First of all, I want to thank you for giving us this chance to appear. We would like to share our views on women and pensions, and also suggest a number of possible improvements. In preparing our presentation, we looked at this issue in terms of, first of all, private or supplemental pension plans, and second, public plans.
As regards supplemental private pension plans, it is clear to us that the best pension plans are defined benefit plans. Large corporations, particularly in the industrial, public and parapublic sectors, generally have this type of plan.
Women have a significant presence in the public and parapublic sectors. In the private sector, however, they often hold jobs in small service companies, which are not large enough and have too few employees for a defined benefit plan to be feasible, even though this type of plan is better, in our opinion.
The legislative framework that applies to defined benefit plans is extremely complex. A small business has neither the means nor the resources to create such a plan. Thus a majority of women working in the private sector are covered by defined contribution plans—or no supplemental pension plan of any kind.
Current laws make it difficult to introduce industry-wide plans. Indeed, the federal government held consultations on that issue last March, and we were asked what our interest was in inter-enterprise plans. I would like to give you an overview of the representations we made at the time.
We pointed out that, at our last convention, we undertook a review of pension systems, the idea being to reflect on ways of ensuring that our members had an adequate level of retirement income. Inter-enterprise plans were identified as one very promising solution. They allow a large number of small companies to get together to create a sufficient critical mass for economies of scale with respect to management and administration costs. Furthermore, it is then possible to introduce defined benefit plans in circumstances where it would otherwise be extremely difficult to do so.
Day care services and centres provide an extremely interesting example of that in Quebec. They were able to introduce a plan that covers 1,400 small companies, each of which has about 30 employees, thereby making it possible to set up a very attractive pension plan for 50,000 women workers, since the vast majority of them are women.
Before the introduction of that plan, there were only a handful of plans in place in these companies that were building up capital. By bringing all of the companies operating in that industry under a single plan, it was possible to set up a “final earnings” type of defined benefit plan. Even though women workers may have to change employers in the course of their career, they very often stay in the same industry. Ultimately, they are able to retain their accumulated benefits. This was possible in particular because the government of Quebec has lifted certain restrictions under the Quebec Supplemental Pension Plan Act to make this type of plan feasible. In my opinion, this is an option you may want to look at.
Furthermore, our major proposal in this area is that there be mandatory retirement plans, with employers being obligated to contribute. I would remind you that, as things now stand in Canada, there is no law forcing employers to set up a pension plan. Despite considerable effort on the part of unions at the bargaining table, the percentage of workers covered by pension plans has never exceeded 40%.
We also know that other OECD countries have better systems of protection—systems that are far more generalized. Although steps could be taken to increase the number of company plans or set up industry-wide plans, it is clear, in our opinion, that a major change is needed in the structure of pension plans, as was the case in Australia, and soon will be, in England.
Companies must be forced to contribute towards retirement for workers, male and female. That requirement could take the form of mandatory industry-wide plans, or provincial plans that allow employers with equivalent or better plans to opt out.
In that regard, the CSN believes that the government of Canada should pass legislation recognizing the right of all wage earners to be covered by a pension plan, and requiring that all employers make a minimal contribution. The parameters of such an approach could be determined jointly by union organizations, employers and governments. Those are some of our suggestions with respect to private plans.
In terms of public plans, a number of observations are in order. Overall, women have less coverage under private plans. In addition, on average, they have less income than men; they derive more income from public plans. For people 65 years of age and over, public plans provide 47% of their total retirement income. However, that income represents 56% of women's total income at retirement, compared to 39% for men.
If we are talking about women in retirement, we clearly need to look at the public plans, including Old Age Security, the Guaranteed Income Supplement or the federal CPP. We support the suggestion that the Guaranteed Income Supplement be increased. That would be one way of improving the situation of women in retirement. It would particularly help the poorest women, who may not be in a position to benefit from an industry-wide plan.
As regards the public plans, it's important to remember that women have periods of work interspersed with other events. Private retirement plans, like public plans, do not reflect that reality. On average, women retire when they're older, because they have not accumulated adequate retirement income.
In that regard, a number of corrective measures should be considered, particularly ones that will reflect changes in family structure. We are no longer dealing with traditional families. Fathers take a more active role in caring for children. We believe that public plans should consider the way the new generations decide to structure their family and personal lives. The calculation of the pension benefit should take into account periods where parents are caring for their children. And that consideration should not relate solely to the birth of a child, but also be extended to other periods, such as when a child is ill or when older parents require care, and so on.
I also want to point out that, even though women have a greater presence in the labour market, they continue to be the ones with the greatest responsibility for caring for sick children and aging parents. Adjustments are definitely required in that area.
Our final suggestion with respect to public plans would be that benefits paid out to surviving spouses actually be paid to the right person. As far as we are concerned, the right person is not the last legal spouse, but rather, the person who is responsible for the children. The current structure must be brought up to date in that regard. Today's families no longer resemble the ones that existed 20 or 30 years ago. Thought must be given to this new reality.
We will be able to provide further clarification on these points during the question period, with the help of Ms. Joncas, who is an actuary.
That completes my presentation.