Stasis Amidst Change: Canadian Pension Reform in an Age of Retrenchment

Faced with aging populations and especially heightened fiscal constraints, large scale pension reforms were implemented in many affluent democracies during the 1990s. Canadian reforms, by contrast, were quite modest and old age security benefits emerged largely unscathed. Drawing on the comparative experience of other OECD nations, we highlight four characteristics of the Canadian pension system and the policy environment to account for this relative stability:(1) the comparatively modest scale of Canadian public sector pension expenditures; (2) relatively greater reliance on general revenue as opposed to payroll taxes to finance these expenditures; (3) the availability of other expenditure targets, notably health care, post-secondary education and social assistance, that could be cut with less political backlash; and (4) a pension design that allocates the public sector share disproportionately to the bottom end of the income distribution, precluding the emergence of the oppositional politics that fueled public debate elsewhere.