strive to preserve them. They can alter the system to make it deliver the
intended benefits with fewer incentives for undesired behaviour.
Retirement Benefits
There are three components of the system of retirement benefits. These
are the Canada Pension Plan (CPP), retirement income-support programs
such as Old Age Security (OAS) and Guaranteed Income Supplement
(GIS), and tax-assisted saving plans.
The Canada Pension Plan (CPP)
The CPP provides a basic level of retirement income for all Canadians
who have contributed to it over their working lives. A separate but similar
scheme exists in Quebec—the Quebec Pension Plan or QPP. Unlike some
private programs, the pension provided by the CPP is portable—changing
jobs does not cause any loss of eligibility.
Retirement Income-Support Programs
Two programs provide benefits to the elderly in Canada. First, the Old
Age Security (OAS) benefit is a monthly payment of $587 that goes to all
Canadians over age 65 with an annual income of less than $122 843, a
cutoff that provides some element of income testing. The OAS benefit is
further income tested because it begins to be recaptured by a tax
“clawback” for individuals with incomes above $74 788. Second, the
Guaranteed Income Supplement (GIS) is a more explicitly income-tested
benefit specifically targeted to low-income elderly Canadians. The GIS