The poverty of unattached senior

The poverty of unattached senior Structural and financial inadequacy of Canada's retirement income system, especially with respect to income support benefits (i.e. Old Age Security), are often identified as one major reason unattached senior women experience poverty.

While it may be compelling to blame low benefit levels and changing eligibility requirements, particularly because 'crisis' policy discourses have influenced questionable restructuring over time (i.e. the clawback), this paper argues that this is too simplistic of an account of the relationship between these women's poverty and the retirement income system. Other broad social-structural factors are at play in women's lives that have the potential to disentitle their access to income security in old age. Specifically, the mismatch between women's economic situations over the life course and their claims to pension or retirement savings income is presented as an important reason for why many women are still poor despite policy provisions for their retirement.

Key words: poverty, unattached senior women, retirement income, policy discourse

Canada's retirement income system consists of three levels: income supports benefits (Old Age Security), social insurance (Canada Pension Plan) and occupational pension plans and registered retirement savings plans. As a system that expanded with the evolution of the post-war welfare state, it was designed to provide income security to elderly persons who may experience economic risks associated with age related factors such as compulsory retirement and health problems. Despite these intentions, many senior citizens are still poor. According to recent Census data, more than 600,000 Canadians over the age of 65 were living in low income in the year 2000. More unattached senior women live in low income than unattached senior men (approximately 428,300 compared to just over 173,000, respectively) (Statistics Canada, 2003).

The inadequacy of Old Age Security is often identified as one major reason behind the poverty experienced by unattached senior women. This blaming of the first level of Canada's retirement income system is not surprising, especially in view of the 'crisis' policy discourses surrounding population aging and the federal debt that have influenced questionable restructuring of income support benefits over time (i.e. the clawback). However, this is not an accurate portrayal of the relationship between these women's poverty and the retirement income system. It is the argument of this paper that other, broad social-structural factors inhibit women's realization of economic security through the second and especially third level of the system. Across their life course, women overwhelmingly experience occupational segregation, income disparity, and unpaid work responsibilities prior to old age. These significant barriers impede their access to suitable pensions and/or their ability to save for their future economic security through occupational pension plans or retirement savings plans.

In exploring the relationship between the poverty of unattached (widowed, divorced/ separated or ever single) senior women and Canada's retirement income system, the first section of this paper provides a brief description of the structure and provisions of the three levels of the system. Attention is drawn to the persistence of poverty among senior women and how particular discourses, sometimes contradictory, have influenced restructuring of the system in the second section. In the third section, I describe social-structural factors at play in women's lives and show how they have the potential to disentitle them to economic security through the second and third levels of the retirement income system. This discussion demonstrates that the mismatch between women's economic situations over their life course and their claims to retirement income security is an important reason why they are still poor despite policy provisions for their retirement. In the final section of this paper, it is suggested that future restructuring of the retirement income system needs to incorporate a new policy discourse that recognizes this mismatch.

Providing Economic Security for Senior Women (and Men)

Upon disengagement from the labour force, women may seek economic stability through the three levels of the retirement income system. The first level, Old Age Security, was implemented in 1952 and reflected post-war Canada's concern with establishing a 'social safety net' that recognised all individuals' shared vulnerability to forces beyond their control, such as risks associated with unemployment, sickness and old age (Armstrong, 1997, p. 5354). Senior women are eligible for Old Age Security (OAS) if they are over age 65, have Canadian citizenship and have resided in Canada for over 20 years (Rice & Prince, 2000). They qualify for maximum old age pensions providing their net incomes are less than $60,806 (see Table 1). Seniors who have net incomes over this amount have some of their benefits withheld (re: the 'clawback') each month and seniors with net incomes above $98,547 do not receive any benefits (Social Development Canada, SDC, 2005a). The old age pension is subject to income tax but continues to be fully protected against inflation; benefits are reviewed and indexed according to increases in the cost of living as measured by the Consumer Price Index (SDC, 2005b).

Pensioners with zero or very limited income are eligible for another core component of this first level of the system, the Guaranteed Income Supplement (GIS). Implemented in 1967, this benefit is now paid monthly to seniors with net incomes below $35,592 and is non-taxable (SDC, 2005a). In 1975, the Spouse's Allowance was introduced to help low-income persons married to recipients of the Guaranteed Income Supplement. Currently known as the Allowance, it is entitled to persons (age 60-64 years) whose partner has died or who are not entitled to their own pension and are living on the pension of their partner until they become entitled to receive OAS at the age of 65. To qualify for the Allowance, the combined yearly income of a senior couple or the income of the survivor must be below $25,152 (SDC, 2005a) (see Table 1 for an overview of these components of the first level). Although beyond the scope of this paper, readers should note that Canadian senior women and men are also eligible for income security benefits through provincial/territorial governments and benefits (i.e. the Age Credit and Pension Income Credit provided through the income tax system) (Clark, 1998, p. 78; Gee & McDaniel, 1991).

The OAS was intended as a foundation for individuals' retirement incomes. Women and men were expected to add to their pensions through the second and third levels of the retirement income system. The Canada Pension Plan (CPP) was introduced in 1966 to provide basic pension income, survivor and disability insurance benefits to people age 65 and over who were past members of the paid labour force and had contributed to the plans alongside their employers (Armstrong, 1997; NCW, 1999; Rice & Prince, 2000) (for a complete discussion of the different designs and implementation of the Canada and Quebec Pension Plans (C/QPP), see Bryden, 1974). The amount of the CPP is dependent on the number of years worked and the level of past earnings (O'Grady-Leshane, 1993) (see Table 2 for maximum benefit amounts). Outside of Quebec, all members of the paid work force must contribute to the plan, whether they are employees, employers or self-employed. As a pay-as-you go plan, contributions from individuals in the paid labour market are used to pay the pensions of those who are retired (Townson, 1995). These contributions are paid on earnings between $3,500 and $40,500, are tax deductible, and are adjusted for inflation every January (SDC, 2005c).

The CPP provides a retirement pension as early as age 60 for seniors and replaces approximately 25 percent of the contributions paid into it (SDC, 2005c). The period of contributions required for a full CPP benefit is 40 years (O'Connor, Orloff, & Shaver, 1999; Rice & Prince, 2000). For individuals who do not contribute to the plan because of time spent outside of the labour market, the CPP excludes 15 percent of the lowest earnings (roughly seven years) from the calculation of retirement income (Townson, 1995). Time spent outside of the labour force to raise children under the age of seven can also be dropped out of the calculation of CPP (SDC, 2005c).