As Canada's economy grew over the 1950s and early 1960s, the question of the purpose of national pensions became an important political issue. In 1951, the principle of universality was considered to be the most important aspect of the new Old Age Security program. The means test that had been part of the 1927 Old Age Pension program was seen as humiliating, and in response, in 1951 Old Age Security was made available to everyone at age 70. Despite this important change, Old Age Security continued to be considered only a supplement to what people saved for their retirement, since the maximum payments remained the same as the maximum Old Age Pension payments. By the late 1950s, however, the influential Beveridge Report of 1942 (which called for a comprehensive system of social security that would ultimately end all poverty) remained very popular. More and more people began to call for a new public pension program that would no longer be merely supplemental, but that would provide people with an income on which they could live.
In 1957, the monthly Old Age Security benefits increased twice, in July and November. Benefits rose in July from $40 to $46 per month ($6 represented an increase of 15 per cent which, applied today, would translate to an increase of approximately $53). The first increase, under the Liberal government of Louis St-Laurent, was an attempt to win votes during the June 1957 election campaign. This was characterized as a political blunder. The mocking terms "six-buck boys" and "six-buck Harris" (referring to W.E. Harris, Finance Minister from July 1, 1954 to June 21, 1957) were used by the Conservatives, who went on to win the election. The newly elected Conservative government led by Prime Minister John Diefenbaker further raised Old Age Security benefits, this time in November, by $9 to $55 per month.
Because a number of politicians had argued, throughout the early 1950s, that the American Social Security Act provided a good example for Canada to follow, the government commissioned Dr. Robert M. Clark, an economics professor at the University of British Columbia, to conduct a study of the American system. The study suggested that such a system would not in fact work in Canada because of demographic and economic differences between the two countries. Nonetheless, Clark praised the United States' inclusion of disability and survivor benefits, and this led Diefenbaker's government to make these benefits a part of its reform proposals. In addition, an income tax exemption was introduced for self-employed people who put money aside for retirement in the form of contributions to a Registered Retirement Savings Plan.
By the end of the Conservative government's term, all the other political parties had developed proposals for a national, contributory pension system. Thus in early 1963, when the Liberal party returned to power under Prime Minister Lester B. Pearson, pensions had become such a prominent issue that the new government introduced a plan for a contributory program within a few months. For the next two years, the issue was studied by a Senate committee led by Senator David Croll, and was discussed between federal Minister of Health and Welfare Judy LaMarsh and the provincial governments, among the various political parties, and in public consultations. As these talks continued, Old Age Security, Disability and Blind Persons' payments were increased in response to pressure from the public and various Members of Parliament, in particular Cooperative Commonwealth Federation MP Stanley Knowles.
A breakthrough in the talks came in April 1964. In March of that year, Premier Jean Lesage of Quebec had announced that his government intended to introduce a provincial contributory pension plan that was more comprehensive than the federal plan, including disability and survivor benefits, larger benefits for everyone involved, and more funding from the provincial government. This was the first time a provincial government sought to take on added responsibility in the field of social security, and it therefore came as a surprise to the federal government as well as the other provinces. Moreover, the more comprehensive nature of Lesage's plan made it attractive. This move by Lesage is considered to be one of the first initiatives of Quebec's Quiet Revolution.
After days of negotiation, it was agreed that Quebec would have a Quebec Pension Plan that would be closely coordinated with the Canada Pension Plan. This arrangement was possible because the 1951 Constitutional amendment gave the federal government the right to provide old age pensions and, through the paramountcy clause, had preserved the jurisdiction of the provinces in this area.
Once this was resolved, the provinces agreed to allow another Constitutional amendment so that the Canada Pension Plan could extend beyond the federal government's existing powers to legislate only old age coverage. Now, the Plan could include people with disabilities and survivors of Plan contributors regardless of age. Section 94A of the British North American Act, which was added in 1951 to enable the federal government to introduce Old Age Security, was amended to this effect.
Another important aspect of the federal-provincial agreement on the Canada Pension Plan was the defining of its amendment process. Two-thirds of the "included" provinces must agree on changes to the Plan, and these provinces must contain two-thirds of Canada's total population. An opted-out province such as Quebec would be considered "included" for this purpose so long as it had an agreement with the federal government to cover workers in its territory who would otherwise be subject to the Plan (such as bank and railway workers).
The Canada Pension Plan and Quebec Pension Plan finally came into effect in 1966. A Guaranteed Income Supplement followed in 1967 to help seniors and near-seniors who would not be able to benefit fully, if at all, from the Canada Pension Plan or Quebec Pension Plan and who had little or no income beyond Old Age Security.