportive housing.
The concerns outlined today are not likely restricted to today's retirees. Fully one-third of Canadian women between the ages of 45 and 59 believe they are not financially prepared for retirement. Moreover, it is expected that economic inequalities among seniors will increase as the CPP and OAS retirement benefits system matures, and as seniors' additional sources of retirement benefits vary in accordance with respective private retirement pension plans and RRSPs. These latter forms of savings are more prevalent among workers with higher earnings.
The percentage of women contributing to private pension plans is now catching up to the percentage of men. The difference was just 0.7% in 2002, whereas it was over 8% in 1991. Still, women receive smaller pension incomes because of the wage difference between men and women, and because these plans do not compensate for absences to raise children or to look after sick relatives, absences that are generally taken by women.
Job insecurity, which is more often the lot of women, has a considerable impact on retirement income. Self-employed workers, part-time workers, and workers who experience extended periods of unemployment have a harder time saving for their retirement. Part-time workers contribute to the CPP, but the benefits replace a relatively low percentage of contributors' incomes when they retire. Also, most part-time workers do not contribute to employer pension plans.
Finally, I'd like to thank the standing committee for inviting NACA's views on senior women and poverty. The council urges the federal government to take immediate action to address the concerns mentioned so that senior women's poverty does not persist into the future.
Thank you very much.