$28,600 a Year: What the Average Older Canadian Woman Lives On

When it comes to the gender pension gap in Canada, there’s good news, bad news—and caveats.

Over the past fifty years, retirement income has increased for many Canadians. Old Age Security, for example, was indexed to inflation in the early 1970s. So was the Guaranteed Income Supplement. And in 1976, 34.3 percent of women aged sixty-five and older were defined as low income (after paying taxes) compared to 17.5 percent in 2022. This is a striking improvement, but it still accounted for some 700,000 women as of that year, a number which will be higher today.

Seemingly endless streams of data on poverty, low income, or median income are collected and analyzed by Statistics Canada. A 2024 analysis goes deep into comparative detail on the financial status of women, but this line sums it up: “Overall, older women had lower income, higher low-income and poverty rates, and relied more on government transfers than older men.”

In 2022, the median income (after tax) for male and female Canadians aged sixty-five and older was $32,000. The average older man received $38,700 per year. As for the average older woman? She lived on $28,600. It was worse for women who are racialized and those who immigrated later in life. Imagine living on that income and paying $2,400 a month in rent (or even $2,000) and eating.

Elizabeth Shilton, a legal scholar, author, and pension expert, highlighted this disconnect in her damning 2024 report on Canada’s gender pension gap for the Ontario Pay Equity Office (PEO). “Canada has one of the best retirement income systems in the world,” Shilton wrote. “But all Canadians do not benefit equally from the system. Masked by the good-news data is a substantial and persistent gender pension gap.”

The contrast in retirement income between men and women, Shilton’s report said, has not changed since 1976. This prolonged inequity is perplexing, since women are increasingly educated and employed; the reasons for the gender pension gap, today and in the future, remain locked in the past.

Retirement pensions are, to this day, built on a philosophy defined in the late 1800s. By men, for men. But mostly for companies that needed committed workers.

Shilton’s book Empty Promises: Why Workplace Pension Law Doesn’t Deliver Pensions offers a fascinating dissemination on the reasons Canada’s private workplace pensions are failing so many:

Canada’s private workplace pension system was not designed to produce adequate, predictable, and secure pensions for workers. It was designed to meet the business needs of employers. For much of the 20th century, pension plans functioned as valuable human-resource management tools for employers whose business model demanded a stable workforce of loyal well-trained employees. They assisted enterprises to attract career-minded employees, to retain them throughout their productive working lives, to influence their workplace behaviour, and to ease them out the door when they became too old to be productive.

Canada’s first company pension launched in 1874, offered to management at the Grand Trunk Railway. Employee pensions arrived later. During this period of rapid industrial expansion, businesses competed hard for workers, and pensions helped buy loyalty. As Shilton noted in an interview, the railroads, banks, and insurance companies that fostered the development of private pensions held all the power.

Remarkably, there were no regulations protecting a worker’s pension from an employer’s whims. “You could lose every penny of your pension if you were fired the day before you hit retirement age,” she said. “A lot of the pensions were fundamentally discretionary. If you changed your job midstream, you would lose your pension.”

Demand for reform grew. The first province to act, Ontario, passed the Pensions Benefits Act of 1962/63, far-reaching legislation that planned to mandate pensions in all workplaces with more than fifteen employees. Alas, it was not to be. The legislation would not come into force until January 1, 1965, and before the clock ran out, the business lobby won the support of political leaders who soon repealed the act.

While Ontario successfully killed these life-enhancing reforms, it compromised with legislation that enshrined some protection for workers, placing limits on free-wheeling corporate control over pensions and employees’ lives. Political leaders were later lauded for the Pension Benefits Act of 1965, which made Ontario the first province to regulate these workplace benefits. Its meagre half measures were copied by others.

In the background of that debate was the demand for a public pension, a partnership between federal and provincial governments. Despite calls for a gold-standard public plan that would replace as much as 70 percent of a worker’s earlier income, Ontario politicians voted for a lesser amount, arguing that private workplace plans would bridge the retirement income gap (and perpetuate worker loyalty). Another win for the business lobby.

“You could lose every penny of your pension if you were fired the day before you hit retirement age.”

Instead of replacing a substantial portion of a retiree’s earlier income, the Canada Pension Plan covers only 25 percent. Changes that began in 2019 will eventually lead to a 33 percent wage replacement but won’t be fully realized until 2059, when today’s twenty-five-year-olds retire.

In the 1960s, the public pension was deemed mandatory. This was a win accompanied by the loss of substantial wage replacement. To justify such a small payout, the government said the CPP would serve to enhance the superior workplace pension, a decision that might have made sense if companies were required to offer a workplace pension, which they were not.

It is worth acknowledging that during the great pension debate, married women were seen as dependent on their husbands. Politicians (men) raised their voices to protect family sanctity by suggesting that a housewife should not be incentivized to join the workforce with the lure of a pension. Instead, a wife would benefit from her husband’s workplace pension, and if he died, she would receive a (smaller) CPP survivor’s benefit.

For all their labour raising children, supporting husbands, and running households like the small businesses that they are, politicians and CPP’s founding fathers chose a reduced survivor’s pension for women who, statistically, would outlive their husbands by many years.

The CPP did allow working women—often single and without children—to pay into the public pension system. As Shilton notes in an interview, those women only benefited if their contributions continued over a long and uninterrupted career. Private workplace pensions were a different matter. Much like today, some got a pension, while others did not. As always, the higher an employee’s salary, the better the pension. And we know how that worked out.

Survivors’ pensions were a “partial solution,” the PEO report says, but for many years, these options ignored divorced women or those living in same-sex relationships, “all of whom gained little” from pension structures designed for the careers of men.

As feminists rallied for economic and reproductive independence, women increasingly found employment outside the home. The way women viewed themselves, their worth, and their opportunities for a life of their choosing transformed, no longer dictated by husbands and tradition.

In hindsight, it is worth noting that those changes, wonderful, empowering, and life saving, meant many women spent more hours working at a job and at home. The new workload affected the gender pension gap with its limiting impact on career advancement among exhausted female employees.

It is hard to do it all. Back in the day, young men embraced the free love movement but were less keen on the result, laundry and kids, a trend that while statistically declining—at least by men self-reporting—still exists to this day.

And so, the fight for equality carried on, for decades.

Survivor benefits for couples in same-sex relationships were not provided until 2000 and were only given to those whose partners had died in a narrow window of time, starting in 1998. It took another nine years for a Supreme Court decision to ensure that the CPP gave survivor benefits to those whose same-sex partners had died prior to that cut-off date.

In the 1970s, as two-income households became increasingly common, women’s advocates pushed for changes to the public pension. Some improvements helped, such as pension credit splitting during a divorce or the exclusion of low-earning periods for mothers who left work to stay at home with children.

Rather than additional policy change that would support female-pattern employment, politicians claimed that pension equality would come from equal wages. But in the 1980s, as the PEO report points out, the momentum of women’s earning power slowed, and the gender wage gap did not disappear.

If they are still alive, the women who fought for those changes are now in their seventies, eighties, and nineties. Some believe those women are the last to live through the gender pension gap. According to Shilton, they are wrong.

Women, on average, start their careers with near pay parity. Women under the age of twenty-five have the smallest wage gap, making ninety-five cents for every dollar earned by men in the same age group. But it doesn’t last.

Between the ages of twenty-five and fifty-four, generally when women are immersed in parenting, they make eighty-seven cents for every dollar earned by a man in the same age cohort. And while some are dismissive of such statistics, saying the difference in hourly wages or annual pay is due to vastly different job categories, a 2023 report from the Financial Accountability Office of Ontario (FAO) found that only two cents of that thirteen-cent wage gap is related to the type of job a woman holds.

Recognition of the motherhood penalty matters. It can take a toll spiritually, physically, and financially.

Mostly, wages are impacted by tradition. Caregiving responsibilities can impede women’s ability to put in long hours that are needed to secure promotions in certain industries, develop networks to facilitate movement to higher paying jobs, as well as create incentives for selecting lower-paying jobs with limited hour requirements.

Recognition of the motherhood penalty matters. It can take a toll spiritually, physically, and financially—this struggle to pursue a career while shouldering responsibility for collecting children from daycare, cooking dinner, checking homework, getting kids out the door for evening sports, and reading bedtime stories, all the while keeping a clean-ish house.

Many women settle for lesser jobs. Others grind through the years. Some get divorced. Eventually, a smaller income leads to a diminished pension and a Registered Retirement Savings Plan that can never be maxed out.

In 2023, Canada had 20.2 million actively working adults. Less than half, some 7 million men and women, paid into a private workplace pension. This means 13 million did not. (For clarity, we are talking about company pensions, not the public CPP.)

Despite a long-term decline in workplace pensions, overall membership ticked upward in 2023: 9.6 million adult women worked in 2023, and 3.7 million paid into a workplace pension; of the 10.6 million men who worked, 3.5 million paid into a workplace pension. The lower numbers for men are due, in no small part, to a twenty-year decline in good union jobs and the rise of new employers that don’t offer a workplace pension. Nobody benefits from that trend.

The growth of women’s membership in private pension plans is undeniably excellent and noteworthy, but it does not negate the reality that many women won’t retire with the highest possible payments due to the motherhood penalty’s impact on salary and career ascent. Besides, not all pensions are equal.

Less compelling is the fact that the proportion of all Canadian workers paying into any type of workplace pension plan declined to 37.7 percent in 2023 from 39.7 percent in 2020. In the late 1970s, more than 50 percent of Canadian workers (mostly men) had a workplace pension. Those retired workers are counted in today’s data on the overall financial well-being of older adults; future cohorts will not be so blessed.

And to drill home the not-so-great news, proportionally speaking, 62.3 percent of Canada’s 20 million workers in 2023 were not paying into any workplace pension—which means, caveats aside, most workers do not have one.

For policymakers focused on the future, this is wildly problematic.

Of course, not everyone needs a private pension. Those with wealth won’t miss it. And many high-paid professionals can save enough to manage a comfortable retirement, despite the adage that says the more you earn, the more you spend.

Having acknowledged those blessed with public service jobs (at least those not impacted by budget cuts) and the lucrative salaries of some who are pension-free, it seems fair to state the obvious: A great many people with no workplace pension can barely pay their mortgage or rent, let alone invest in RRSPs. Many Canadians aged fifty and older have less than $5,000 in savings.

But retirement planning? If you’re lucky enough to stay healthy, the best protection against old-age poverty might be lifelong employment. In other words, carry on.

Increasingly, women are moving into traditionally male zones: science, technology, engineering, and mathematics (STEM) jobs that pay well, offer upward mobility, and can be fully or partially remote, supporting work–life balance. And yet the FAO reports that more women than men still join non-STEM employment or lower-paid STEM jobs.

“While educational attainment has increased significantly for women,” the FAO report on women’s labour said, “certain key differences in the field of study chosen by men and women may impact lifelong earnings potential. In 2020, women significantly outnumbered men in health, education, social and behavioral sciences, and law fields, while men outnumbered women in science, technology, engineering, and mathematics fields that have significantly higher income potential.”

“Women are still clustered in what we call ‘the Cs,’ the clerical, the cashier, the care worker.”

At the Pay Equity Office of Ontario, Kadie Philp, commissioner and chief administrative officer, takes these observations a step further. “Women are still clustered in what we call ‘the Cs,’ the clerical, the cashier, the care worker,” Philp says. “They are clustered in jobs that are still undervalued and underpaid. We put more weight on, say, a firefighter who’s providing an essential life-saving service than we do a nurse in Emerg who is also providing an essential life-saving service.” Emergency department nurses are often assaulted by patients, sometimes severely, so they face danger of a different kind than a firefighter.

The disconnect in the way jobs are valued, Philp says, ultimately leads to lower retirement income for women.

In the early stage of a career, most of us do not consider the long-term impact of our choices. It doesn’t hit home until decades later when the retirement math doesn’t add up.

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Tammy Schirle, a Wilfrid Laurier University professor and economist, who calls herself a “feminist and fiscalist,” has considered the cost of divorce on a woman’s financial longevity.

It can be profound.

“If you’re thinking about somebody who is currently retired,” Schirle says, “they may have been divorced long before their retirement. And if they had any children, they would have made sacrifices to their career to do that child rearing.

“They took time away from work while they were still married to take care of kids, and that has a long-term penalty that we’re getting really good at measuring now. For women who have kids and go back to work, they’re looking at earning 30 to 40 percent less than they would have if they hadn’t had kids. And that just comes with taking on the jobs that allow for flexibility to deal with all the child care, soccer, sick kids, all that stuff. So, you’re looking at a career where you have lower earnings.

“While you’re married, that’s fine. You can think about negotiating that kind of work between you and your spouse. But upon divorce, it’s not clear how well that gets accounted for in terms of the impact on your retirement income down the road.”

What is typically not built into a divorce agreement or asset splitting is the impact of parenting on a woman’s lower earnings when she eventually retires.

“She’s never going to fully recover from that later in her career. And that’s going to be built into her own Canada Pension Plan and any other savings that she has available for retirement,” Schirle says. “This is where I think many women have developed the incentive or recognition that having an income and pension of your own is really important because you can’t really build that into a flawless marriage contract.”

And so, from a feminist economist, here is a bit of wisdom for today’s young women to prepare for life forty years hence.

“I think,” says Schirle, “it would be fair to say that when you are talking about both men and women, young people in the labour market today, if you don’t get into a public service job, it’s going to be very, very difficult to find the type of secure retirement income that you might underappreciate when you’re young but will certainly become important when you’re older.”

Adapted and excerpted, with permission, from The Astonishing Lives of Older Women: How to Create Pleasure Over Peril in Peak Longevity by Moira Welsh, published by ECW Press, 2026.