The Canadian Press

A new study for the Ontario government says keeping Canada’s pension system as it is would have the effect of seriously hurting the future prosperity of some key groups of the population.

Federal and provincial finance ministers are meeting in Whitehorse on Friday to map out a blueprint that would force or encourage Canadians to save more for their retirement.

The study prepared for the Ontario government says seniors have flourished under the current system over the past 40 years.

But the system is beginning to erode, as a growing portion of the working population is either not covered by a pension plan or is covered by a shaky plan that does not pay solid benefits upon retirement.

Study author Bob Baldwin says that in the future, most people will still be able to depend on a healthy stream of retirement income.

But he’s worried about vulnerable groups such as single seniors relying on Old Age Security, immigrants and elderly people.

“The option of leaving everything as it is will have its adherents, but seems likely to result in a significant minority facing a decline in their standard of living and a forcing many people to rely on pension plans and retirement savings institutions that are less effective than available alternatives.”

His report was meant to inform the Ontario government about the state of retirement income in Canada, and did not include policy recommendations.

Baldwin shows that poverty among seniors has dropped significantly since the 1970s, but has faced some setbacks recently.

He is concerned that the federal government’s Guaranteed Income Supplement and Old Age Security programs will not be able to keep up with major changes about to occur in Canada’s demographic makeup.

He found that between 1976 and 2007, the real median income of elderly couples rose 55% and was up 79% for elderly singles.

But since the mid-90s, income among seniors has been flat or deteriorated, he noted.

While he does not predict any great catastrophe if Canada’s pension system remains as it is today, he does note that several provincial governments and many experts have come up with a broad range of options to improve the system.

“The status quo is an option,” he concludes. “However, it is an option that may leave a significant minority of people with moderate to high earnings facing a decline in their standard of living in retirement, and force many people to rely on sub-optimal pension and retirement savings institutions.”

IE