Early planning and buybacks matter when women take time away from the workforce, argues OPB’s Mila Babic
When caregiving pulls working women out of the labour force, the fallout doesn't just hit their bank accounts; it notably erodes their retirement security for decades.
Yet Mila Babic notes the industry is paying closer attention to how caregiving affects pensions, and she sees that as a positive development. In defined benefit (DB) plans, the impact is most visible when workers leave their jobs to provide care, because that time away usually means they stop building pension credit.
What was once driven more by maternity and parental leave is now increasingly tied to broader caregiving responsibilities, in part because of an aging population.
"Those patterns have changed over time. They used to be primarily what we consider maternity parental leave, and now we're seeing more interest in taking leaves for caregiving,” said Babic, executive vice-president and chief client services officer at the Ontario Pension Board (OPB). “We're seeing that manifest itself in pensions and how people accrue credit, and in a defined pension plan when you step away from work. Those are the circumstances where you don't accrue credit during that entire period, unless you have an opportunity to make up those credits to be able to close that gap in retirement in terms of years of service and total income. And as women are aging longer, of course, that means that the impact is realized over an even longer period of time.”
Babic makes the case that OPB is in a relatively strong position because eligible members have the option to buy back pension credit, and a meaningful share of them do. While she sees that as an encouraging sign, she is cautious not to overstate what the organization’s own data can show about gender differences, noting that a smaller plan has to lean on broader industry research for a fuller picture.
However, she added that OPB’s experience may not mirror every sector, since many of its members also have workplace provisions that offer supplementary benefits alongside buyback options. Even so, the wider trend is clear in her view: more people are taking leave for caregiving, and those absences create gaps in pension credit and years of service.
Babic acknowledged the pension challenge for women is rarely just one thing as many either leave work entirely or scale back their hours to make caregiving possible, and the fallout touches more than pension credits alone. When workers step away and later change careers, transferring pension assets from one plan to another can be difficult, compounding the losses already incurred during the break. Career progression also takes a hit too.
"Sometimes when you step away from your career, you don't have the same opportunities for job advancement. So it impacts you both on an income perspective as well as a credit accrual perspective," she said. “Those two things together create greater gaps. Given that we're seeing an increase in usage of caregiving leaves, etc., that's an area that we continue to focus our energies on.”
According to Babic, many workers still don’t understand the options available to them when they reduce hours or take leave. She pointed to OPB’s Temporary Part-Time Work Arrangement as an example of a policy designed to soften the pension impact. Under that approach, members working reduced time can still buy back credit for the full period rather than only the hours worked.
Additionally, there’s the practical problem that leave often comes at exactly the moment when people are least able to afford buybacks. Because of that, she sees real value in reconnecting with members after they return to work, when they may be in a better position to consider making up lost credit.
Because caregiving leave is often emotionally difficult, which can make complex pension decisions harder to process in real time, Babic believes giving people a chance to revisit those decisions later can provide both reassurance and a better shot at protecting their retirement plans.
The best defence against pension loss, Babic suggests, is early, practical education. If workers understand near the start of their careers how time away from work affects pension credit, benefits coverage, and long-term retirement income, they are in a much stronger position to plan ahead rather than react under pressure.
That means helping them weigh their options before a leave begins, including whether reducing hours may be more manageable than stepping away altogether, how to prepare financially for an expected absence, and how buybacks can be used later to narrow the gap.
She also stressed the importance of keeping contributions going during leave wherever possible and making sure leave-related options are available fairly across genders, not structured in a way that assumes caregiving falls to one group. In her view, broader access to those arrangements could help spread caregiving leave more evenly over time.
Babic ultimately reinforces the need for clear communication. Employees need straightforward information about what a plan allows, what the long-term implications are, and how to act on those options. They also need a clear understanding of what benefits and leave-related options their employer offers because the right approach depends heavily on individual circumstances.
In her view, many workplace plans now provide more flexibility than people may realize, but that flexibility only helps if employees know it exists and understand how to use it.
She emphasized that timing matters. Getting information early and applying as soon as a leave begins can reduce the cost of options such as buybacks and make it easier to protect long-term retirement income. More broadly, she frames the issue as one of early planning and practical guidance: people should not wait until later in their careers to think about retirement, because decisions made during a leave can have lasting effects.
“In this space, what's really important is to mine your data, understand where the greatest opportunities are, have lots of engagement and understand how best we can support our clients within the context of the plan that we have. And I think that we're our members are very lucky because they do have provisions that allow them to make these buybacks and to close those gaps. There's many industries that don't have those opportunities,” said Babic.
