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Costs, Savings Incentives and OAS/GIS


  • Keith Horner


An aging population will raise the cost of Canada's Old Age Security/Guaranteed Income Supplement (OAS/ GIS) programs. If the benefit levels under OAS and GIS were increased in line with wages to maintain their antipoverty effectiveness, the program cost would double by 2030 as a percentage of the gross domestic product. With this scenario as a base, we employ a life-cycle model to explore the effect of program design changes on the cost of benefits, taking into account the interaction between OAS/GIS benefits and private retirement saving. One finding is that, despite savings responses, raising--not lowering--the 50 percent benefit-reduction rate under the GIS would reduce program costs.

Suggested Citation

  • Keith Horner, 2008. "Costs, Savings Incentives and OAS/GIS," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 119-136, November.
  • Handle: RePEc:cpp:issued:v:34:y:2008:i:s1:p:119-136

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    References listed on IDEAS

    1. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2006. "Are Americans Saving "Optimally" for Retirement?," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 607-643, August.
    2. Michael J. Daly, 1981. "The Role of Registered Retirement Savings Plans in a Life-Cycle Model," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 409-421, August.
    3. Engen, Eric & Gale, William & Uccello, Cori, 1999. "The Adequacy of Household Saving," MPRA Paper 56442, University Library of Munich, Germany.
    4. Jeremy Lise, "undated". "Is Canada’s Retirement Income System Working?," Working Papers-Department of Finance Canada 2003-02, Department of Finance Canada.
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