UPDATE 1-Canada officials weigh pension reform

* Ministers considering how to reform pension system

* One idea is voluntary Canada Pension Plan contributions

OTTAWA Dec 18 (Reuters) - Federal and provincial ministers meeting on Friday focused on ways to help Canadians better prepare for retirement, but a report they commissioned concluded the retirement system was working quite well.

Pension reform was the main focus of a meeting in the Yukon capital of Whitehorse between Federal Finance Minister Jim Flaherty and his provincial and territorial counterparts.

The most prominent suggestion going into the meeting was to set up a system whereby Canadians could make voluntary extra contributions to the mandatory Canada Pension Plan.

The idea, being pushed by British Columbia and Alberta, aims to provide an additional channel for those who do not have private pension plans to boost their retirement benefits.

But a team of researchers, appointed by the federal Conservative government to assess the adequacy of Canadians' retirement incomes, said new plans were not necessarily the answer.

"The introduction of new savings instruments or the expansion of current plans may potentially have a limited impact on savings since many Canadians, especially at higher income levels, will substitute other assets for investments in new plans," said the report, released in Whitehorse on Friday.

The research team was headed by Jack Mintz, a prominent fiscal and tax policy specialist.

The report, which does not contain specific recommendations but is intended to provide background for policy makers, said Canadians were "doing relatively well in ensuring that they have adequate savings for their retirement."

However, it noted evidence that suggests some are not saving enough for their retirement and said more research was needed to identify which groups were underfunded and why.

Saskatchewan is already operating a voluntary supplemental plan on a provincial basis and the province is among those that have shown an interest in making it national.

Canada offers other other tax-sheltered savings options, notably registered retirement savings plans (RRSPs) and tax-free savings accounts, which are not being fully utilized.

A study by Royal Bank of Canada (RY.TO) released on Thursday said just 35 percent of Canadians planned to contribute to an RRSP for the current tax year.

The experts' report said that, contrary to conventional thinking, Canadians without registered pension plans are often better prepared because they have other assets such as homes or financial investments.

Advocates of the a supplementary CPP plan say it could attract people who want to save more for retirement but are not financially sophisticated don't feel comfortable managing their own retirement funds. It also might have lower fees.

But a supplemental CPP could displace RRSP savings and cut into the business of financial institutions.

The opposition Liberal Party came out last week in favor of the Supplementary Canada Pension Plan. Flaherty says all options are on the table but he has not taken a position.

A secondary concept the ministers may consider is whether anything should be done to protect the pensions of companies that go bankrupt, such as Nortel Networks Corp (NRTLQ.PK).

Some opposition politicians advocate putting workers' pension funds at the head of the line of creditors when a company goes bankrupt. The idea may have public appeal, but Flaherty has said that such a plan may make it difficult for a distressed company to attract fresh credit because it could go straight into pensions.

The finance ministers were not expected to reach a final decision on Friday on how to proceed on the idea of pension reform. (Reporting by Randall Palmer and Louise Egan; editing by Rob Wilson)