What can we do about pensions?

This paper sets out some of the problems with Canada's pension system and outlines some of the options that have been proposed to deal with them.

The paper clarifies that Canada's pension system consists of three tiers. The basic building block is Old Age Security (OAS) and Guaranteed Income Supplement (GIS), while the Canada Pension Plan (CPP) constitutes the second tier. The third building block is private arrangements; workplace pension plans that receive tax subsidies. The paper states that there are issues raised in each of three tiers that need to be addressed. However, changes to any part of the system will likely require adjustments to other parts.

The paper main conclusions and recommendations are:

• there are increasing calls for an expansion of the public pension programmess in general
• an increase in OAS/GIS is urgently needed to address the unacceptably high poverty rate of older women on their own
• in this sense, since GIS is targeted to low-income individuals, an increase in the benefit could be an ideal way to stimulate the economy
• indexing OAS and GIS to wage rather than to inflation would address the problem of old people being fell further and further behind the rest of the population
• increasing the average age at which people retire would allow governments and pension plan sponsors to postpone pension payouts and keep boomers working longer
• still, this would have an adverse impact on lower-income earners who must rely on public pensions as their main source of retirement income
• members of workplace pension plans face immediate difficulties that need to be addressed
• in this respect, a national pension insurance fund, or a national investment and pension fund can be reasonable options