Evidence of meeting #43 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 women.
A recording is available from Parliament.
Bloc
Luc Desnoyers Bloc Rivière-des-Mille-Îles, QC
I'm not important! That's discrimination against men. That will be in the blues.
Liberal
The Chair Liberal Hedy Fry
Can I get an okay on whether it's going to be December 3 or 8? Then let's move on.
Conservative
Candice Bergen Conservative Portage—Lisgar, MB
Let's say December 8. Who knows what's going to happen, but let's say the 8th.
Bloc
Luc Desnoyers Bloc Rivière-des-Mille-Îles, QC
I'm not important, but I'm nevertheless going to ask a question.
Conservative
Bloc
Luc Desnoyers Bloc Rivière-des-Mille-Îles, QC
You mentioned that there was the Alliance, but did you mention the SEPB?
Liberal
The Chair Liberal Hedy Fry
That's okay. Now, do you think the third is too soon?
Why don't we see if we can get people to come? It's only the Vancouver Police that are new; the others are all here. So let's try for the 3rd, as Madam Demers suggested and as the clerk is suggesting to me, and hope they can come.
Liberal
The Chair Liberal Hedy Fry
Then we bring in the people on the 8th. Okay. We've said on the 8th.
Who knows? The report may be so excellent that we may not take a long time discussing it.
Conservative
Liberal
The Chair Liberal Hedy Fry
We should go and do it in Vancouver? Okay, on Friday, December 11, we will all go to Vancouver. The committee will travel.
In fact, if it may be too late for the Vancouver Police to come, we could video conference them in.
Now that we've finished that, I will suspend while we await our witnesses.
The committee is now in session.
I want to thank Mr. Baldwin and Dr. McDonald for coming here today. As you know, the committee is discussing the issue of pensions. Actually, we're discussing pensions from the point of view of private, public, and unpaid work, people who have done unpaid work and what happens to them in their pensionable years.
We'll ask you each to present for 10 minutes. Feel free to present for under 10 minutes, if you wish. After that we will have a round of questioning from the members of the committee.
Given the order in which I have your names, Mr. Baldwin, will you begin, please?
Bob Baldwin Consultant, As an Individual
I will.
Thank you very much. It's an honour to be here.
Having spoken with both the clerk and the analyst who is supporting your efforts, I thought it would be appropriate for me to address three questions today.
First, will the increased labour force participation of women affect their retirement income security?
I'm going to give short answers and then explain them.
The short answer to that question is yes, the change is already evident in data on incomes of older women, and there's much more to come. However, I will also forewarn you that it doesn't appear that there's any immediate prospect of establishing equality between the incomes of older men and older women.
The second question I'll speak to is whether there are gender-specific retirement income issues that the committee might note. My answer is yes, there are a number of issues to be addressed in all pillars of Canada's retirement income system.
Finally, are there important pension issues that are not gender-specific, but which will be very important to women? The answer is yes, there are some very serious problems facing the third pillar of Canada's retirement income system, and these are not gender-specific problems, but they will have an important impact on women.
I should say that I will use this term “gender-specific” to refer to both workplace pensions as well as registered retirement savings plans and the income that each of those institutions generates. I should warn you too that my presentation is oriented more towards identifying problems than it is to telling you what the right answer is to solve the problem.
First of all, let's talk about the increased labour force participation of women and current retirement income prospects of older women.
I have, by way of background to what I'm going to say now, prepared some tables, which the clerk has indicated she will have translated and circulated to you. If you don't catch all the numbers as I'm speaking, don't worry, they will catch up with you at some point.
I want to note that over the period between the early 1980s, which is the earliest period for which I was looking at income data, through to 1996, there was a stubborn stability in the ratio of women's income to men's among people over 65. The women's income seemed to be stuck at about 62% of men's income. Happily, between 1996 and 2006 that gap has closed slightly, but only slightly, so that by 2006 the average income of individual women over 65 was 68% of that of older men.
The second thing I'd note about incomes of older women compared with those of older men is that over that period from 1981 to 2006, the sources of women's income in old age changed. They changed in ways that made the sources look more like men's income, in the sense that income from the Canada and Quebec pension plans and third-pillar income grew faster than other sources of income.
At the beginning of the period, women were getting about 7% or 8% of their income from each of the Canada and Quebec pension plans and the third pillar. By the end of this period of observation, which is 2006, women were getting about 20% of their income from the Canada and Quebec pension plans and about 30% from workplace pensions. You can see that these two sources of income, which in effect reflect your working career, became more important over this period of time.
I would point out, though, that there's a bit of a difference in the period when these incomes grew. That is, most of the increase in income from the Canada and Quebec pension plans took place between 1981 and 1996. After that, it was a fairly stable portion of older women's income that came from the Canada and Quebec pension plans. In the case of third-pillar income, which as I said includes workplace pensions and RRSPs, the income from that source was growing right through to the end of the period of observation, which is 2006.
The last thing I want to say is that if you look at income coming from the Canada Pension Plan, you notice that the number of female contributors compared to the number of male contributors grew over the whole period from 1966, when the plan was created, until 2006. Back in 1966, there was only one woman contributor for every two men. By 2006, there were 90% as many women contributors as there were men contributors. There was also a tendency towards equalization in retirement benefit payments to women versus men over that 40-year period. So at the start of the period, retirement benefits paid to women were only 64% of the benefits paid to men, and by the end of the period, it was up to 82%. The chief actuary, in his latest regular actuarial report on the Canada Pension Plan, predicts that those gaps will keep getting narrower, but you never reach equality, at least by 2050, which is the end of the timeframe assessed by the chief actuary.
Moving on to some gender-specific issues, I'm going to limit myself to some comments on old age security and the guaranteed income supplement. I'm going to talk about it in relation to the objective of eliminating poverty in old age.
There have been some quite comprehensive studies done of poverty among the elderly in Canada in the recent past. I'm thinking of two articles in particular in a recent edition of Canadian Public Policy: one prepared by Kevin Milligan and another prepared by Mike Veal. They both paint a picture of substantial decline in poverty rates among the elderly in Canada over the period from the late 1970s to the early 2000s.
In fact, Canada now has one of the lowest rates of elderly poverty in the high-income part of the world. But there are two things. One is that there are some subsets of the elderly population with noticeably higher rates of poverty than the elderly population as a whole. One of those population subsets is single elderly women, especially people who are widowed or divorced. Further research on the widowed part of that story has also been done in a Statistics Canada study by Bernard and Li, which you may want your staff to have a look at.
I'll add with regard to the low rates of poverty that there are some real debates about how to define and how to measure poverty. These debates are actually quite important in looking at the situation of the elderly poor, because the incomes of the elderly poor are much more strongly concentrated near the low-income lines than is true of the non-elderly population. So if you move those lines even a small amount, you start moving significant numbers of the elderly from one side of the line to the other. You may want to be sensitive to that, because you may get conflicting testimony on what portion of the elderly population has an income below the poverty line.
Looking ahead, there are a couple of policy issues you may want to think about. One is that through old age security and the guaranteed income supplement, we offer minimum income guarantees to elderly couples and elderly singles. It is striking that the guarantee to elderly couples is 1.6 times the guarantee made to elderly singles. Usually when people are trying to equilibrate incomes between couples and singles, the factor that is used to equilibrate them is 1.4, not 1.6, which is to say we're making a somewhat stronger commitment to elderly couples, it would seem, than to the single elderly. So you may want to think about that especially in relation to the problem of single elderly poverty rates.
The other thing that is very important going forward is what kinds of adjustments will be made to old age security and GIS in the future. I say this because those programs are price indexed. Generally speaking, price indexing is a good thing. Over the last 25 years or more, average wages have not grown in relation to prices, so old age security and GIS have also maintained not only their purchasing power but also their value compared to average wages and salaries. The chief actuary is expecting that labour markets will tighten up under the demographic circumstances we're facing in the future, and I think he's right. Real wage growth is likely to begin. If that's true, then OAS and GIS will start falling compared to average wages, and they will likely fall in relation to poverty rates.
Liberal
Consultant, As an Individual
Okay.
Lastly, the big issue that is not gender-specific that I think you want to be concerned about is the declining portion of the workforce that participates in workplace pensions. There are now almost equal portions of women workers and men workers belonging to these plans. They are a very important source of income. But participation in them has been declining since the late 1970s for a variety of reasons that have not yet shown up in third-pillar income data, but will start showing up for reasons we could get into in Q and A. The way we respond to that will be very important for the retirement income prospects of all elderly, including all elderly women.
I'll stop there, Madam Chair, and take questions.
Dr. Lynn McDonald Professor, Faculty of Social Work, Director of the Institute for Life Course and Aging, University of Toronto
Thank you for inviting me. I'm just going to make four points, and my colleague has already made at least two of them.
The first point I want to make is that the inequality in the labour force is totally reflected in CPP/QPP, in RPPs, and RRSPs, and in savings, and until such time as that issue is addressed, probably in labour market policy, there will continue to be a gap between men's and women's pensions.
I would also add that one of the factors we have to keep thinking about is that women still have babies. Yes, women have the child dropout clause, but what the most recent research is showing is that when women come back into the labour force, they do not get back into the same job they had. They are further down on the ladder when they come back. Oftentimes, they may come back just part time because that's the only kind of work they can get. It's not always guaranteed.
The second point I want to make is a rather important point, and that is on the decline in the prevalence and stability of marriage, and that is to say that marriage rates are down and divorce rates are up. Single, female-led families are on the rise. There is a huge increase in cohabitation and common-law relationships. All of this translates into women not having the legal and fiscal protection of marriage, which they have had for some time.
There is a very large change, and this is being reflected even in the first wave of baby boom women. The problem with this is, as they say in academia, that women are always one man away from poverty. This is quite true, when I go to my third point, which is.... We've talked about unattached women. I would like to say that unattached women--you refer to them as single women--make up 38% of the older population over age 65. It's 38%, and 14% of them live in poverty.
Who is carrying the burden of this poverty is an interesting question. When we break down the categories, there are single women, there are widowed women, there are divorced women, and there are separated women. The women who are carrying the burden of poverty in this country are the divorced and separated women.
If I just give you one quick example, if you take divorced women and put them in the male bottom quintile, which would be 20% for men, 43% of divorced women have the same salary, so it gives you some idea.
I want to also add to that women from visible minorities and aboriginal women. Aboriginal women are the most dependent on our public pension system in this country and they are the poorest of the poor of the poor. The visible minority women are the second poorest of the poor, with a rate of about 25% who live below LICO.
The fourth point I want to make is about caregiving. Women are double caregivers, and they are serial caregivers. In other words, one in five baby boom women are caregiving, just for starters--five million people. The problem is that 17% of them are what we call the famous “sandwich generation”. When that's over, then they serially go on to look after their husband's parents, their husband, and so on and so forth. The caregiving issue never ends. It's not quite as short and small as we think it is.
There's a huge issue attached to this that nobody has even thought about, and that point is, what happens when the caregiving is over? What the latest research is showing, in the U.S., in Canada, in OECD countries, is that through the caregiving process, women are forced into early retirement, and it's retirement by stealth because they don't think they're going to retire. So what happens is when the caregiving is over, which could be up to 10 years, they then try to go back into the labour force. Their human capital has deteriorated, they have wasted or used all their savings to live, and they can barely afford to even go out to look for a job. Then they face age discrimination because they're an older worker, and who wants an older worker?
I would say we need to look at pensions to cover, maybe not the first point, because I think it's a labour market issue, but the other points. I think we need to look at doing something about the allowance for women who are divorced and separated. I think we need to look at the sponsorship agreement and make some changes for older women there. I'm thinking of expanding GIS, but I won't say any more.
Is that it?
Liberal
The Chair Liberal Hedy Fry
Thank you very much.
Now I will begin with the questions. This is a seven-minute question session, and the seven minutes include both the questions and the answers. So if you want a lot of questions to come to you, then you need to give crisp answers.
I just wanted to say before we begin that I do love the phrase “serial caregivers”. It really depicts what women do from the moment they give birth until... That's an extraordinary phrase. We might borrow it for our report.
Ms. Zarac.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
Thank you, Madam Chair.
Welcome, Mr. Baldwin and Ms. McDonald.
Mr. Baldwin, you said you weren't offering any solutions but rather pointing out problems. I hope you nevertheless have your ideas on the subject—you've studied such a long time—because we're looking for solutions.
You mentioned the upcoming situation. You also said that, from 1980 to 1996, the incomes of women 65 and over represented 62% of those of men and, from 1996 to 2006, only 68% of men's incomes. The difference isn't great.
And yet, based on my personal experience, the years from 1980 to 1996 were years in which women stopped working in order to take care of their children, whereas, from 1996 to 2006, we more commonly saw women stopping for a period of time, taking parental leave and then going back to the labour market.
However, incomes didn't increase much all the same. How do you explain that?
Consultant, As an Individual
First of all, one of the things to remember about the data I gave you on the current elderly is that they don't include any of the baby boom generation. The most recent age cohort you would look at would be people born in 1941, I think it is. Right? So we haven't really begun to catch up with the effect of the baby boom.
On the solution side, I realize that in editing myself at the end, the one thing I did leave out is that I think you should pay a lot of attention to the role of old age security in the retirement income system. It tends to get overlooked in these discussions, but it's very important in creating a base of non-income-tested income that is not directly linked to labour force participation. So I'll just leave that thought with you.
The other thing is that, in the third pillar, we are probably relying far too heavily on individual employers to serve as platforms for delivering retirement income. They're not effective platforms because most of them don't have the scale expertise to run a decent pension plan. Most of them will die before their employees do—that is, the companies will die, not the people.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
We saw that with Nortel, a company that gave a lot.. To take the example of Nortel, let's say that it was a big company in which employees placed their trust. And yet they now find themselves without a pension.
What action should be taken to protect pensions in the event of bankruptcy or...?
