The Pension Blueprint podcast video transcript 

Episode 3: The gender pension gap

Celine Chiovitti (VO): Hello and welcome back to The Pension Blueprint. I'm Celine Chiovitti, Chief Pension Officer at OMERS and your host on this podcast. An issue I've made a priority in my role at OMERS is addressing the gender pension gap. At OMERS, over 60% of members are women, and today, women across Canada retire with about 17% less income than their male counterparts.

In this episode, we have one of the best and brightest in the pay equity space to help us unpack the many issues that result in this gap. Kadie Philp is the commissioner and Chief Administrative Officer of Ontario's Pay Equity Commission. She brings a wealth of legal and public policy expertise to one of the province's most important roles, championing fairness and pay and equity in work. This conversation goes into some incredibly enlightening and unexpected places. So please enjoy this episode with Kadie Philp.

Hello Kadie. Welcome to The Pension Blueprint.

Kadie Philp: Thank you for having me.

Celine: I'm so excited to have this conversation. And I have to say, I heard you talk for the first time at the BC Public Sector Pension Conference, and I was mesmerized from the moment you started all the way to the end. You're so passionate about this topic.

Kadie: Thank you.

Celine: A really important topic to have a conversation about. But let's start from the beginning, which is you are Ontario's Pay Equity Commissioner.

Kadie: I am.

Celine: What does that mean? What do you do on a day-to-day basis?

Kadie: Well, that means I oversee, I guess, a regulation, the Pay Equity Act, which says that every person has access to pay equity, or every working person has access to pay equity. My job is to make sure that employers are abiding by that law and that workers or employees understand that they have access to pay equity through the law.

Celine: Okay.

Kadie: So it's part regulatory.

Celine: Yeah.

Kadie: Which is important. And it's also part public education and research.

Celine: Right.

Celine: And that's where I've sort of seen you—on the public education and just again, the passion about having these conversations. So the topic you were talking about at the conference that I want to really dive into today is the pension pay gap.

Kadie: Yes.

Celine: And it's something that, you know, we've been paying a bit more attention to, I think more recently. You have just a fountain of knowledge around this. So what is it, what is the pension pay gap?
Kadie: It's a great question because we started asking that. We look at the gender wage gap, and we can talk a little bit about that also. But we wondered, you know, since women's labor market participation has increased dramatically over the last 30 years and because, in fact, gender wage gaps have closed significantly over the years, we thought that gender pension gaps would also be closing.

So we did some very high-level, preliminary research and we realized, or discovered, that gender pension gaps are increasing. What that is, much like the wage gap, is the difference in earnings women and men receive in their pensionable years or in their pension retirement years. So women have a 16% to 17% gender pension gap, which is quite substantial—part of your retirement income being lost compared to men.

Celine: So does that mean if I, generally speaking, if I'm a retired woman, I get about 17% less take-home income than my male counterpart, in pension—

Kadie: Yes.

Celine: When I retire?

Kadie: Yes. But I just want to clarify, we only looked at available data, which was CPP.

Celine: Okay. And old age security.

Kadie: Yes, yeah, old age security.

Celine: Okay.

Kadie: So we're not able to see into, you know, your pension funds.

Celine: Yeah.

Kadie: OMERS, for instance, or other pension or employer-sponsored pension funds. We're also not able to see specific data on private savings, right? Individuals have private savings in RRSPs or other investments. We do have some insight and knowledge on women's different investment patterns, which we can get into. But we do know with the CPP there's a 17% gap.

Celine: Yeah.

Kadie: And that gap does, as you saw at the BC public sector pension funds, the gap varies by sector as well. We saw some—we were able to look across British Columbia public sector pensions, just public sector pensions, just to make sure, clear, it was only those. And we saw quite significant gaps. Some sectors had 6%, some had up to 25% and 32%. So it really depends on the sector, but broadly Canadian CPP at 17%.

Celine: Well, you sparked my curiosity. And we actually went and looked at OMERS specifically, like looking at our pensioner data set.

Kadie: Very good.

Celine: And I would say it is very similar. And I know other pension plans are doing similar research. So I think that is the power of having the conversations.

Kadie: Yes.

Celine: It gets us to actually look at the data and try and sort a solution. So maybe start from the beginning. Why does it exist to begin with? And I know there's a lot of history around it. It's complicated.

Kadie: Yeah.

Celine: But maybe give us a little bit of a history lesson around it.

Kadie: Well, maybe I'll start with just the gender pay gaps and the history of that, because that's sort of where, you know, there's a relationship obviously between the two. If you're paid less, you're investing less, you're saving less, you're going to retire with less. So maybe I'll talk a little bit first about the history of how pay gaps emerge. But then we can also talk a bit about the design of pension plans.

Celine: Yeah.

Kadie: And how some of the policy decisions created, I think, unintended gendered outcomes. So in terms of the history, you know, we were largely nomadic people up until 300 years ago—well, okay, sorry, six to ten thousand years ago. But the invention of the mass paid labor market is actually really a new invention in human history. And with the creation of the industrial revolution essentially, and having mass paid labor markets come to the workforce, we saw the emergence of a highly gender-segregated labor market that was actually legislated.

And that's always shocking to people because we don't think about—we think there's this idea to think, well, men have these strengths and women have these strengths, and this sex-segregated labor market happened naturally. You know, we can go all the way back to the Neolithic period and talk about the invention of the plow and how that actually created a new division of gendered labor. Because our, you know, anthropologists and sociologists talk about how pre-agricultural revolution, men and women participated equally in their tribes and their communities. The economic activity of the time was really only gathering food, and that was shared equally. So women and men participated, you know, so we started equitably.

We started equal.

But when we started to shift our economic structure, settling, creating, you know, land and surplus, we had to change our social structures. And that wasn't necessarily favorable for women. So we saw even, you know, ten to six thousand years ago, gender roles changing for men and women. But what's most striking for me is when you look at the moment of mass industrialization and the creation of a paid labor market, basically from their onset of participation in the labor market, women and men were prescribed different roles and those roles were valued and paid differently.

Those roles were codified in laws like protective laws. And I use the word protective loosely because the concept was sort of, we need to protect women, so we're going to restrict women—which, giant question mark over the, you know, intention over protection. But a lot of women were kept out of certain jobs because it was not deemed appropriate for women to do, because there was, you know, a mass desire to protect women's reproductive capabilities. So they can't work in laundries, they can't work heavy equipment, they can't do all these things which policymakers felt was detrimental to women's health. So this really created an unlevel—

Celine: It's just eye-opening to sort of hear the history around this.

Kadie: Yeah, it is, 'cause I often get asked, like, why did—it's the 21st century, why do we still need laws on this? And I'm like, because laws were created in the first place that created massive inequality. Women were like shoved into sectors that were believed to be extension of their, you know, natural sensibilities, whatever that means, and then paid less. And part of the reason they were paid less is because, one, they just thought, these are extensions of women's natural abilities. So it's not really hard work for them. We can pay them less.

Also, we had this very heteronormative society where family was very prescribed—idea of what family was, and the male was the head of the household and was a breadwinner. So women didn't need to be paid as much because they were likely partnered and they didn't need to earn much. That legacy, we'll get to it, is actually why it has directly influenced the pension gap.

But as you know, women started to demand better for themselves in the labor market in the 1950's. Actually, we had probably the first movement for minimum wage across all the board—men and women fighting for minimum wage. What was interesting about that movement, great, we achieved minimum wage, but the government carved out certain sectors where minimum wage didn't apply.

Celine: Right. Shocking.

Kadie: Those were the sectors where women were largely clustered, like textiles, childcare, all of these things that they just felt wasn't, you know, worthy of minimum wage. So that again created an uneven paying and playing field for women, because there was, again, policies that said everybody in the labor market deserves minimum wage except people in this sector, which happened to be women then.
Because there were, again, policies that said everybody in the labor market deserves minimum wage except people in this sector, which happened to be women then.

So the conversation started to shift in the 1970s, and women started to demand a concept called pay equity, which is what my office does.

Celine: Yes.

Kadie: Which is equal pay for work of equal value. So, recognizing that men and women have been clustered in different institutions or different sectors, and those sectors have been valued differently because of this clustering—because when women do something, we tend to undervalue it and pay it less.

So, the concept of pay equity is saying we can actually look at different job functions that have been historically or stereotypically gendered, and we can take away the gender and look at it in gender-neutral terms, assign value, and then, based on that point value—it's complex HR compensation theory stuff, we won't get into it—

Celine: Yeah.

Kadie: But based on that value, we can assign wages and then compare to make sure men and women occupying those jobs are getting fair wages.

Celine: So you have found a way to solve for the inequities in wages when it comes to working.

Kadie: Yes.

Celine: So then, that's improved. That's phenomenal news.

Kadie: That has improved. We need to celebrate that.

Celine: That's phenomenal news.

Kadie: We are closing wage gaps. Yes.

Celine: Yeah. You're closing wage gaps, you're addressing it. You're taking out the inequities, you're valuing work for the work and not having bias around that. We've actually seen improvement in the gender wage gap. Why are we not seeing improvements in the pension pay gap? Why do you think that is?

Kadie: Yeah, and that's what shocked my team because we had this hypothesis or assumption that, okay, women's labor market participation has skyrocketed from the 1960s, when the pension plan was designed.

Celine: Yeah.

Kadie: The CPP and our wage gaps have closed significantly, so we should see this relationship—and we haven't. In fact, as I mentioned, it's widening for women.

So, a couple of things on that. It goes back to pension design.

When policymakers were designing the CPP in the 1960s, I just feel like they maybe had—I'm going to try to give them the benefit of the doubt and say they had absolutely zero imagination, where they couldn't imagine a world in which women worked. Because the entire concept and the sort of social economic structure of the time was largely heteronormative, or heterosexual families, where men went to work and earned, and women participated at home taking care of the domestic labor.

And let's be clear—that's domestic labor; that is work, unpaid. So they lived off of men's paid labor market wages, but they also propped and made it able for men to go to work and earn the wages because they did all the other work.

So the policy designers just thought that would be the model forever, and that women in retirement would also just live off of and benefit from the breadwinner, or their husband's or their partner's wages. So I think it's just a massive lack of foresight.

Celine: Yeah.

Kadie: To think about that, women's labor market participation in the 1960s was like 38%. We're now at 89%.

Celine: Yeah.

Kadie: So I think that, you know, they looked at the male breadwinner model and just assumed this is going to be in perpetuity.

Celine: Right. And it's never been evolved.

Kadie: It's never—and the big challenge also, as you know, and it's true for all pensions—your pension is based on hours worked.

Celine: Yeah.

Kadie: And we know that women tend to work less hours because they take time out of their career to raise children, to do elder care, to take care of other things in their life.

Celine: Yeah.

Kadie: So if you're working less hours, you are contributing less to your pension. So it's a participation gap that's creating part of the problem.

And so the question we have to ask is, what can we do around that participation gap? It's not—I hear the argument often, well, women should just work more hours or, you know, find better jobs or—

Celine: Yeah.

Kadie: Supplement their pensions in other ways. I think it's on the policymakers also, who designed the system—

Celine: Yeah.

Kadie: —in a way that favored a male breadwinning model, to reconsider the entire design.

Celine: It's, again, I could listen to you for hours because it's so complex. And I think you break it down in such a simple way, but it's a problem and it's something that we need to talk about and start to address.

And so, you know, I could talk a little bit about what we're doing at OMERS and I would love to get your—

Kadie: Yes.

Celine: Your input on that, because I know we've had a bit of a conversation around this, but the way you've broken it down, and you've got a lot of documentation on your website, so I would point out the paper that you produced, "Understanding the Gender Pension Gap in Canada." Because I think it does go into the history, the way you've explained it, some of the systemic issues, and then some calls to action on what we can actually do to try and solve it.

Kadie: And I do think it's a multi-stakeholder approach. It's not any one—

Celine: It is.

Kadie: Space.

But, so, you know, to your point of predominantly, you know, if I look at OMERS plan members, we opened up the plan back in 2023 to allow for all non-full-time employees to enroll. Before that, you couldn't enroll.

Right.

Celine: And so that was sort of just one way. We didn't actually do this to solve this issue. We were aware of it, we didn't know what the outcome would be. And then we've been able to enroll about 53,000—

Kadie: That's amazing.

Celine: Women into the plan since then.
So it's phenomenal. And now we're really trying to pay attention to what you've talked about—as a defined benefit pension plan, essentially, the longer you have credited service in the plan—

Kadie: Yeah.

Celine: —and the higher your income, the better your pension.
And what we found when we look at the data is that, to your point, more women take time away from the workplace to have and care for their children. And the way we've set up the plan, it's not necessarily easy for them to buy back that service. So we're trying to work with our employers to solve for it. But part of it is education, part of it is having the conversations.

Kadie: Absolutely.

Celine: And there's a lot of research—and I know you touched on this—there's a lot of research that says women as individuals also feel less comfortable and confident in making those financial decisions and investing, and, you know, literacy. Can you talk a little bit about that?

Kadie: Sure. Before I get into that, I just want to say congratulations on that incredible move to open the pension up to non-full-time workers, because we know that women tend to work multiple part-time jobs to compensate for how they have to organize their life around other caretaking responsibilities. And that's a huge disadvantage if you're not able to contribute. So I think that is, you know, it's one of the recommendations and one of the things I talk about is saying, how do we get not just women, but anybody in part-time or gig work to be able to have access to these types of tools? So I think it's really wonderful that you've done it. Obviously, you've seen significant uptake. That's, I think, a great lever to show you that you're moving in the right direction.

In terms of financial literacy, what I always found interesting about that topic, because I've been listening to financial institutions talk about this for 20-plus years and they still haven't got it right, is that they tend to think financial literacy is just clearly explaining what our products are. And that's a very different—

Celine: Yeah.

Kadie: —idea than clearly explaining what markets are, what, in this context, pensions are, how they work, how they're invested, how they're vested, how they are withdrawn, all of the consequences of other financial decisions. So I think we've got to change the way we think about financial literacy, because usually it's, "I'll just educate them on the products I have."

Celine: Yeah.

Kadie: And it needs to be education on the entire system, and also the consequences of decisions and actions within the system. Like you mentioned, leave and women opting to not—or a family, a partnership opting to not—purchase the leave time or reinvest that time. Then the education is on, well, here are the long-term consequences of that.

Celine: Yeah, right.

Kadie: Because it's not front and center.

Celine: It's not.

Kadie: Right. And I get it, especially in today's world—it's not easy, right? The cost of living is so high. You go off on pregnancy or parental leave, you have kids, you come back. A lot of people can't afford at that moment to purchase it.

Celine: Exactly.

Kadie: the cost of not purchasing it. So I think for us, it really is about the education around, to your point, understanding the unintended consequences. I see so many people, so many women towards the end of their career, when they're actually doing the numbers around it and saying, "Oh, I should have done it at the time."

Celine: Yeah.

Kadie: But they don't even know what the impact is going to be.

Celine: Exactly.

Kadie: And then what happens if you get divorced? There are just so many other things that put you in those vulnerable situations.

And I think it is—I appreciate how challenging it is for a pension fund as big as yours—

Celine: Yeah.

Kadie: —with so many members, and even the CPP with millions of members, to do that education. But I think, as you said, it's multi-stakeholder. The pension funds and the government have the responsibility to educate individuals on the consequences. Policy makers have the responsibility to create an environment where it's a level paying and playing field for everyone.

Celine: Yeah.

Kadie: And individuals have the responsibility to ask questions and try to get as much information as they can as well, to make good decisions for themselves.

Celine: I love that, we're all in this together. Women tend to take more time away from the workplace on pregnancy and parental leaves. How does that impact the pension pay gap?

Kadie: Well, it impacts all wage gaps, not just pension, but also pay. We know that when women take leave, there's a thing called the motherhood penalty. We see their pay drop six to seven percent because there's a perception that she's a mother, and her attention is split. So, management sees that as a detriment, which is really interesting because there's also the fatherhood boost, where men see a five to eight percent increase in their pay because they're now seen as responsible breadwinners. They need to be taken seriously and perform at work.

The challenge with this sort of bias towards women taking parental leave is it creates the problem of, well, first, families are going to decide what's financially sustainable. So, whoever is usually making the least amount of money is going to take the leave.

Right, will take the time.

If that's consistently the woman because of wage gaps, you're going to have more women dropping out, therefore having this motherhood penalty in the wages, but also having less pensionable hours in the workplace. So, it creates a problem that gets very difficult to address if we don't have policies on parental leave encouraging men, or if it's a same-sex partnership, encouraging both partners to take on the responsibility of parenthood and leave so that the earnings gap becomes a little less. That would have a much greater impact long term for women, mostly who are experiencing it now, but for all partners as they go into their sort of earnings, pensionable hours journey.

It's a cyclical issue. And I think the other connection that we could make is that we have declining fertility, a declining birth rate, and that's something that we need to address. So how do you address that? Well, you try and create policies to encourage—

I think it's also an interesting question to explore if those declining rates—what's causative of that? If you're in a situation where you're aware that once you go on leave, you're going to start earning less and you're going to have detrimental impacts on your pensionable savings or your lifelong earnings, it might impact a family, a woman, or a couple's decision-making around parenthood. So I think if we want to address the issue of decreasing fertility rates, we also have to look at the broader decision-making patterns around it. And I think a lot of it is linked to wage gaps, to earning gaps, to pension gaps, because that's significant. Cost of living is going up a lot, and so we have to look at the whole system around this dynamic, around the decisions we make around taking leave or not when we know how it's going to impact things like our pension.

And I think we need to move forward. I hope that everyone could just end with the thought that we need to move forward. It doesn't matter who we blame or what the system said; it's about how do we move forward. So what does good look like?

Celine: What does good look like?

Kadie: I love that you said good and not like great or bad or worse.

Celine: I'd love to get to great.

Kadie: Just go to good.

Celine: What does good look like in this space?

Kadie: Yeah, I think good looks like individuals, you know, in—well, from the CPP point of view, I'll start there.

Celine: Yeah.

Kadie: Because I think we really need for all Canadians to look at that model, because we can continue to blame or call out, you know, women's working patterns are different than men's working patterns, so it's their fault. But it's not, if the entire system was built on male pattern working.

Celine: Right.

Kadie: So I think good for me on the policy side is policymakers looking at the design and redesigning it. A huge problem across public, private, and pension funds is sex-based amortization. Women withdraw less every month from their pension because we use sex-based amortization tables to allocate how much money they can get. The EU has made that illegal. I think Canada would do well to look at that and look at the gender bias in that. Yes, we see tables showing women outliving men, but not all women. It's not a huge enough proportion to justify financially hurting all of the women who survive by bringing in significantly less income a month because of those tables. So that's a great thing policymakers need to look at.

From the pension plan point of view, like OMERS, I think it's looking at your design and what are the steps. You're already aware that non full-time work is a roadblock, so you're starting to remove that roadblock and thinking about how to make this accessible. The buybacks on leaves—that's huge. When people go on leaves, it's usually a financially constrained time in their life, so rethinking how to make it affordable or create systems that allow them to buy back or continue to pay while they're on leave, however that's going to work. I think that is an amazing next step to think about, because when we do the research, we know those are the blocks.

Celine: Yeah.

Kadie: So it's listening. And the same thing on the financial literacy side—stop explaining products.

Celine: Yeah.

Kadie: And start really educating on the system and the relationships in the system. You know, we see that, and as you know this, because you're well educated and your members are on the road to education depending on where they are in their retirement planning, there are different ways that you can withdraw your pension. There are different ways you can withdraw your RRSPs. All of these things—some of them are higher risk but higher reward in terms of the withdrawal, or some of them have better impacts. We see that women tend to choose the safer option, that's less risk but also less payout.

But less payout.

And men choose the higher risk, more payout. So there has to be a conversation. I think when I saw that consistently across a lot of different pension funds across Canada, and again people were saying, well, it's women's fault they're choosing, I said, are they choosing it? Or are they being coached to choose that? Are they being educated properly on the consequence of that choice? So I think it's a bigger conversation around making sure people have the information they need to make an educated decision.
If I'm an individual, an employer, a pension plan, where do I go to for resources? I know I can access resources on your website.

Celine: Yes. Are there any other spots that you would point us to?

Kadie: Well, we were shocked that this was one of the preeminent studies on the gender pension gap. It's not something that's well looked at, which is why we decided to do the study. We did a very high level. So our website, payequity.gov.owen.ca, the site is on the main page. CPP—the Canada Pension Plan—has some insights. They do publish some interesting information, so that would be a spot to look as well in terms of trying to get educated on that. They recently did a great intergenerational look at pensions and an intergenerational look at the way we think about money very differently and retiring very differently. So I'd recommend looking at their insights page as well because they've got interesting reports.

And I think if you are a person who works in the pension space, it's great professional development. But if you're an individual or a person that's affected by pensions or will be—everyone's a member of the CPP at least.

Celine: That's right.

Kadie: It's a good primer for you to get educated as well.

Celine: Yeah. Yeah. I think we all need to get educated. And for OMERS members listening, we will post a link to your website from our website at omers.com.

Kadie: Thank you.

Celine: Thank you so much for joining me. I would love to just finish off with a set of fun questions, just so we can get to know you a little bit more personally. Kadie, are you up for that?

Kadie: Okay, I'm up for it.

Celine: Okay. Fast five.

First thing you do in the morning.

Kadie: Oh, have water.

Celine: Good answer. I go straight to my dark coffee, so that's what you should be doing.

Last thing you do at night.

Kadie: Oh, a little bit of like a meditation, breathing, relaxation. Then I probably just annoy my husband. Yeah. "How was your day?" Poke, poke, poke.

Celine: There you go. Yeah.

Best restaurant, and what's your order?

Kadie: Oh, what city am I in?

Celine: You choose.

Kadie: I just feel like I have to answer that question first.

Celine: Toronto, let's do Toronto.

Kadie: Toronto—I live near Yorkville. I love Cibo and they have this amazing octopus salad.

Celine: Lovely. That's a healthy choice. There you go.

Kadie: It's delicious.

Celine: What about closer to home?

Kadie: Yeah, I'm up north so there isn't really a lot of restaurants there.

Celine: Home cooking.

Kadie: Yeah, home cooking. Yeah, yeah. Venison stew.

Celine: Venison stew, there you go.

You have 48 hours to travel to go anywhere you want, not including travel time. Where are you going, who are you taking, and what are you doing?

Kadie: Oh my gosh. I'm going to Berlin. I'm taking my two nieces to Museum Island.

Celine: I want to be one of your nieces.

Kadie: Yeah.

Celine: That's amazing. Good answer. Well, thank you so much Kadie for this conversation.

Kadie: Thank you for having me.

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