Canadian Immigrants' Pension Inequality

Many think that Canada’s retirement income system is all-encompassing and supportive of all Canadian seniors. There are various barriers to having adequate retirement funds for Canadian immigrants – including not meeting basic pension requirements, pay inequality that disallows savings plans, and undervalued foreign-acquired experience. The realities of these challenges have made Canadian immigrants experience financial insecurity and poverty as they approach and reach retirement, resulting in having to rely on other methods of income, such as intergenerational support and working undocumented jobs. Canada’s population has the largest immigrant population in all of the G8 countries. As the largest drivers of the Canadian economy, it is vital that these workers are supported during their retirement and are able to be as financially secure and comfortable as their native-born counterparts.

The Canadian Pension System

The Canadian retirement income system consists of three major components. The public components include Old Age Security (OAS) and Guaranteed Income Supplement and the Canada Pension Plan and Quebec Pension Plan. It is important to note that Quebec has a different pension plan as the rest of the country – indicating different challenges faced by immigrants who reside in Quebec. Private systems exist of occupational pensions and personal savings in the form of Registered Retirement Plans and Registered Retirement Savings Plan, respectively.

Requirements

There exist many requirements for each component of the public Canadian retirement income systems. This includes a minimum length of residency – a minimum of 10 years is necessary to receive any type of payment from the OAS but the benefits of a full basic pension necessitates a 40 year residency minimum. Immigrants who have lived in Canada for less than 10 years cannot receive OAS benefits and those who have less than 40 years residency receive only a portion of the full benefits.

Reasons for Pension Inequality

Language Familiarity

The familiarity with Canada’s languages, either English or French, have shown to be a great factor in the workplace integration that immigrants face. Those who have a high command of these languages tend to have a less difficult time finding occupations than those that do not. In 2006, there was a shift in immigrant selection criteria: from previous foreign formal education to official language knowledge. Official language proficiency can equate to better economic and social integration of Canadian immigrants.

Length of Residency

Canada’s retirement income system consists of multiple assessment criterion. One that has constantly been an issue for immigrants is length of residency in Canada. The Old Age Security program requires a minimum of 10-years residency in order to access the pension. Some Canadians do not meet this requirement, depending on what age they immigrated. Even so, full basic pension calls for a 40 year presence in the Canadian workforce since the age of 18 – an even more demanding requirement for most Canadian immigrants. A majority of Canadian immigrants are between the ages of 25-34. Although this is quite a large gap, a 40 year workforce presence could possibly mean working until 74. This is 11 years more than the average age of retirement in Canada. A Canadian immigrant that has less than 40 years of contributions receives only a portion of what the full benefit is.

Skill Underutilization

The underutilization of skills has been a long-standing obstacle for Canadian immigrants. The lack of recognition of their foreign education and work experiences has allowed for their developed skills to be unused in Canada. In 2013, Reitz et al.’s research supported the idea that immigrant skill underutilization has actually been on the rise in years prior. Canada’s lowest skill levels categories, which include service occupations and manual labour, immigrants have about double the amount of this population compared to their native-born equivalents. In 2006, 4.3% of this group were university-educated immigrants compared to 1.8% university-educated native-born Canadians. This trend has been ongoing since 2006.

Pay Inequality

There exists many reasons for the pay inequality that Canadian immigrants experience, including discrimination and low market value of immigrant’s foreign credentials and expertise. The immigrant wage gap continues to persist as an important challenge that stops Canadians from being able to retire as early and as comfortable as their native-born counterparts. Canadian immigrants are also unlikely to reach the same level of financial stability and security as their native-born counterparts. This pay inequality manifests itself by showing a private savings gap between Canadian immigrants and native-born Canadians.

Current Solutions

The insufficiency of the retirement support that immigrant Canadians receive have resulted in exploring other forms of income in order to support themselves.

Ferrer’s 2017 research paper examined the experiences of a few retired Filipino Canadian domestic workers and the other ways they have used in order to have enough funds as they approach retirement. His paper reveals the experiences of poverty of these workers – being too old to work the jobs that have lower barriers (including manual labour or service-based jobs), having to partake in undocumented work, and relying on intergenerational support in order to ensure some sense of financial security. Intergenerational support and reliance on retired workers’ adult children is a reality for many immigrant workers. There simply is not enough financial freedom to retire as comfortably and easily as native-born seniors.

Summary

Many think that Canada’s retirement income system is all-encompassing and supportive of all Canadian seniors. There are various barriers to having adequate retirement funds for Canadian immigrants – including not meeting basic pension requirements, pay inequality that disallows savings plans, and undervalued foreign-acquired experience. The realities of these challenges have made Canadian immigrants experience financial insecurity and poverty as they approach and reach retirement, resulting in having to rely on other methods of income, such as intergenerational support and working undocumented jobs. Canada’s population has the largest immigrant population in all of the G8 countries. As the largest drivers of the Canadian economy, it is vital that these workers are supported during their retirement and are able to be as financially secure and comfortable as their native-born counterparts.

References

1) Marier, P., & Skinner, S. (2008). The Impact of Gender and Immigration on Pension Outcomes in Canada. Canadian Public Policy / Analyse De Politiques, 34, 59-78. Retrieved from http://www.jstor.org.ezproxy.library.ubc.ca/stable/25463654

2) Curtis, J., Dong, W., Lightman, N., & Parbst, M. (2017). Race, language, or length of residency? Explaining unequal uptake of government pensions in Canada. Journal of Aging & Social Policy, 29(4), 332-351. DOI: 10.1080/08959420.2017.1319452

3) Preston, V., Kim, A., Hudyma, S., Mandell, N., Luxton, M., & Hemphill, J. (2013). Gender, race, and immigration: Aging and economic security in Canada. Canadian Review of Social Policy, (68), 90-106. Retrieved from https://search-proquest-com.ezproxy.library.ubc.ca/docview/1370183846/fulltext/51D8D2F8D5F43D8PQ/1?accountid=14656

4) Hum, D. & Simpson, W. (2010). The declining retirement prospects of immigrant men. Canadian Public Policy / Analyse de Politiques, 36(3), 287-305. Retrieved from http://www.jstor.org/stable/20799658

5) Curtis, J. & Lightman, N. (2017). Golden years or retirement fears? Private pension inequality among Canada’s immigrants. Canadian Journal on Aging / La Revue Canadienne du Vieillissement, 36 (2), 178–195. doi:10.1017/S0714980817000083

6) Ferrer, I. (2017). Aging filipino domestic workers and the (in)adequacy of retirement provisions in Canada. Canadian Journal on Aging, 36(1), 15-29.