GENDER RISK AND EMPLOYMENT PENSION PLANS Elizabeth J Shilton Senior Fellow, Centre for Law in the Contemporary Workplace, Queen’s Faculty of Law Shades of Grey: Law and Aging in the Contemporary Workplace, April 28, 2012, Toronto, Ontario

Pension Plans as Risk Management Tools: The Risks of Retirement Health risks Investment risks Generational risks Gender risk

WHAT IS GENDER RISK? The risk that women’s retirement incomes will be lower because of their gender Outline of Presentation: How well do women fare within the current employment pension system? What accounts for gender differences here? What could we do about it?

HOW WELL DO WOMEN FARE WITHIN THE EMPLOYMENT PENSION SYSTEM?

Pension Plan Coverage: Employees ALL38%45.4%45.2%38.2% MALE52.3%46.9%37.3% FEMALE35.3%40.8%39.3%

Benefits: Gender Impact Varies from Pillar to Pillar Pillar 1 OAS/GIS Pillar 2 C/QPP Pillar 3 RPP/RSPP Combined$7,400$6,600$16,800 Women$7,700$5,900$13,300 Men$6,900$7,400$20,200 % Women 110%80%66%

Female to Male Pay Ratios, Statistics Canada All EarnersFull Time/YearHourly Wages

WHY DOES THIS HAPPENS?

Some historical and legal facts about employment pension plans Why do we have employment pension plans? Because employers wanted them – Recruitment and retention devices – Linked to mandatory retirement

Legal Framework The legal framework enables employer control Employer decides: – whether to offer them – whether and when to terminate them – what their benefit structure will be Legal rules guarantee employer autonomy, subject to regulatory minimum standards and collective bargaining

Gendered profile of pensioned employee Employee with DB pension Long time in the labour market ‘Career job’: Lengthy and continuous service with a single employer Higher wage levels and steeper wage curves Women Shorter total time in labour market Breaks in service, more job turnover ‘Time out’ early in career to bear and care for small children Earlier retirement Lower wages and flatter wage curves

Gender Impact in defined contribution plans Size of DC account at retirement is directly related to labour market earnings and time in the labour market Earnings earlier in a career are more valuable than earnings later in a career because they have more time to attract investment income No guaranteed pension – exposure to longevity risk has greater impact on women

WHAT COULD WE DO ABOUT IT?

Gender Equality and Pension Reform 1960s : improved pension security for ‘male breadwinners’ 1980s: ‘family’ approach (mixed-sex couples) – Antidiscimination provisions – Survivor benefits – Pension/credit splitting

Pooled Retirement Pension Plans (PRPPs): Step Backward for Women No guaranteed pension No longevity risk pooling Loss of gender correctives in pension regulatory statutes No requirement for employer contributions Will employer abandon better plans in order to embrace PRPPs?

A final thought…. Pension design choices have ‘far-reaching normative, political and tangible economic implications for women (and men)’. Bernd Marin in Women’s Work and Pensions: What is Good, What is Best? Designing Gender-Sensitive Arrangements (2010)