Evidence of meeting #34 for Status of Women in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was coverage.
A recording is available from Parliament.
4:10 p.m.
Senior Analyst, Analysis Branch, Statistics Canada
The certainty around the planned retirement age is correlated with things such as household income, with pension coverage, with the amount of RRSP savings. So certainly financial preparedness is central in all of that, absolutely.
4:10 p.m.
NDP
Irene Mathyssen NDP London—Fanshawe, ON
I was doing some background reading, and one of the things I came across—in Monica Townson's work, but I've read it elsewhere—was that the uptake in terms of RRSPs is significantly lower than what's available. People simply can't afford it. They don't have that liquid income or they're raising kids or caregiving, or a host of any other reasons. That inability to provide that little extra cushion against a lack of a good defined benefits pension would seem to suggest that's the reason we're seeing people working longer and being less able to retire in what we would call a dignified and comfortable way.
4:10 p.m.
Assistant Director, Labour and Household Surveys Analysis Division, Statistics Canada
If we go back to the early CPP uptake—people who take their CPP in their early sixties—and split that figure into those who have some registered pension plan income and those who do not, those who do not are far more likely to go back to work and work a significant amount than those who also have pension incomes. It seems that there are at least some people who retire without that adequate income, then reassess their situation and end up back at work fairly soon afterwards.
4:10 p.m.
Liberal
The Chair Liberal Hedy Fry
Ms. Mathyssen, that's your time. Thank you.
We're going to the next round. Welcome, Ms. Guarnieri. It's a pleasure to have you. You will share your time with Anita?
4:15 p.m.
Liberal
4:15 p.m.
Liberal
Albina Guarnieri Liberal Mississauga East—Cooksville, ON
Thank you.
In the 21 years that I've done constituency work, I've had some occasion to witness some very sad stories. One issue that has always bothered me is that women who lose a spouse have to cope with an immediate drop in household income. They're reduced to the survivor benefits without any bridge or transition period. This leaves them with a couple of options, for those who aren't wealthy, where they may have trouble paying their immediate rent, or they may have to look into selling their home to make ends meet, to move into a smaller home. I wonder whether or not you would consider that there would be merit for this committee to explore maybe a six-month transition period, where they continue to use full OAS and CPP benefits for say, six months or three months. I'm pulling six months because that seems reasonable to make a transition to the next step.
I am eager for your thoughts. I see that you're smiling.
4:15 p.m.
Assistant Director, Labour and Household Surveys Analysis Division, Statistics Canada
Well, the statistical evidence we have on that is from a couple of studies that were done a few years ago. One was in an international context and just looked at replacement rates right after widowhood. Generally, they showed that right after the spouse dies, it really wasn't an issue. But we're always looking at averages, medians, means, so there are always cases at the ends of the distribution where things are a little bit different.
If we look at a Canadian study that was a little bit longer term, it looked at the income tax data, and again they found there was not a lot of evidence, at least in talking about the means or medians, in terms of immediate large declines in income replacement rates once you take account of the fact that the number of people in the household had been reduced. However, over the following five years, the income declines far more for widows than it does for widowers. So over time you get a greater gap between the incomes of the two groups. That corresponds to what we see in terms of the GIS rates, where the GIS rates for women definitely seem to be going up as they age.
4:15 p.m.
Liberal
Albina Guarnieri Liberal Mississauga East—Cooksville, ON
That's interesting that, yes, the data do not support difficulties immediately after, but I must confess, I should be sending you my constituency cases, which would indicate otherwise.
I don't want to eat into Anita's time.
4:15 p.m.
Liberal
Anita Neville Liberal Winnipeg South Centre, MB
Thank you.
You referenced earlier that divorced women—I was going to focus on what my colleague did as well, on single women—are particularly disadvantaged as they move through with pensions. Have you done any study on the impact of the splitting of pensions at divorce?
4:15 p.m.
Liberal
Anita Neville Liberal Winnipeg South Centre, MB
Okay. Going back to my colleague's question, women frequently live much longer than men. Women are frequently alone much longer. We currently have income splitting for couples, which provides a financial advantage if you're in a couple situation, but it strikes me that the single person, man or woman but usually woman, is particularly disadvantaged. You're saying that your data isn't showing anything of the sort.
4:15 p.m.
Senior Analyst, Analysis Branch, Statistics Canada
When I raised the issue of marital status, I wanted to get at what were the potentially vulnerable populations in terms of perhaps low income. Without getting into the discussion around what constitutes low income or what constitutes poverty, if we look at the census data from 2006 and we use the low-income cut-offs before tax--these are women who are not living with family members and are 75 years of age or older--we get a low-income rate of 28% for those women who had never married during their lives and a low-income rate of 29% before taxes of those who were widowed. For those who are 75 and over but divorced, the low-income rate was 42%. That's a difference of about 13 percentage points. If we look at the 65 to 74 age group, the low-income rates for the widowed and never married are in the range of 25% to 30%, and the rates of the divorced are in the 39% range. That's where I was coming back to for late-life changes in family formation or dissolution in this case, and the implications for financial well-being.
4:20 p.m.
Liberal
4:20 p.m.
Conservative
Alice Wong Conservative Richmond, BC
First of all, thank you very much for such a detailed study. I would like to draw your attention to the second slide, the percentage of paid workers with pension coverage by sex and age group. We can see that between 1997 and 2007, it stands out very clearly that the 25 to 34 age group probably have gone into jobs with pension coverage.
Relating to age, then we have the 45 to 54 age group who are also covered with pensions. Is there a correlation between the pension coverage and the RRSP that they get into?
4:20 p.m.
Senior Analyst, Analysis Branch, Statistics Canada
In the taxation data we have here, you'll notice that the absolute numbers that are reported within age groups vary somewhat because different things are included within these figures. The taxation data are based on something called the pension adjustment that's reported. That's where those data are coming from, so that's where the four percentage point increase in the proportion of young women here with a positive pension adjustment comes from.
That could include, and does include, deferred profit-sharing plans within the taxation data, and given the nature of the data, we can't net out the implications of deferred profit-sharing plans. In the survey data, we also see the increase. Within those numbers, we also have the possibility that survey respondents mistook a group RRSP for a registered pension. My suggestion is that the reason the survey data are higher than the tax data is for that reason. But if one assumes that they're equally likely in 2007 as in 1997 to get those things confused, the overall trend is still upward and of the same magnitude. If one assumes that the reporting error is of the same magnitude, it's suggests that something is happening there.
4:20 p.m.
Conservative
Alice Wong Conservative Richmond, BC
Based on what you just said about the confusion, isn't it true that younger people are now looking at financial literacy more than older women who have not had the opportunity of being educated on the way to invest or the way to plan, and also retirement planning for women? Do you see a correlation between financial literacy and retirement planning, and hence the results of their pensions at the end? It's complicated, isn't it?
4:20 p.m.
Assistant Director, Labour and Household Surveys Analysis Division, Statistics Canada
We really don't have a whole lot of evidence on that right now. There's actually a new survey that will become available in the next few months on financial capability, and it should answer a lot of those questions on demographic characteristics. It actually contains questions that are almost like a test of people's ability to plan their finances. Within a few months, we should have a lot more answers than we do right now on the ability of different groups to engage in financial planning.
4:20 p.m.
Senior Analyst, Analysis Branch, Statistics Canada
Could I add one thing on that issue?
One of the issues we face when we do surveys of this sort and ask people in telephone interviews about their pension coverage and so on is that how well they understand their retirement savings vehicles is somewhat suspect. For example, a few years ago we did a workplace and employee survey. In that survey we surveyed employees within a firm. We also had the management of the firm fill out an independent survey. What we found was that some 10% of individuals reported that they had a pension plan, and when we surveyed the firm, the firm didn't offer a pension plan.
More recently, when we looked at the 2007 General Social Survey report, of the people who self-identified as pension plan members, 15% said that they didn't know what type of plan they had. These were individuals who were 45 to 59 years old and who were presumably approaching retirement. The other thing that stood out from those results was that we asked individuals who they received financial advice from. Again, these are people aged 45 to 59. I think around 30% of them said that they didn't receive financial advice from anyone. Some received financial advice from a spouse or a family member. We don't know about the quality of the advice. I think about half—I could confirm those numbers—were receiving financial advice from a financial institution or a financial adviser. The likelihood of not receiving financial advice was higher among people with low incomes and higher among more recent immigrants to Canada and other groups.
Coming back to Ted's point, in December or January we will be releasing a survey of financial capability, and it will shed more light on this issue.
4:25 p.m.
Liberal
The Chair Liberal Hedy Fry
Yes. I will ask for that information before the witnesses leave.
We'll go to Mr. Desnoyers.
4:25 p.m.
Bloc
Luc Desnoyers Bloc Rivière-des-Mille-Îles, QC
Thank you, Madam Chair.
On page 3—which interests me the most—you state that the coverage rate for women in the private sector is approximately 22%. Is that correct?