Economic problems driven by Canada’s aging population will be somewhat offset by baby boomers delaying retirement, according to a C.D. Howe Institute report released Tuesday.
Later Retirement: The Win-Win Solution argues that over the next two decades, Canadians are likely to stay in the workforce about five years longer than their predecessors.
“There will be a strong trend towards later retirement as a result of social and economic pressures, without any policy action,” the report argues.
This trend, it argues, will “significantly reduce although not entirely offset” the anticipated negative macro-economic and labour-market effects of the country’s population aging.
“This suggests that compensating policy reforms are still needed but can be less draconian than has often been thought to be necessary,” the report states.
Report author Peter Hicks argues that a key reform will be to gradually increase the standard age of pension eligibility, to bring it more in line with increases in longevity. He asserts that it makes no sense to continue with a standard age of 65 for public pension eligibility when the average retirement age will soon be 68.
The report argues that “the needed changes are not large,” and that they can be introduced gradually. It contends that the reforms should involve gradually raising the age band at which Canadians can receive CPP and making similar changes to Old Age Security (OAS).
In January, Prime Minister Stephen Harper announced plans to overhaul Canada’s retirement pension system. There has been speculation that the government will raise the qualifying age for OAS to 67 from 65. Details are anticipated later this week when the federal budget is announced Thursday.
