Canada's system of managing social insurance numbers (SINs) is vulnerable to fraud, misuse and overpayment, costing Canadians between $377 million and $2.4 billion annually, according to a new report by thinktank The Fraser Institute.

The report urged the government to review and reform the current SIN management system, citing the fact that there are more SINs than actual Canadians.

"Our social insurance numbers have become the backbone of virtually every federal income support program," said Fraser Institute senior research economist Niels Veldhuis in a statement. "Yet past reports by the Auditor General show there are 2.4 million more social numbers than actual Canadians."

The report noted that income support programs linked to social insurance numbers such as Canada Pension Plan, Old Age Security and Employment Insurance represented more than one-fifth of all government spending in 2005-06, at $117.9 billion.

Mr. Veldhuis said the biggest concern may be the significant discrepancy between the actual Canadian population and the number of usable and non-dormant SINs.

"Why are there more SINs that people? What is happening with those SINs? Are they being used, and if so, for what?" Mr. Veldhuis remarked. "The government doesn't know and that invariably means more tax dollars are disappearing without accountability."

The report said the government could lose between 0.32 per cent and two per cent of spending on SIN-linked programs as a result of this problem, which it added was a conservative estimate "since they rely on estimates from the Auditor General which are almost exclusively estimates of overpayments and do not necessarily include estimates for fraud."