Public Pension Reform and the 49th Parallel: Lessons from Canada for the U.S.

Financial Markets, Inst & Inst. 2020;29:121-162.

54 Pages Posted: 9 Jul 2020 Last revised: 13 Oct 2020

See all articles by Clive Lipshitz

Clive Lipshitz

Tradewind Interstate Advisors

Ingo Walter

New York University - Leonard N. Stern School of Business; New York University (NYU) - Department of Finance

Date Written: July 8, 2020


Public employee pension systems around the world show remarkable diversity in design and execution. Among these, the U.S. defined benefit public pension system has drawn increased attention because of questions about the long-term sustainability of many of the underlying pension funds – as well as concerns of equity between pension plan members, retirees, taxpayers, bondholders, and users of public services. The Covid-19 pandemic introduced new fissures in state and local government finances, heightening the need to bolster long-term public pension fund robustness. As an alternative model, the Canadian public pension system is widely respected. This was not foreordained. The authors trace difficult decisions undertaken in Canada in the 1980s and 1990s along with essential descriptive features of the Canadian Model. Using a novel primary dataset, the authors benchmark the 25 largest U.S. plans against their ten largest Canadian peers, exploring key issues in a paired analysis. The authors extract fundamental lessons from the Canadian experience, proposing a roadmap for reform of the U.S. public pension system. They argue that long-term pension sustainability, once politically prioritized, most be built on equity and discipline in plan design, funding, and amortization of existing deficits. They emphasize the importance of legal framework, particularly joint sponsorship, alongside enhanced governance and unified legislation. They also draw lessons from the Canadian experience with respect to enhanced investment organizations and investment strategies.

Keywords: Public pension funds, Public finance, Municipal finance, State and local government debt, Retirement security, Comparative government retirement systems, Pension reform, Canadian pension system, Canadian Model, Institutional investors, Paired analysis

JEL Classification: G23, H7, J38, J45

Suggested Citation

Lipshitz, Clive and Walter, Ingo, Public Pension Reform and the 49th Parallel: Lessons from Canada for the U.S. (July 8, 2020). Financial Markets, Inst & Inst. 2020;29:121-162., Available at SSRN: or

Clive Lipshitz (Contact Author)

Tradewind Interstate Advisors ( email )

2013961709 (Phone)

Ingo Walter

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY 10012
United States
212-998-0707 (Phone)
212-995-4220 (Fax)

New York University (NYU) - Department of Finance

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics