Simulated Replacement Rates for CPP Reform Options Kevin Milligan ~ Vancouver School of Economics ~ University of British Columbia

Simulated Replacement Rates for CPP Reform Options

with Tammy Schirle
University of Calgary School of Public Policy Research Papers, Vol. 7, Issue 7, March 2014.
Google Scholar entry.


We have two goals for this paper. First, we set out the current state of retirement-income adequacy in order to make clear which Canadians are doing well under the current system and where there are opportunities for improvement. We draw on new and existing evidence on retirement incomes in Canada, finding that a particular group of Canadians--middle- and higher-income earners without employment-based pensions--is at higher risk for inadequate pension income. Second, we simulate several proposals for reform in order to assess how they might change the pattern of retirement income across the earnings distribution. Our findings emphasize the importance of considering the interaction between the Canada Pension Plan and the Guaranteed Income Supplement, and of targeting a reform to the Canadians who would benefit most. We find that some of the proposals perform better than others in these regards. We also propose and simulate a simpler reform--an upward expansion of the pensionable earnings cap--that would yield well-targeted results, but with less complexity than some of the other options. We conclude by noting that the case for reform depends critically on how one views the role of government in alleviating under-saving by middle- and high-income earners.


Published version, March, 2014: Embedded PDF.

Slides from presentation at University of Calgary / CIRANO conference "Proposals for Canada/Quebec Pension Plan Expansion: Are We on the Right Path?", Ottawa, November 28, 2013: PDF.

Other writing on CPP Reform

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