From the Introduction: The purpose of this paper is to provide a critical perspective on the scope and limitations of the present retirement income system in Canada and a commentary on the alternative proposals for reform. First, we outline the evolution and development of public policy in this area, the main components of the present system and its major limitations, and the nature of growing pressures for change. We then review the alternative reform proposals suggested by the federal Task Force. A comparative summary outline of the recommendations of other pension studies, and the general conclusions of the Ontario Royal Commission Report, are presented in the appendix. Finally we summarise the significant issues in pension discussions and the possible reform strategies.

Like other transfer programs, a pay-as-you-go public pension system can significantly affect economic behavior and, hence, relative prices and macroeconomic aggregates. This paper illustrates some of these effects, which are important in weighing options for reforming public pensions, in the context of a stylized model of the Canadian economy. It shows that introducing such a system can reduce aggregate saving, income, and wages and increase interest rates. It also shows that a significant part of the distortion can occur because benefits are not explicitly linked to contributions and that creating a linkage can reduce the distortions associated with the wage tax that funds plan contributions.

This document outlines proposed improvements in federal income security benefits for people who have already retired, and proposes expansion of the Canada and Quebec Pension Plans. It also deals with occupational pension plans and registered retirement savings plan. Finally it reveals the b̀ottom lines' of pension reform.