Tag Archives: pension

Cracks In Future For Canada Retirement Income

November 6, 2026 The Silo Leave a comment

“Warning signs include declining private-sector pension coverage and the gradual erosion of Old Age Security’s income-replacement role, as benefits indexed to inflation fall behind wage growth.” C. D. Howe Institute

Canada’s retirement income system has generally served seniors well. Average income replacement rates remain high, poverty among seniors is low, and seniors’ median net worth has more than doubled in real terms since 1999.
But cracks are emerging. Public and private pensions now replace 10 percentage points less of pre-retirement income than two decades ago, low replacement rates are becoming more common among lower-middle earners, private-sector pension coverage is declining, and OAS is steadily losing ground as a source of income replacement.
The authors argue that Canada should rethink how the system delivers income replacement and poverty protection. They propose exploring a targeted “Canadian seniors benefit” combining OAS and GIS, shifting OAS’s income-replacement role to an expanded CPP/QPP, and strengthening employer-based retirement savings for workers without workplace pensions.

The authors wish to thank Xavier Dufour-Simard and Francois Laliberté-Auger for their assistance in carrying out some of the analyses contained in this paper. The authors also extend their gratitude to Sebastien Betermier, Colin Busby, David Dodge, Malcolm Hamilton, Sarah Hobbs, Abid Kazmi, Sébastien LaRochelle-Côté, Alexandre Laurin, Bernard Morency, James Pierlot, William B.P. Robson, Allan Shapira, Richard Shillington, John Stapleton, Michael Veall, and several anonymous referees for valuable comments and suggestions. The analyses contained in this paper were carried out at the Quebec Inter-university Centre for Social Statistics (QICSS), a member of the Canadian Research Data Centre Network (CRDCN). The activities of QICSS are made possible by the financial support of the Social Sciences and Humanities Research Council (SSHRC), the Canadian Institutes of Health Research (CIHR), the Canada Foundation for Innovation (CFI), Statistics Canada, the Fonds de recherche du Québec and all the Quebec universities that contribute to their funding. Conclusions, interpretations, and possible errors remain our own.

Introduction

Over the past decade, there has been little investigation into how seniors are faring with respect to the retirement system’s two key objectives: helping individuals sustain their standard of living in retirement (income replacement) and protecting them from financial hardship at older ages (poverty alleviation).

This stands in contrast to the rich policy discussion that led to the 2016 federal-provincial agreement to enhance the Canada (and Quebec) Pension Plan (CPP/QPP). Discussions focused on several major developments. The arrival of the first cohorts with full CPP/QPP earnings histories had helped lower poverty among seniors (Milligan 2008). Increased generosity in the Guaranteed Income Supplement (GIS) and CPP/QPP also contributed significantly to declining poverty rates (Schirle 2013). As Veall (2008) argued, the retirement income system was largely accomplishing its poverty alleviation objective. On income replacement, the debate leading to CPP/QPP enhancement made clear that overall rates were high in the population (LaRochelle-Côté et al. 2008; Ostrovsky and Schellenberg 2009). However, mid-earners without employer pension coverage were most at risk because public pensions offer relatively low replacement rates for them¹Throughout, “public pensions” refers to the first two pillars of the system – OAS/GIS and CPP/QPP – and not to employer pension plans for public-sector workers, which belong, like private-sector plans, to the third pillar. (Ostrovsky and Schellenberg 2010). That extensive discussion took place less than two decades after another successful CPP/QPP reform took effect in 1998 (Little 2008).

Since the discussions leading to the 2016 agreement, much has occurred, including a pandemic, a surge in inflation, and significant financial market fluctuations. Although the CPP/QPP multi-decade expansion has been rolling out effectively, retirees have faced setbacks elsewhere. The continuing decline in defined benefit (DB) plan coverage in the private sector has turned off the “automatic pilot” for many workers’ retirement savings. Meanwhile, Old Age Security (OAS) and the GIS continue to protect against poverty despite the recent inflation surge because they are indexed to prices. But they are losing ground as sources of income replacement. Unlike CPP/QPP, whose benefits at retirement reflect wage growth over a worker’s career, OAS and GIS amounts are only indexed to prices and fall behind wage growth (see Box 1). Future retirees who rely heavily on OAS/GIS will therefore see lower replacement rates than today’s retirees. These trends suggest that Canada’s retirement income system risks falling behind.

Because of the importance of the retirement income system and the growing size of the senior population, public claims abound that seniors cannot make ends meet, live in poverty, or struggle with the cost of living. These sentiments are often behind proposals to further expand pension coverage and to increase benefits for older Canadians, such as OAS. There are also those advocating the opposite; namely, that retired babyboomers fare much better than prior generations of retirees and that, as a result, OAS should be curtailed for higher-income earners and left to play only a poverty alleviation role, potentially freeing up financial resources for other uses.

This Commentary, drawing heavily on Boisclair et al. (2025a), has two aims.

First, it investigates the financial outcomes of seniors over two decades (2002 to 2022), comparing their retirement incomes to prior earnings and taking a look at household balance sheet data. It finds that seniors have, on average, fared rather well financially, both in terms of flows (income/consumption) and of stocks (net wealth).
Second, the paper illustrates and acknowledges the changes in income composition and income replacement at older ages in recent decades – in particular, decreasing private sector pension coverage and a retreating role of the first pillar (OAS/GIS) of the retirement income system. It then discusses some options to reform the system and refocus it on its objectives.

Data Sources to Assess Seniors’ Financial Situation

To evaluate whether the retirement income system met its objectives in the past 20 years, we mainly rely on Statistics Canada’s Longitudinal Administrative Databank (LAD). The LAD offers detailed financial information derived from the tax records of 20 percent of the Canadian population. It allows us to obtain precise income measures at multiple points over a taxpayer’s lifetime and provides information on household composition. As a complement, we use Statistics Canada’s Survey of Financial Security for balance-sheet analysis. Both datasets are subject to substantial lags: LAD data are available through 2022 and SFS data through 2023. Readers should keep these lags in mind when interpreting our findings.

When inflation peaked in 2022, interest rates rose sharply, and housing prices fell from their peak in some major markets, while financial markets rose strongly. Because public pensions are indexed to prices, seniors’ income from OAS, GIS, and CPP/QPP was largely protected; financial and pension assets have generally grown; housing wealth, by contrast, may be somewhat overstated for owners in the most affected markets.

Poverty alleviation: With respect to poverty alleviation, we use key measures of poverty that can be constructed with tax data. As is clear from the literature, there is no single perfect measure of poverty (Government of Canada 2018). We mainly use the low-income cut-offs, after tax (LICO-AT) measure, created by Statistics Canada. The LICO-AT has not been updated since 1992 and relies on meeting expenditures on housing, food, and clothing but does not account for the growing share of expenditures on transportation and communications (Noël 2017).² But it is easily computable from LAD data.

Income replacement: To evaluate the retirement income system in terms of income replacement, we calculate replacement with a measure of pre- and post-retirement income at some given ages. For this analysis, we define pre-retirement income as the average income in the age range 50 to 54, so as not to rely on a single year of income in the denominator of the replacement rate.³ We define the post-retirement window as the tax year in which the taxpayer turns 70.⁴

Income Replacement in Retirement

Family replacement rates (RR) on average are high, ranging from 80 percent to 90 percent (Figure 1).⁵ They increased by almost 10 percentage points (pp) between the 2002 and 2014 cohorts, before declining to roughly their levels at the beginning of the period. That hump-shaped pattern is mostly the result of changes in the denominator: pre-retirement earnings (at ages 50-54) declined slightly in real terms for cohorts turning 70 up to 2012, then rose by about 10 percent between the 2016 and 2022 cohorts (Boisclair et al. 2025a).

Retirement incomes, by contrast, increased steadily over the period. Including TFSA net withdrawals as income increases the RR by only 2 to 3 percentage points, with little effect on replacement rates, although this could change as TFSA use increases. Replacement rates are higher on an after-tax basis, since tax rates are lower at older ages due to several tax measures and to the progressivity of the income tax schedule.⁶

Figure 2 shows that despite similar gross replacement rates, individual incomes at age 70 have changed composition over the past decades.⁷ Public pensions, defined as the sum of OAS/GIS and CPP/QPP, are a very important source of income for seniors on average, but the share of pre-retirement income they replace has been declining from 31 percent of total pre-retirement income in 2002 to 27 percent in 2022. We observe a similar declining trend for private pension income (27 percent to 21 percent).⁸ What may seem surprising is that private pension income is declining for these cohorts, but changes to Registered Retirement Income Funds (RRIFs) over time could explain at least part of this phenomenon. Overall, public and private pension incomes have gone down from representing 58 percent of pre-retirement income to 48 percent, a drop of 10 percentage points in less than 20 years. This is a large drop coming from the three pillars of the retirement income system.

If the contribution of these sources to replacement is falling, what is keeping gross replacement rates constant? A closer look reveals that gross replacement rates do not decline accordingly because of an increase in several other income sources, notably employment (+6 pp), dividend (+3 pp), and RRSP (+1 pp; excluding RRIFs and RRSP-purchased annuities) income. Employment income at 70 is not concentrated among the better off: relative to pre-retirement income, it contributes more to replacement in lower deciles (14 pp in the third decile versus 9 pp in the eighth in 2022), although it forms a larger share of retirement income in the top decile (Boisclair et al. 2025a, Table 3).⁹ We also observe a decline in investment income (-3 pp), which could reflect the growing importance of tax-favoured savings vehicles (RRSPs and TFSAs) over time. One can conclude that there is more diversity in income sources at age 70 than there was 20 years ago and that traditional retirement income, coming from public and private pensions, has eroded substantially as a percentage of pre-retirement income.

Income Replacement Across Income Groups

Replacement rates from public pensions decline as income rises, a well-known feature of Canada’s retirement income system. To examine how this relationship is evolving, we divide the income distribution into cohort-specific deciles of pre-retirement after-tax income and compute the RR for each decile over time. The RR for the first decile hovers around 2 and is omitted to enhance readability (Figure 3). This means that someone in the first decile sees their real after-tax income double at age 70 relative to ages 50-54. Replacement rates are thus very high at the bottom of the income distribution.

The RRs generally decrease as pre-retirement income increases. At the very top (10th decile), the replacement rate remains above 60 percent. Because saving and dissaving outside registered accounts matters more at higher incomes, income replacement rates are a less reliable guide to consumption replacement in the upper deciles, and relatively low rates there are not necessarily a sign of inadequacy. Most deciles increase until 2014 to 2016, followed by a decrease of a similar magnitude. Deciles 2 and 3 exhibit no net variation from 2002 to 2022, whereas higher deciles have positive net variations, ranging from 3 percentage points (decile 4) to 6 percentage points (decile 7) over the entire period. The only decile that sees a net negative variation is the 10th (highest earners), whose RR drops by almost 6 percentage points over the period. The decrease for this decile again reflects faster growth in pre-retirement income from 2016 onward, suggesting that this group is faring increasingly well before retirement and is therefore of less concern from a retirement-income policy perspective.

Figure 4 illustrates the difference in gross RR magnitude between the ends of the income distribution. The graph shows how lower deciles depend on public pensions (OAS, GIS, and CPP/QPP), which replaced almost 80 percent of their gross income in the early 2010s. On the other hand, the upper deciles rely a lot more on private pensions (including RRIFs). We observe in the decile 3 that public pensions have not followed the increase in pre-retirement income, resulting in a decreased contribution to the gross RR by more than 19 percentage points over the 2013-2022 period (from 80 percent to 61 percent). This trend is much less pronounced for the 8th decile, where the decline is 2 percentage points (23 percent to 21 percent) over the same period. This suggests that the deteriorating income replacement function of the public pension system is disproportionately affecting lower-income taxpayers. Overall, this leaves the bottom of the distribution most vulnerable to the erosion of public pensions and the top to the retreat of Registered Pension Plans (RPP).

Averages also mask dispersion within deciles. The share of taxpayers with replacement rates below 60 percent – a level that is hard to reconcile with standard consumption-smoothing preferences – rose by 7 to 13 percentage points across cohorts in deciles 3 to 5, and up to a third of seniors below the median have low replacement rates (Boisclair et al. 2025a). Earlier work with the same data shows that low replacement rates are concentrated among middle earners without employer pension coverage (Ostrovsky and Schellenberg 2010).

Poverty Protection in Retirement

We find that the fraction of retired seniors below the LICO-AT is low (about 4 percent) and has remained very stable over cohorts, abstracting from the effect of the pandemic. The average depth, or shortfall, below the LICO over the period is also stable at around 18 percent (Figure 5). Thus, very few seniors fall below an absolute low-income threshold such as the LICO: Canada has been highly successful in protecting seniors from very low incomes. The same cannot be said for all Canadians, namely youth and working-age adults, however.

By comparison, in 2024, 5.4 percent of seniors lived below Canada’s official poverty line (the Market Basket Measure), compared with 11.5 percent of children and 12.6 percent of adults aged 18 to 64 (Statistics Canada, Table 11-10-0135-01). The dip in the low-income rate for 2020 is probably a reflection of larger transfers to households, such as the Canada Emergency Response Benefit (CERB). Overall, poverty rates are low among seniors because of the combined effect of OAS and GIS.¹⁰ In this light, it is notable that so much of the policy discussion revolves around poverty alleviation, when the erosion of the income replacement role of OAS is well underway and should be a cause for concern.

The Balance Sheet of Seniors

Income flows can be different from spending flows. When income flows include withdrawals from RRSPs and TFSAs, one also captures spending coming from the decumulation of these accounts (unless these monies are then transferred to taxable savings or to another investment use). This is therefore a good proxy, as argued above, but this will not include decumulation from other accounts and, more generally, consumption out of wealth. This can be important since a wealthy individual or household with a modest income may be better off financially, and spend more, than a counterpart with a high income but no wealth.

The most comprehensive source of data currently available on wealth holdings is Statistics Canada’s cross-sectional Survey of Financial Security (SFS).¹¹ Since this is not longitudinal data, Table 1 shows cross-sectional statistics over time in constant 2023 dollars for households aged 65 and older. Specifically, the table reports both the proportion of households holding various types of assets and debts as well as the median value among households with positive balances. Median total assets and median net worth are also included and are calculated across all senior households, including those with zero or negative net worth. Conditional medians for individual assets cannot be added up to obtain the totals.

The median household net worth (assets minus debt) of those age 65+ has risen from $503,600 in 1999 to $1.1 million in 2023, or by 120 percent. This doubling over 24 years is a significant increase in the potential living standards of seniors. Of course, there is considerable dispersion, but the median senior household has a very high net worth. The share of seniors with RRSP assets rose from 57.8 percent to 72.7 percent, while the median value of those assets increased substantially, by more than 77 percent in real terms. TFSAs were introduced in 2009, and by 2023, 65 percent of households with at least one member aged 65 or older held TFSA assets, with a median value of $60,000. Importantly, while the share of households with RPP assets increased slightly over the period, the median value of those assets increased by 32 percent on average. Overall, traditional retirement savings, through pension plans and tax-favoured saving vehicles, increased substantially over time. Principal residences, held by 83 percent of senior households, also increased substantially in value: the median value among homeowners rose by 136 percent in constant dollars.¹²

Median debt increased as well by 136.7 percent over the period. But since debt is low relative to assets, its evolution does not significantly impact net worth. A few interesting changes occurred – for example, lines of credit, in particular home equity lines of credit, have more than doubled in prevalence and in median value – but traditional mortgage debt still accounted for the lion’s share of senior debt in 2023. Over the period, the share of households with mortgage debt nearly doubled to one in five (20 percent); households may have been able to borrow more on account of larger assets and rising income, but also lower interest rates (Bédard and Michaud 2021).

On average, seniors now have much higher net worth and financial equity, from which to finance consumption in retirement if they wish to do so. Even though counting home equity probably overstates the increase in net consumption opportunities coming from wealth, the overall portrait is quite positive for many in terms of non-government savings for retirement. However, this may not be available to some who have very few assets (Baldwin 2022). Notably, there is an important divide between homeowners and renters. The divide is stark: among families whose main earner was 55 to 64 in 2023, homeowners with an employer pension had a median net worth of $1.4 million, compared with $11,900 for renters without one (Statistics Canada 2024). Household type matters as well: seniors living alone, many of them widowed, had a median net worth of $475,900 in 2023, less than half that of senior families. Further complicating the interpretation of wealth differences is the increase in the average length of the retirement period, implying that one needs more financial wealth to sustain a given regular flow of consumption expenditures in retirement.

The Policy Challenges Ahead

To summarize the findings for policy, we must first note that the bottom income deciles rely on the public system (OAS, GIS, and CPP/QPP), while above the median, RPPs and other private retirement savings account for a much larger share. Hence, two issues warrant attention: 1) the future evolution of public pensions and its impact on the bottom deciles (and, perhaps less importantly, higher deciles due to CPP/QPP enhancement); and 2) the evolution of RPPs and other retirement savings arrangements and their impact on the replacement rates of individuals above the median. We discuss each in turn.

The Eroding Income-Replacement Role of OAS/GIS

With price indexation instead of wage indexation, the income replacement role of OAS/GIS has been slowly eroding, as indicated by Figure 2 – especially so for lower deciles, as shown in Figure 4. The 10 percent increase in OAS for those aged 75 and over introduced in 2022 partly offset this erosion for older seniors, but did not change the underlying indexation mechanism. And without further intervention, this will continue in the future, reducing OAS’s income replacement value by more than 22 percent over 20 years if real wage growth is 1 percent above inflation. The CPP/QPP expansion already underway will barely offset this decline in aggregate – roughly offsetting it for workers with earnings close to the Year’s Maximum Pensionable Earnings (YMPE), but not for lower earners, whose gains are smaller and partly clawed back through the GIS, while higher earners see a net gain (Boisclair et al. 2025a).

There are several possible options to adapt OAS, including a few known proposals. One would see OAS increase in generosity; another would see it curtailed; and a third would see it reshaped entirely. We review these proposals below as potential options or starting points for further policy discussions.

Option 1: Expand OAS for Those Aged 65-74

This idea was originally put forward in 2021 in a private member’s bill, Bill C-319, which died when the previous Parliament was dissolved. The content of the bill has moved to Bill C-261, which was first read in Parliament on February 9, 2026.¹³ A 2022 enhancement increased OAS by 10 percent for Canadians aged 75 and over; the current proposal would extend the same increase to Canadians aged 65-74.

We do not think this is the right approach for two reasons. First, an across-the-board increase is poorly targeted: poverty among seniors is now low relative to other age groups, and most of the cost would go to seniors who are not at risk of poverty. Second, it would not solve the underlying problem: a one-time increase restores some income replacement today, but with price indexation the erosion simply resumes, inviting further ad hoc increases. Relying on such raises on top of legislated inflation indexing leaves this important program – perhaps more than others due to its size and salience, as well as its single-government nature – at the mercy of political and public finance pressures.

Option 2: Start OAS Clawbacks at $100,000 of Family Income

A proposal from Generation Squeeze would cut OAS for better-off seniors – effectively lowering the clawback threshold by combining family incomes rather than treating them individually and/or increasing the rate compared to the current situation.¹⁴ Using the “family income” concept, contrary to individual income, which is currently the case for OAS clawback, would ensure that single or widowed individuals are not disadvantaged (the current 15 percent clawback starts at an individual income of $93,454 in 2025).

We share the premise of this proposal: any reform that refocuses OAS will, and should, ask more of better-off seniors. Our concern is rather with its design. While this would ease financial pressures on the program while protecting the poverty alleviation function for lower-income seniors, we believe this would come down to turning OAS into a “taxable GIS.” Indeed, the GIS’s very function is to ensure that seniors with little or no income other than OAS are lifted to just above some low-income threshold. It is unclear to us that duplicating this function is the best way forward. While a family-income test avoids disadvantaging single or widowed seniors, it would also end the individual character of OAS. Since its introduction as a universal benefit in 1952, OAS has provided lower-earning spouses – mostly women – with an independent source of income and could discourage couple formation later in life. Moreover, this proposal in itself is incomplete, as it does not address the erosion of income replacement above the median.

Option 3: Create a Canadian Seniors Benefit and Expand CPP/QPP

This proposal was made by one author of this paper in the Financial Post in late 2024 and in L’actualité.¹⁵ It would combine OAS and GIS – the OAS supplement – into a more streamlined “Canadian seniors benefit,” aimed solely at poverty alleviation, while only using CPP/QPP to achieve income replacement objectives. Canada has taken a similar approach elsewhere, for example with the Canada child benefit (CCB). This option has two distinct components: (a) replacing OAS and GIS with a targeted, federally funded “Canadian seniors benefit”; and (b) expanding CPP/QPP benefits, financed by higher contributions from workers and employers, to take over the income replacement function currently played by OAS. The two components fall under different jurisdictions – the first is federal, while the second requires federal-provincial agreement – but they are designed to go together: implementing the first without the second would amount to a cut in retirement income for middle-income workers.

More specifically, the idea consists in closing OAS as it currently exists, stripping it of its income replacement function – which has been in constant decline in recent and future decades – and moving its poverty alleviation function to an expanded GIS. The latter, which would become a targeted “Canadian seniors benefit,” would ensure that all seniors have an income at least equal to the low-income threshold. This is similar to what OAS and GIS currently accomplish together for lower-income seniors.

Consider an illustrative design for a single senior. The new benefit could guarantee the current combined maximum of OAS and GIS – about $22,800 a year in late 2026 – and be reduced by 40 cents for each dollar of other income. It would then be fully phased out at about $57,000 of other income between the current GIS cut-off ($23,112) and the OAS recovery threshold ($93,454). The reduction rate would thus be higher than the 15 percent OAS recovery tax but lower than the 50 percent to 75 percent GIS reduction rates, which would also improve work and saving incentives for low-income seniors. An earnings exemption similar to the current GIS one should also be preserved. Parameters for couples would need to be set separately. The first pillar would thus become a pure anti-poverty transfer program.

Such a redesign would have important distributional consequences, which hinge on a key difference between the two programs: OAS and GIS benefits depend on residence and current income, whereas CPP/QPP benefits depend on lifetime earnings. Keeping the new benefit tied to residence and current income is what protects seniors with low incomes, whatever their work history – including many with interrupted employment histories, caregivers, persons with disabilities, low lifetime earners, and immigrants with incomplete Canadian residence – since it would guarantee an income at least equal to the low-income threshold. By contrast, the income replacement function moved to CPP/QPP would accrue in proportion to lifetime earnings. Seniors whose current income places them above the range of the new benefit, but whose lifetime earnings were modest, would therefore lose OAS without an equivalent CPP/QPP gain. This is notably the case of lower-earning spouses in middle-income couples, often women, for whom OAS is currently an individual source of income; income testing on a family basis would remove it, unless the design preserves some individual entitlement.¹⁶

In any case, substantial savings would ensue for the federal government since OAS payments (excluding GIS) are planned to total nearly $68 billion in 2026/27. The actual size of the savings will depend on the specific parameter values for the redesigned “Canadian seniors benefit” and on the transition (see below), but would eventually amount to tens of billions of dollars a year. Then, a parallel increase in contributions would enhance CPP/QPP benefits to take over the income-replacement function of OAS. As a purely illustrative order of magnitude, replacing the maximum OAS pension for a worker with career earnings at the YMPE would require about 3 percentage points of additional contributions, split between employees and employers, on a fully funded basis.¹⁷This would effectively move the income replacement function of OAS “off-budget,” within a plan with strong governance, and bring it together with the rest of earnings-related income replacement in CPP/QPP. How this expansion is financed matters as much as its size. A fully funded expansion, like the one introduced in 2019, is fair across generations but takes about 40 years to mature, which, if OAS were closed at the same time, would leave middle-income workers retiring in the interim with neither OAS nor much additional CPP/QPP. A partially funded (pay-as-you-go) component would allow benefits to be paid sooner at the cost of transfers from future contributors.

Transition is the main challenge. Many workers have planned their retirement around OAS, and closing it abruptly would impose large and unforeseen losses on those who have already retired or are close to retirement – a retiree with $41,000 in income from a defined benefit pension and full CPP would lose about 15 percent of income – while a fully funded CPP/QPP enhancement would take decades to mature. The two must therefore move in step: OAS would remain in place for current retirees and cohorts close to retirement and be phased out gradually for younger cohorts as their CPP/QPP entitlements build up, with long advance notice. The CPP/QPP phase-in could also be accelerated, through two sources that can be combined: drawing on part of the assets accumulated in the base CPP and QPP and using part of the federal savings from closing OAS, for instance, to finance a partially pay-as-you-go component. Both involve transfers across generations to be weighed against the higher contributions they would imply later, and the latter would make federal savings correspondingly smaller in the short run. Beyond the transition, governments could decide whether to use the savings to lower taxes, reduce debt, or fund other priorities.

Clearly, such a major change would require careful and demanding coordination between the federal and provincial governments, at least with respect to the CPP/QPP part. Although such coordination is always a challenge in Canada, it is not unheard of. This is evidenced by the two important rounds of changes to CPP achieved in the past 30 years: in particular, the 1998 reform and the 2016 agreement to enhance the CPP; and by the contribution rate cuts announced in the federal Spring Economic Update.¹⁸ Cancelling those rate cuts could indeed be part of a broader remodelling under this option.

The Retreat of Private-Sector Pension Coverage

The landscape is changing rapidly for RPPs. Coverage in the private sector has eroded from an already low level, despite high hopes when Canada’s retirement system was established: 35 percent of private sector workers were covered in 1980, compared with fewer than one in four today (Boisclair et al. 2025a) – and only about 17 percent of core-age private-sector workers after correcting for double counting in official statistics (Dostie and Morris 2025). The quality of coverage has declined as well: in 1980, 90 percent of covered private-sector workers had a defined benefit plan, compared with 41 percent in 2023, so that fewer than one in 10 private-sector workers now has access to a DB pension (Boisclair et al. 2025a).¹⁹ As discussed, this is particularly concerning for above-median earners.

Although the primary goal of the CPP/QPP expansion currently underway was to cover workers without RPPs, this may translate into higher replacement rates for those with DB RPP coverage. Indeed, many public sector DB plans do have a so-called “integrated” structure with CPP/QPP²⁰ – but it is too early to tell how many DB plans will have accounted for the CPP/QPP enhancement in the medium- to long-term.

However, middle- and higher-income earners without pension coverage have long been the group most at risk of inadequate income replacement. While solutions may exist to increase pension or retirement savings coverage for this target group, most are difficult or costly to implement or politically unpopular. For instance, a recent proposal in a C.D. Howe Institute Commentary (Ambachtsheer and Mazer 2026) suggests subsidizing small businesses to offer employee pensions. While this may help since cost is often a major concern for employers considering a pension plan, administrative burdens remain, and the subsidy could provide windfall gains to employers that would have offered a plan anyway. Furthermore, the very low take-up of Pooled Registered Pension Plans (PRPPs) illustrates that a stronger approach is required.

Quebec’s approach under its law on Voluntary Retirement Savings Plans (VRSPs), which requires employers to offer a basic savings plan with auto-enrolment, seems to be going in the right direction. Indeed, we have recently found that the law has resulted in increased savings in VRSPs but also in RRSPs and TFSAs (Boisclair et al. 2025b). However, enforcement is currently limited, and employer contributions remain voluntary, hampering more significant progress. Moreover, all workers are enrolled in the plans, even lower-income workers who might not benefit much or for whom an RRSP-type plan might even reduce future GIS benefits. In its most recent budget, the Quebec government has announced that it would study options to strengthen VRSPs, including a possible public VRSP managed by an independent organization, similar to the National Employment Savings Trust (NEST) in the UK.

If we are to address the income replacement gap for the target group, strengthening employer-based solutions will be needed to avoid an even larger CPP/QPP expansion than the one already underway and the one following the folding of OAS, based on option 3 above.

Conclusion

The evidence presented in this paper and elsewhere suggests that, on average, Canadian seniors have fared relatively well in recent decades and that the retirement income system has so far met its objectives in aggregate, both in overall income replacement and poverty protection. While some seniors continue to face hardship, this conclusion may surprise many and contrasts with the broader narrative of widespread financial difficulty among seniors.

Against this backdrop, the evidence also points to weaknesses that are already visible and likely to deepen:

public and private pensions now replace 10 percentage points less of pre-retirement income than they did two decades ago;
low income-replacement rates are becoming more frequent among lower-middle earners;
private-sector RPP coverage keeps declining; and
the income replacement function of OAS continues to erode and is not fully offset by the CPP/QPP expansion underway.

To date, other income sources – notably employment – have filled the gap, but they cannot be relied upon in the same way as pensions. One way forward, which we do not favour, would be to keep adjusting OAS on an ad hoc basis. Or Canada could, as we suggest, reshape OAS by folding its limited income replacement function into the CPP/QPP and merging the rest with GIS to create a “Canadian seniors benefit” that focuses solely on poverty reduction.

For income replacement above the median, private-sector RPPs and other employer-sponsored retirement savings arrangements could help bridge the growing gap, given their apparent value to workers (Dostie and Morris 2025). The enhanced CPP/QPP may also prove sufficient for this group following the current expansion and any changes that may come with the remodelling of OAS/GIS. If not, Canada could complement this approach with an “improved VRSP-like” system in which employers are encouraged or mandated to play a stronger role – as was always intended in the design of Canada’s retirement income system – or expand CPP/QPP even further still, this time above a certain level of earnings. In all scenarios, it is time to revisit Canada’s retirement income system.

For the Silo, Pierre-Carl Michaud and David Boisclair.

References

Ambachtsheer, K., and A. Mazer. 2026. Spreading the Benefits: A Targeted Tax Credit Is Needed to Expand Retirement Plan Coverage in Canada’s Private Sector. Commentary 704. Toronto: C.D. Howe Institute. https://cdhowe.org/publication/spreading-the-benefits-a-targeted-tax-credit-is-needed-to-expand-retirement-plan-coverage-in-canadas-private-sector/.

Baldwin, B. 2022. “The Evolving Wealth of Canadians: Who Is Better Fixed for Retirement? Who Is Not?” E-Brief. Toronto: C.D. Howe Institute. https://cdhowe.org/publication/evolving-wealth-canadians-who-better-fixed-retirement-who-not/.

Bédard, N., and P.-C. Michaud. 2021. “Playing with Fire? Household Debt near Retirement in Canada.” Canadian Public Policy / Analyse de politiques 47(1): 56–71. https://www.jstor.org/stable/27034142.

Boisclair, D., X. Dufour-Simard, and P.-C. Michaud. 2025a. “Retirement Incomes in Canada: Past, Present and Future.” Retirement and Savings Institute (RSI) Working Paper 19. September. https://ire.hec.ca/en/19-retirement-incomes-in-canada-past-present-and-future/.

______________. “La Loi RVER a-t-elle augmenté l’épargne des travailleurs au Québec?” Jacques-Parizeau Research Chair in Economic Policy Working Paper 5. October. https://cjp.hec.ca/en/5-la-loi-rver-a-t-elle-augmente-lepargne-des-travailleurs-au-quebec/.

Dostie, B., and T. Morris. 2025. “The Labour Market Impacts of Employer-Pension Plans.” Retirement and Savings Institute (RSI) Working Paper 18. August. https://ire.hec.ca/en/18-the-labour-market-impacts-of-employer-pension-plans/.

Financial Services Regulatory Authority of Ontario (FSRA). 2026. “Workplace Pension Membership Increases in Ontario, but Many Could Benefit from Additional Planning Steps.” News release. March. https://www.fsrao.ca/announcements/workplace-pension-membership-increases-ontario-many-could-benefit-additional-planning-steps.

Government of Canada. 2018. Canadian Poverty Reduction Strategy: What We Heard about Poverty So Far. Ottawa: Employment and Social Development Canada. https://www.canada.ca/en/employment-social-development/programs/poverty-reduction/reports/what-we-heard.html.

LaRochelle-Côté, S., J. Myles, and G. Picot. 2008. Income Security and Stability during Retirement in Canada. Analytical Studies Branch Research Paper Series 306. Statistics Canada.

Little, Bruce. 2008. Fixing the Future: How Canada’s Usually Fractious Governments Worked Together to Rescue the Canada Pension Plan. Toronto: University of Toronto Press. October.

Milligan, K. 2008. “The Evolution of Elderly Poverty in Canada.” Canadian Public Policy / Analyse de politiques 34(Supplement 1): S79–S94. https://doi.org/10.3138/CPP.34.4.S79.

Noël, Alain. 2017. “How Do We Measure Poverty?” Policy Options. November 9. https://policyoptions.irpp.org/2017/11/how-do-we-measure-poverty/.

Ostrovsky, Y., and G. Schellenberg. 2009. Pension Coverage, Retirement Status, and Earnings Replacement Rates among a Cohort of Canadian Seniors. Analytical Studies Branch Research Paper Series 321. Statistics Canada. https://www150.statcan.gc.ca/n1/en/catalogue/11F0019M2009321.

______________. 2010. A Note on Pension Coverage and Earnings Replacement Rates of Retired Men: A Closer Look at Distributions.

Schirle, T. 2013. “Senior Poverty in Canada: A Decomposition Analysis.” Canadian Public Policy / Analyse de politiques 39(4): 517–540. https://doi.org/10.3138/CPP.39.4.517.

Statistics Canada. 2024. “Survey of Financial Security, 2023.” The Daily. October 29. https://www150.statcan.gc.ca/n1/daily-quotidien/241029/dq241029a-eng.htm.

Veall, M. R. 2008. “Canadian Seniors and the Low Income Measure.” Canadian Public Policy / Analyse de politiques 34(Supplement 1): S47–S58. https://doi.org/10.3138/CPP.34.SUPPLEMENT.S47.

Wolfson, M. 2011. Projecting the Adequacy of Canadians’ Retirement Incomes. Institute for Research on Public Policy. https://irpp.org/research-studies/projecting-the-adequacy-of-canadians-retirement-incomes/.

Culture

Why Canadians Are Retiring Much Later

July 18, 2026 The Silo Leave a comment

Statistics Canada’s retirement-age data tell a remarkable story.

After declining steadily from about age 65 in the late 1970s to roughly 61 around 2000, the average retirement age has climbed back to historically high levels (see Figure).

In 2025, the average retirement age reached 65.4 years overall – 66.2 for men and 64.5 for women.

The reversal reflects the interaction of several long-term forces affecting both the supply and demand for older workers.

On the supply side, one of the most important structural changes has been the maturation of women’s participation in the labour market. Compared with earlier generations, today’s older women have much stronger lifetime attachment to paid work, higher pension entitlements, and retirement decisions that are increasingly coordinated with those of their spouses. This transformation has fundamentally reshaped aggregate retirement behaviour.

Demographic trends reinforce this shift. Slower labour force growth resulting from population aging, lower fertility, and recent reductions in immigration have tightened labour supply. As fewer younger workers enter the labour market, employers increasingly rely on experienced older workers to fill skill shortages.

Demand has evolved as well.

Canada’s economy has continued its transition toward service, professional and knowledge-based employment, where accumulated skills and experience often become more valuable with age and where many occupations are less physically demanding than in previous decades.

Longer and healthier lives have also changed retirement behaviour. Many Canadians reaching their mid-sixties today can expect another two or three decades of life, much of it in good health. Retirement has increasingly become a gradual transition rather than a single event, with combinations of continued career employment, part-time work, consulting, self-employment and phased retirement becoming more common.

Changes in social attitudes have contributed.

The elimination of mandatory retirement removed barriers for those wishing to remain employed, while employers and governments have become more attentive to age discrimination. Although the abolition of mandatory retirement appears to have had only a modest direct statistical effect on retirement ages, it expanded opportunities for those who wished to continue working.

These developments have now reached an important milestone. Among Canadians aged 65 and over – the traditional age of public pension eligibility – the proportion continuing to work has grown steadily and is likely to continue increasing.

This evolution suggests that Canada’s retirement income system deserves a fresh review. Much of its architecture was designed when retirement was relatively brief, labour force participation after age 65 was uncommon, and workplace pension coverage was both broader and more generous.

The increase in retirement ages is therefore more than a demographic curiosity. It signals that Canadians have already adapted their behaviour to longer lives, changing labour markets and evolving retirement patterns. Public policy should now consider whether the retirement income system has adapted as well.

Retirement is increasingly diverse. Some Canadians work longer because they choose to remain engaged; others because financial necessity leaves little alternative.

At the same time, important features of the current system discourage continued work among lower-income seniors through Guaranteed Income Supplement earnings rules, while public pension benefits increasingly flow to many higher-income Canadians who remain economically active well beyond traditional retirement ages.

For the Silo, John Stapleton/ Peter Hicks/ C.D. Howe Institute.

Peter Hicks is a policy adviser and a former Assistant Deputy Minister with Social Development Canada and John Stapleton is the new Social Policy, Ageing and Well-being Policy Fellow at the National Institute on Ageing. He is principal at his consultancy: Open Policy.

Culture

World Economic Forum Report Highlights Retirement Trends as Life Expectancy Increases

June 9, 2023 The Silo 1 Comment

Due to longer lifespans, governments and employers must reshape approaches to retirement to ensure ageing populations can live fulfilling, healthy lives
New survey indicates shifting views on retirement and stark differences in how younger and older people see their future
World Economic Forum report provides new approaches to retirement that governments, employers and individuals can consider

New York, USA, June 2023 – Life expectancy increased from an average of 46 to 73 years between 1950 and 2019 and the United Nations forecasts further increases, estimating that global average life expectancy will reach about 81 years by 2100. Longer lifespans are causing individuals, governments and business leaders to rethink their approach to work and retirement.

Living Longer, Better: Understanding Longevity Literacy, a new World Economic Forum report, in collaboration with Mercer, a business of Marsh McLennan, explores how lengthening lifespans are reshaping how individuals view their working lives and retirement. The report offers recommendations for government and employers to ensure they are adequately supporting people in multiple stages of work and retirement.

The report highlights purpose and quality of life in addition to financial health and resilience – themes that are traditionally associated with retirement planning. It offers options that individuals can consider to ensure they are approaching work, learning and retirement in ways that best meet their needs.

“When it comes to longevity and living longer, healthier lives, everyone has a role on this critical topic,” said Haleh Nazeri, Longevity Lead, World Economic Forum. “How will business support an older workforce and one with growing caregiving needs, what will policymakers do to help all citizens reach retirement equity, and finally, what can individuals do at every life stage to ensure they are able to stay financially resilient in a longer life.”

“Employers are thinking more about the current age distributions within the areas of talent needed to operate their organizations and how to influence the trajectory of these distributions,” said Rich Nuzum, Executive Director, Investments & Global Chief Investment Strategist, Mercer. “To leverage longevity and fight the war for talent effectively, moving from individual roles to team-based roles can help employers take full advantage of the diverse strengths of teams that comprise a combination of older and younger workers.”

Views on Retirement
A new survey, Pulse Poll, of almost 400 professionals indicates that women and men view retirement differently. Women, for example, are 55% more likely to say they don’t know if they have saved enough for retirement.

The poll also reveals differences in how younger and older populations view their retirement futures. Both women and those under 40 are more willing to reskill but worry about associated costs. Both groups are also more likely to feel isolated.

Further results from the Pulse Poll can be found below and in the report:

Health is a top concern with two thirds of respondents indicating they expect to have caring responsibilities
Days of “Bank of Mum and Dad” may be reversing; many younger people are likely to have to financially support older family members
Pulse Poll respondents over 40 target lower income replacement levels in retirement
People are generally unaware of how to achieve their target levels of retirement income
More men looking forward to retirement, while more women need to understand their financial situation
Women are 55% more likely to say they don’t know if they have saved enough
Younger people are eight times more likely to use social media for financial advice
44% of under-40s want to retire by 60
Women and younger people are more willing to reskill but are also worried about associated costs

The respondent profiles to the Pulse Poll were homogeneous and predominantly included those who had undertaken higher education, were in more senior positions, were likely to be in employment at major global organizations and with a high level of individual agency and financial literacy.

While there are some sample limitations, the survey suggests how the findings can help start a conversation about the challenges faced and can contribute to the development of solutions for the population this group of respondents represents.

Recommendations for Governments and Employers
As people are living longer lives, business and government need to restructure their approach to later life planning. Failing to adopt a multi-stakeholder approach towards longevity will inevitably result in a significant portion of people retiring into poverty.
Recommendations are cover three key areas of work and retirement including quality of life, purpose and financial resilience.

Government

Facilitate upskilling of older workers and clamp down on ageism
Provide incentives for employers to offer more robust leave policies for caregiving needs
Explore the wider use of default auto-enrollment and default investment strategies to increase and maximize savings
Establish safety nets such as minimum pension levels provided by government
Enact enabling legislation to make all jobs flexible for longer-life working if desired and to accommodate all life-stage needs
Offer digital skills training and equipment to ensure equitable access to opportunities for all

Employers

Implement programmes offering support such as carers’ leave, information and advice for those who have caregiver responsibilities
Understand what impact the company’s retirement plan design has on the trajectory of retirement-readiness and labour flow – check if people can actually afford to retire
Provide flex-work programmes for caregivers, such as job-shares; allow part-time workers to contribute to defined contribution plans; provide training programmes for workforce re-entry, similar to those for early-career employees
Implement and review financial wellness programmes to:
- Cover specific life-stage needs that account for gender, cultural and ethnicity differences
- Consider personalized models to show the impact of different working arrangements and retirement ages on pay and pension
- Cater to low-income earners who are likely to need the most support saving and planning for retirement

Individuals can also reimagine what their longer lives might look like as the three-stage life of school, work and retirement makes way for a multi-stage life that could include lifelong learning, career breaks and new occupations in later life. This includes pursuing upskilling and reskilling opportunities, as well as prioritizing retirement and pension planning if possible.

Increasing longevity globally will require new innovations and solutions to address how people can stay financially resilient in a retirement that may be 20 years longer than their grandparents. With supportive actions from government and employers, individuals will have a chance to try new approaches to longer lives and reassess how they want to study, live, work, save and retire in ways that are different from what has been done in the past century. For the Silo, Madeleine Hillyer/World Economic Forum.

Philanthropy

Fundraising Survey Shows More Canadians Are Giving But Giving Less

September 16, 2019 The Silo 1 Comment

(Toronto, Ontario) Seven in ten Canadians have given to charity in 2018, and almost half of donors are open to different sorts of giving approaches than just the traditional solicitation letter, according to the 2018 What Canadian Donors Want Survey, conducted by the Association of Fundraising Professionals (AFP) Foundation for Philanthropy – Canada in partnership with Ipsos.

The survey, which featured 1,500 Canadians age 18 or older, found that the percentage of people giving to charity in 2017 jumped by four points from the 2015 survey, returning to previous giving levels. Even as more Canadians are giving, they are giving less—an average of $772 cdn in 2017 compared to average giving levels of $924 cdn in 2015 and $726 cdn in 2013.

Eighty percent of donors give to more than one cause, with 23 percent giving to 4-5 charities and 13 percent supporting 6 or more causes. The top recipients of donations are social services and health charities—more Canadians (59% and 57%) gave to those causes than any other.

Overall, Canadians are more confident in the charitable sector than ever before, with nearly eight in ten respondents (78%) saying they’re confident in the organizations that comprise the charitable sector. That figure represents a five-point increase from 2015 and is significantly higher than confidence in the private sector (67%) or the public sector (60%).

Roger Ali Foundation for Philanthropy Canada

“Overall, the survey shows a Canadian population that is very supportive of the work of the country’s charities and a good understanding of how charities work to support communities,” said Roger Ali, CFRE, chair of the AFP Foundation for Philanthropy – Canada. “However, there are signs that donors are changing how they want to give and interact with charities, and the sector needs to understand and adapt to these changes so that we remain relevant to the people who support us and the people we serve.”

Changes in Volunteering, Giving Behavior

One troubling sign is a drop in volunteerism rates. According to the survey, one-third of Canadians volunteered their time to a charity or non-profit in the past 12 months and spent an average of 88 hours—down precipitously from 110 hours in 2015. “We’ll be watching this closely in our next survey to see if this is a one-time drop or a trend,” Ali added.

Canadians continue to change in how they want to be approached for donations. While 44% express a preference for traditional requests, such as mail, one quarter prefer a more personal approach like peer-to-peer contact or crowdfunding. Three in ten (31%) say they’re open to anything, having no specific preference.

Fundraising preferences vary significantly by age. Baby Boomers (54%) are the most likely to prefer being solicited through traditional requests, compared to Gen X’ers (43%) or Millennials (33%). By contrast, Millennials (17%) lead the way on crowdfunding, preferring this option to a greater extent than their Gen X (11%) or Boomer (5%) counterparts.

Perceptions of Charity Roles, Performance

Many underlying views on charities have remained relatively stable over time. Three-quarters of Canadians continue to agree that charities play an important role in society to address the needs not being met by the government, the public sector or the private sector. Majorities also believe that charities are trustworthy (61%) and act responsibly with the donations they receive (63%).

Canadians are more divided on how much charities spend on their programs and services vs. how much they spend on supplies, administration, salaries and fundraising. A growing majority (58%, up six percentage points from 2015) trust charities on how much they say they spend money on programs and overhead.

However, about a third of Canadians (34%, down 4 points) are less trusting, indicating that charities overstate how much they spend on the cause or programs (24%), or that charities are being intentionally misleading (10%). Yet, when presented with factors and asked how important each one is in evaluating a charity’s effectiveness, Canadians placed more emphasis on a charity’s ability to achieve its mission and create impact than managing its operation or its fundraising.

“Donors are looking for charities that create impact to change the world for the better,” said Lorelei Wilkinson, CFRE, chair of the AFP Foundation for Philanthropy – Canada Research Committee. “But it’s always clear that they keep a careful eye on administrative costs and a charity’s operations. The charitable sector needs to do a better job of explaining that overhead costs are essential for growth and sustainability —for things like equitable salaries, updated computer equipment, etc.— as part of being efficient with their use of donor dollars.”

Looking Ahead

Almost half of Canadians (46%) indicate that they are very likely to give in the next 12 months, while another one-third (34%) are somewhat likely to donate. However, 59% say they are also concerned about the economy, which may force them to reassess their giving plans.

A considerable number of Canadians (42%) proactively seek out information on the cause/charity and contact them to donate, while six in ten (58%) say the charity approaches them and they donate based on the information they receive. When looking for information on charities they support, Canadians continue to rely on online information (75%) as opposed to family, friends or colleagues (39%).

Social Media

The 2018 What Canadian Donors Want Survey also asked general questions about Canadians’ use of social media.

Similar to 2015, eight in 10 Canadians (81%) have a social media account. This applies across every age group, from 91% of Millennials through to 85% of Gen X’ers and 70% of Baby Boomers. Women (84%) are more likely than men (78%) to maintain at least one social media account.

Facebook dominates the Canadian social media landscape: three in four Canadians (75%) say they have a Facebook account, placing it well ahead of Twitter (29%), Instagram (28%), Reddit (5%) or other social media (13%).

Nearly two in ten Canadians on social media (18%) have donated to a charity in response to a request that came through their social media account. Millennials (23%) and Gen X Canadians (19%) are more likely than Baby Boomers (13%) to have made a charitable donation in response to a social media invitation or post.

“As generations age, we expect that email and social media will continue to become more prevalent in fundraising,” said Mary Bowyer, CFRE, member of the AFP Foundation for Philanthropy – Canada Research Committee. “For now, we’re seeing a blend of different approaches, and the most successful charities will be those who personalize their appeals based on what individual donors want, meaning a mix of mail, email, videos, Tweets and other communications.”

About the Survey

The 2018 What Canadian Donors Want Survey was based on a poll conducted between October 10 and October 17, 2017, on behalf of the AFP Foundation for Philanthropy – Canada. For this survey, a sample of 1,500 Canadians aged 18+ was interviewed. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe.

The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

The Association of Fundraising Professionals (AFP) is the largest international association of fundraising professionals in the world. AFP has over 33,000 members world-wide, with 3,800 in Canada. AFP promotes the importance and value of philanthropy, and enables people and organizations to practice ethical and effective fundraising. AFP Canada was formally created in 2017.

As the philanthropic arm of AFP, the AFP Foundation for Philanthropy – Canada supports many programs and services through its fundraising efforts. Fulfilling the promise of philanthropy by funding programs and services in the areas of research, diversity & inclusion, supporting the profession and leadership. To find out more, please visit www.afpnet.org.

Politics

Why Ontarians Continue Having Trouble Paying For Electricity

October 18, 2015 The Silo 22 Comments

[See Comments at the end of this article for updates Ed.] “All my pension goes to pay my electricity” – constituent. With Ontario boasting the highest energy prices in North America, quite honestly I don’t know how some people get by. When people bring their electricity bills into my office, it provides a line-by-line window on just how difficult it has become to pay the bills.

Recently I met with a couple who live in a modest 790 square foot house – they heat with one electric space heater, have been wearing heavy sweaters all winter and are doing absolutely everything they can to keep costs down. But their hydro bill for January was $641.67 — $233.89 of which was delivery charge. During the meeting I was told: “All my pension goes to pay my electricity.”

Nowadays if you can’t afford your electricity, in many cases, you don’t have the option of paying interest or getting caught up later – your service is simply shut off. To have service reconnected is often hundreds of dollars. If someone can’t afford their bills in the first place how will they ever be able to pay exorbitant fees for reconnection? Apart from closing down cheap coal generation, there are many reasons why hydro has skyrocketed.

For example, the Feed-in-Tariff (FIT) Program pays out massive subsidies for wind and solar contracts to produce power we don’t need. This continues to drive up the cost of electricity which rose by 26 per cent between 2008 and 2010 – projected to rise another 46 per cent by the end of this year. The FIT Program, with its overly-generous payments, will cost taxpayers $4.4 billion more than the previous Standard Offer Program. Wind generators operate at 28 per cent capacity and their output is out of phase with electricity demand during certain times of the day.

You can’t store electricity, so we pay the U.S. and Quebec to take the surplus power off our hands. We’ve paid them $1.8 billion over the past six years. Their industries use this cheap power to compete even harder with our manufacturers, and so the downward spiral continues.

If you’re a large user, look for the words ‘Global Adjustment’ on your hydro bill. Simply put, Global Adjustment covers the spread between market price and guaranteed price paid to generators, plus the cost of paying standby natural gas plants not to produce electricity, as well as paying for conservation programs. One North Bay manufacturer had a Global Adjustment — nonexistent on their 2009 hydro bills — of $1,700 on their electricity charge of $1,400 for that month. The Global Adjustment is expected to increase tenfold, from $700 million in 2006 to $8.1 billion in 2014. This will certainly cause more Ontario manufacturers to close up shop and move to cheaper locales.

Also, watch for the Smart Meter charges to hit home. The computer system cost $250 million, and the bill is now due.

Let’s not forget the cancellation of the Oakville power plant and cancelling, demolishing and relocating the Mississauga power plant. These cancellations were nothing more than political ‘seat savers’ for the last election and will cost taxpayers $1.1 billion.

In many ways the Green Energy Act put the desires of the renewable power industry ahead of the needs of people and Ontario businesses – a perfect formula for killing jobs and crippling consumers. For the Silo, MPP Toby Barrett

DID YOU KNOW?- Norfolk Power (and in fact all Ontario Municipal power companies to the best of our knowledge-CP) has a 13 days past due policy for Service Termination Proceedings. Even small “ma and pa” businesses provide 30 day terms and even 60-90day terms before sending out Collection Letters or Warning Letters. We contacted Norfolk Power and were told that “it’s standard policy- set by Ontario’s Energy Board”. Hmmm- that sounded like a standard “sub-standard” explanation to us, so a bit of research showed that the Ontario Energy Board is a self-regulated, internally filled board that sounds impartial but is anything but- in fact we were unable to determine exactly who or how board positions are filled, never a good sign for impartiality. If you decide to call them at 416 481 1967 be ready for one of the most confusing answering services you will ever find. Messages prompt you with a never ending supply of websites and telephone numbers- finally if you are persistent enough you will be asked to “press 9” to consent for your personal information to be gathered, recorded and used by the Ontario Energy Board- not exactly consumer friendly. I suppose you could always speak with one of the Public Information Officer but then they will refer you to media relations. You won’t be transferred (we were told they aren’t allowed to) so keep a document open and handy- 416 544 5171 and then the process begins again only this time you are immediately connected with an answering machine asking for your credentials. *sigh Fifteen minutes later from when we started our initial inquiry we realized we might as well be prospecting for dare we say it “oil”. [Update- Many Municipal aka “County” Hydro companies including Norfolk Power have sold their electricity services to Hydro One but have held onto their Water services. Ontarians will now receive a separate bill for Water and a separate bill for electricity. Perhaps more confusing, in Spring of 2015 Ontario announced that it would sell 15% of its Hydro One holdings in an IPO plan that will eventually sell off another 45% in order to raise money for debt repayment, transportation and infrastructure programs. Targeted buyers would be Canada’s largest pension plans. http://www.bloomberg.com/news/articles/2015-04-16/ontario-to-sell-15-of-hydro-one-one-of-biggest-ipos Ed. ]

If you have the brain power – take a look at this excerpt from the Energy Board’s website- listing (in broad terms) changes to Ontario’s energy act- which ultimately affects consumers in Ontario and their payment and use of energy:

1907-1959
The Natural Gas and Oil Wells Act marked the Province’s early concern for the proper management of its energy resources – a concern that evolved through the Natural Gas Act of 1918, the Natural Gas Conservation Act of 1921 and the Ontario Fuel Board Act of 1954.
1960-1998
The Ontario Energy Board Act, 1960 created the Ontario Energy Board (OEB) as a successor to the Ontario Fuel Board. The OEB was authorized to set just and reasonable rates for the sale and storage of gas and to make orders granting leave to construct pipelines for the transmission of oil or gas to expropriate land for oil or gas pipes.The Ontario Energy Act, 1964 clarified certain powers of the OEB and strengthened the sections dealing with gas storage. An amendment to this Act in 1965 set out the ground rules for the OEB in determining the rate base of gas utilities and giving the OEB power to make regulations prescribing a uniform system of accounts for gas companies.On June 7, 1973, the Premier announced the establishment of the Ministry of Energy which would include the OEB. Further amendments were made to the Ontario Energy Board Act which included provisions for the appointment of additional board members and making the OEB responsible for annual reviews of rate and rate-related matters of Ontario Hydro.In the late 1960s and early 1970s, the oil crisis developed in the Middle East, causing natural gas prices to soar. Ontario Hydro turned to nuclear generation and the public became conservation conscious. During that time, the Board decided on hundreds of natural gas applications and conducted major reviews of Ontario Hydro rates.
1998
The mandate of the Board changed significantly with the passage of the Energy Competition Act, 1998 (ECA) The ultimate goal of the ECA was the creation of a competitive market in the electricity and natural gas industries.To achieve the goal of creating a competitive market in the electricity industry, the former Ontario Hydro monopoly was replaced by several business entities including two distinct commercial companies, Ontario Power Generation (OPG) and Hydro One Inc., and one Crown corporation, the Independent Electricity Market Operator, now known as the Independent Electricity System Operator (IESO). OPG has taken responsibility for the generation of electricity while Hydro One owns and maintains transmission and distribution wires. The IESO manages the province’s electricity system and operates the wholesale electricity market. The OEB had varying degrees of regulatory authority over all three corporations as well as the province’s municipal electric utilities.The OEB became responsible for regulating local distribution companies and for ensuring that the distribution companies fulfill their obligations to connect and serve their customers. The OEB also became responsible for licensing certain participants in the market. The OEB regulated all market participants in the province’s natural gas and electricity industries and it provided advice on energy matters referred to it by the Minister of Energy and/or the Minister of Natural Resources.
2002
On May 1, 2002, Ontario’s new electricity market opened. The new market was the culmination of over five years of work by the electricity industry, government, the OEB, the IESO and many other market participants. The generation of electricity became a competitive activity, with electricity bought and sold on the new spot market at competitive prices. The IESO successfully began operating the wholesale market.Over the summer of 2002, record-high temperatures drove up the demand for electricity as well as the market price, which resulted in considerable consumer concern. In response, the government introduced the Electricity Pricing, Conservation and Supply Act, 2002. This legislation, which received Royal Assent on December 9, 2002, capped the price of electricity at 4.3 cents per kilowatt hour for residential, small-business and other designated low-volume consumers, effective May 1, 2002 to May 1, 2006. This legislation also provided refunds, retroactive to May 1, 2002, to compensate those consumers for any costs in excess of the 4.3-cent cap.All transmission and distribution rates were frozen at existing levels until at least May 1, 2006. Utilities were required to receive written approval from the Minister of Energy before any application for rate changes could be submitted to the OEB. This legislation also deemed any interim rate order to be final. In addition, the new legislation modified the OEB’s objectives in the areas of energy efficiency and conservation with respect to both natural gas and electricity from “facilitating” to “promoting.”
2003
Proclaimed on August 1, 2003, the Ontario Energy Board Consumer Protection and Governance Act, 2003, established the new OEB as a self-financing crown corporation and gave the OEB the opportunity to do its work more efficiently and effectively. In particular, the legislation provided for a management committee to manage the activities of the OEB. The legislation further enhanced the OEB’s role in protecting and educating energy consumers.In December 2003, the government introduced the Ontario Energy Board Amendment Act (Electricity Pricing), 2003, which put in place a new interim electricity pricing structure, replacing the 4.3 cent per kilowatt hour (kWh) price cap as of April 1, 2004. Under the interim structure, residential, low-volume and other designated consumers paid 4.7 cents per kWh for the first 750 kWh consumed per month, and 5.5 cents per kWh for consumption above that level.The Act called on the OEB to develop a new electricity pricing mechanism. It also charged the OEB with the responsibility to protect and renew Ontario’s electricity grid by ensuring reasonable charges for the delivery of electricity.The legislation also required the OEB to allow local distribution companies to recoup costs (called “regulatory assets”), the recovery of which had been put on hold in 2002 by the Electricity Pricing, Conservation and Supply Act, 2002. These recoveries would be spread over a four-year period so that they would have only a modest impact on the final price to consumers.
2004
In June 2004, the Government of Ontario proposed a restructuring of the province’s electricity sector in order to encourage new electricity supply, energy conservation and stable prices at a level reflecting the true cost of electricity.The Electricity Restructuring Act, 2004, received Royal Assent on December 9, 2004. The new legislation amended the Ontario Energy Board Act, 1998, and the Electricity Act, 1998.The OEB became responsible for developing a transparent mechanism for establishing electricity commodity prices for eligible consumers who have not signed contracts with electricity retailers. The Regulated Price Plan, which took effect May 1, 2005, replaced the interim two-tier pricing of 4.7 cents per kilowatt hour (¢/kWh) and 5.5 ¢/kWh hour that had been in place since April 2004.The OEB also assumed responsibility for the Market Surveillance Panel, previously the responsibility of the IESO.A new agency, the Ontario Power Authority (OPA), was established to ensure an adequate, reliable and secure supply of electricity in Ontario for the medium and long term. The OEB was given the duty of approving the OPA’s fees and its integrated power system plan and procurement process. The OEB is also responsible for licensing the OPA.
2009
The Green Energy and Green Economy Act, 2009 received Royal Assent on May 14, 2009. Among other things, the legislation amended the Ontario Energy Board Act, 1998 and the Electricity Act, 1998. It established important responsibilities for the OEB and other entities in achieving the objectives of conservation, promotion of renewable generation, and technological innovation through the smart grid.The OEB’s three new objectives are: The promotion of renewable energy, including the timely connection of renewable energy projects to transmission and distribution systems; The promotion of conservation and demand management; and The facilitation of the implementation of a smart grid. The OEB has an important role to play in ensuring the government’s objectives in the legislation are achieved. That includes ensuring that electricity distributors meet the requirements for renewable generation connection, smart grid implementation and conservation and demand management.
2010
In 2010, Ontario passed the Energy Consumer Protection Act, that would ensure Ontarians have the information they need about electricity contracts and bills, as well as the comfort of knowing they can rely on fair business practices. The new rules come into effect in January 2011.

Silo reader “Jack” sent us this scan of his hydro bill- over 500$ for two months of service for a small 2 Bedroom basement apartment. Notice that he was unable to pay his bill on time due to the fact that his bill accounted for almost 50% of his rent.