Canada’s pension system treats caregiving as a gap rather than a contribution, leaving women behind | Canada Voices

Connie McAlister, a 58-year-old Saskatoon resident, has a bachelor’s degree, a master’s degree, and a low six-figure salary that has allowed her to max out her Canada Pension Plan contributions for most of her career.

But when she logged into her MyService Canada account, her estimated CPP at 65 was a projected $958 a month, 36 per cent below the maximum of $1,507.65.

CPP payments are based on three factors: your earning history, how long you contributed to CPP – 39 years to receive the maximum, and your starting age. Taking CPP before 65 reduces your payments, while delaying past 65 will increase payments.

The difference for Ms. McAlister? A decade out of the paid workforce and no CPP contributions while she was raising four kids and supporting her now ex-husband while he finished his doctorate.

What Ms. McAlister didn’t know was that she can apply for a provision that takes into account years spent out of the workforce. That provision will help, but it’s not enough to make up the shortfall, nor does it go as far as similar measures in other countries.

Which raises the question: Why does Canada’s pension system treat a decade of caregiving as a gap rather than a contribution?

“Unpaid work, like raising children, is just as important as paid work,” Ms. McAlister says.

Canada’s pension system doesn’t see it that way. That’s because it’s designed around paid workforce participation, rewarding those who spend more time in the paid labour market, leaving out those whose daily work is unpaid care work, subsidizing their partners’ careers, and our communities.

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The implications are vast. A single year of caregiving leaves a 22-per-cent retirement savings gap between women and men, rising to 41 per cent after five years. That’s because women are still the primary caregivers for children in Canada. Although 46 per cent of fathers are taking more parental leave, their leaves are drastically shorter than women, who are also five times more likely to work part-time.

Women also tend to live longer than men, stretching their financial resources across more years, yet a 2025 survey of 1,981 members by insurer Sun Life Canada found women had, on average, 27 per cent less in savings than their male counterparts at retirement.

Ms. McAlister was surprised by how much her decade away from the paid workforce would cost her in retirement. She didn’t know she could file a federal government form to have a Child Rearing Provision applied, but hopes her CPP estimate will increase once her application is processed.

The Child Rearing provision may be applied if a primary caregiver has received Family Allowance payments, the Canada Child Benefit, had children after Dec. 31, 1958, or had low or no earning years because they were the primary caregiver of a child under the age of seven.

While it can be helpful in evening out the playing field, an opt-in for parents to qualify for this provision likely means some women will miss out on money they are entitled to.

The motherhood earnings penalty – which includes such things as lost and lower pay, fewer career opportunities and lower savings – doesn’t end when the kids grow up. It gets locked into the CPP calculation and follows women into retirement.

Consider two women who both started work at 25 with wages that mirror the maximum base CPP pensionable earnings each year, and which assumes 2-per-cent annual wage growth.

Woman A never takes time off work and maxes out her CPP contributions each year, qualifying at age 65 for the maximum pension. Woman B has a child at age 30; her earnings fall 49 per cent in the first year after birth and are still 34 per cent lower a decade later, the average penalty Canadian mothers face according to OECD economists.

She never leaves the work force completely but the money disappears through reduced hours, part-time work and promotions that go to someone else. CPP’s Child Rearing Provisions may cover her until the child turns seven. Then the protection stops, and the penalty keeps going for the next 28 years.

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The gap between these two women in retirement builds in three ways. Woman B earns less, so she saves less. She saves less, so she forgoes decades of investment growth on money she never had to invest. Lastly, she contributes less to CPP, so the pension itself is smaller.

In 2026 dollars, and assuming both women retire under fully enhanced CPP, Woman B collects roughly $6,800 less per year in CPP than Woman A, about $170,000 across a 25-year retirement. That is what remains after the Child Rearing Provision applied – the provision helps, although her earnings never fully recover.

Canada’s pension system could automatically drop the low-income child-rearing years or introduce caregiver credits that let all caregivers continue accumulating pension benefits, like they do in France and Germany.

Until then, the system asks women like Ms. McAlister to file a form to prove that the decade she spent raising four children counted for something.

Janine Rogan, CPA, is a bestselling author and founder of The Wealth Building Academy.