OAS a growing concern

Andrew
Andrew Robinson
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Talk of change to old age pensions rings alarm bells

Lana Payne — File photo

Although how it will take shape is uncertain, already critics are raising concerns about how eligibility for Old Age Security (OAS) in Canada may soon change.

It has been widely speculated the Harper government is looking to raise the age of eligibility for OAS from 65 to 67.

In a speech last week at an economic forum in Switzerland, Prime Minister Stephen Harper mentioned changes he intends to introduce, including ones to unfunded retirement programs.

Government House leader Peter Van Loan later said OAS needs to remain “sustainable in the medium and long-term” in an interview with The Canadian Press.

According to the 10th OAS Actuarial Report, the number of OAS beneficiaries in Canada is expected to double from 2010 (4.7 million) to 2030 (9.3 million). Over that same time frame, total OAS and Guaranteed Income Supplement payouts will jump from $35.8 billion to $107.7 billion.

However, any potential change is only under review at this point, according to a spokeswoman for the office of Minister of Human Resources and Skills Development Diane Finlay.

“Clearly, inaction is not an option,” said Alyson Queen. “There are a number of things to review, and right now our focus is to ensure Canadians understand the situation we face as a country when it comes to demographics and when it comes to programs, like OAS, that are 100 per cent funded by taxes.”

Unlike the Canada Pension Plan (CPP), which is covered by a portion of the wages of Canadian workers, OAS is supported entirely by taxes. Newfoundland and Labrador Federation of Labour president Lana Payne suggests that may need to change.

“The labour movement has said we’re going to have somewhat of a pension crisis if we don’t deal with some of this, but certainly raising the age by which Canadians would be eligible for OAS and GIS (General Income Supplement) is not the way to solve what is basically a problem of saving that we have in the country.”

Her main concern regarding potential OAS eligibility changes is how it might effect seniors living on the edge of poverty.

“All we will do is penalize low income seniors or low income workers throughout their lifetime, because they’re really the ones who are not able to save.”

Payne would propose enhancing the CPP by requiring employees to divert more of their earnings towards it. She also made note of the fact the percentage of gross domestic product devoted to OAS and GIS expenditures in the years to come is projected to rise by less than a percentage point.

Numbers from the 10th OAS Actuarial Report back her claim. The expenditures as a percentage of GDP for 2011 is 2.4 per cent. That figure is projected to jump to 3.2 per cent in 2030 before dipping below three per cent in subsequent decades — 2.9 in 2040, 2.6 in 2050, and 2.4 in 2060.

“It’s not a huge jump when you consider other things are going to grow a lot more,” she said. “I think there’s an attempt here to create fear that we have to absolutely do this because the Europeans are doing this.”

Payne said middle income earners could also feel a pinch. According to Payne, 63 per cent of all workers in the country do not have a company pension plan.

The issue of possible OAS changes has been the hot topic for phone calls St. John’s South-Mount Pearl MP Ryan Cleary fielded over the weekend.

“There’s this whole, for lack of a better word, panic,” said the NDP MP. “People are thinking, ‘What is happening here? Can these changes be made this quick? Will we have a say?’”

Cleary said a debate on OAS needs to happen. Bonavista-Gander-Grand Falls-Windsor Liberal MP Scott Simms is of the same mind.

“I think it’s the biggest issue in my riding,” said Simms, going on to note central Newfoundland has an aging population base. “If they’re going to starting raising the age of eligibility for OAS, you’re going to start seeing a bigger demand for welfare services and obviously loans, seniors residences, long-term care, and other things.”

Payne is surprised the issues did not come up in the last federal election and suspects some voters may have cast their ballots differently had they known the Conservatives intended to introduce substantial changes to OAS.

Queen said the federal government has no specific timeline for introducing changes to OAS. As for whether it may prove difficult to sell the public on a plan that may force them to wait longer for OAS, Queen said they need to understand the realities at play.

“To ensure tomorrow that seniors continue to receive their benefits, it’s important that we take action today so that the program reflects both our fiscal and demographic realities.”

arobinson@thetelegram.com

Twitter: TeleAndrew

Organizations: Old Age Security, Canadian Press.According, Newfoundland and Labrador Federation of Labour

Geographic location: Canada, Switzerland, Government House Newfoundland

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Recent comments

  • sukhminder S Sarang
    December 06, 2013 - 00:44

    40 years wait to get full OAS is a very long period in this fast world.It should be reduced to 20 years to recieve full OAS benefits.It is very less and too late which causes poverty among seniors.

  • Tin
    January 31, 2012 - 14:33

    This is why no party would touch it until now...irrational public. The public does not understand these programs and doesn't get that everyone on OAS/GIS is not poor or needs it. The OAS act is full of holes which allows millionaires & people who have multiple homes or reside outside the country to receive $1300/month. It also for su=ome stupid reason allows certain people to retire at 60 while others have to work until 65. Calm down. There is no doubt these changes will have no effect on the poor but will hopefully go after those who really don't need OAS/ GIS. Worst case scenario they will raise retirement to 67...I hope they don't do this because I don't think it is fair . It also won't change the boomer problem...just drag it out. It needs to be fixed and you people need to calm down and let them do what should have been done long ago....Cut off the scammers and the welathy and the non-residents.

  • MBC
    January 31, 2012 - 10:28

    What kind of government are you when you apply costs-benefits analysis to senior citizen programs???? if we need additional funds to help seniors pay for basic needs such as heat & light, food and medications, then raise my taxes by 1%. Better still find ways to cut government waste which would be in the billions!

  • MVGQuebev
    January 31, 2012 - 09:12

    The middle class Canadians work and pay their Taxes and Dues as honest citizens. The minimum you deserve when you reach the retirement is the basic Medical care and sufficient support to be above the poverty line. According to calculations, even people working above the age of 70 will have not enough funds to support their basic needs and the support you count on after the long period of payment is vanishing. I suggest that the Federal and Provincial Governments reduce the Tax burden of middle class citizens by 10% points and let them look after themselves, as there is no medical support in time with the present system nor there is any pension support you can count on. The elected officials enjoy their public pension at the cost of us and renovate their offices at the time of dire needs of the population, why make Russian Putin as mockery our system is not much different. I wish the present Govt. will reconsider their options and will not leave the seniors to go hungry and begging. We have 4 more years to go for the next election. We voted this people to the Govt. after the previous one made a reserve of our Tax dollars, this one is starting to do the same frenzy. Don't forget we will be there and united if you do harm to us we will get rid of you!!!!

  • Randy
    January 31, 2012 - 08:28

    It's programs like OAS ,that sets this country apart from others. Harper had no mandate to do what he is doing.Why didn't he bring this out during the election? Because he is gutless,that's why he announced this overseas,and not in this country. This man is dangerous,and we in our 40s 50s 60s will remenber

  • Concerned Senior
    January 31, 2012 - 08:13

    It's very obvious, the Feds (Conservatives) don't have their priorties straight, and are causing grave concern for this country. First of all, why are they giving tax breaks to the wealthy businesses and attacking the seniors on OAS? Pretty small, isn't it? Furthermore, if this country is so bad in debt, why are they supporting foreign aid so much? Is this getting to be, or already is, a communist country, I am beginng to think so. Our founding fathers, Sir John A. MacDonald for one, would not even think of the like, putting hardship on its own people. I was trying to think of Stephen Harper as being a fair Prime Minister, but this tactic gets my goat! He doesn't even realize where he came from, none-the-less of where he is going! He's steadily taking this country in the wrong direction! Never mind what other countries are doing, we are a rich nation with lots of resources, and to leave our seniors out in the cold is one thing that's not befitting of true Canadians. The Feds in power should get a life, and continue to let the seniors have one! That's my take, and lets see the next election!!!!!!

  • toon
    January 31, 2012 - 06:52

    Wouldn't it make more sense to change elligability for OAS and make it dependent on income. Many Canadians (many who are in (early) retirement now) do not need this extra income.

    • Wilfred Currie
      January 31, 2012 - 09:15

      Good-Bye Harper

    • Marty
      January 31, 2012 - 11:16

      Before they start cutting benefits/increasing eligibility age, a good ide would be to change who receives OAS. There is a segment of the ccanadian population who are wealthy and certainly don't depend on theimonthly OAS cheque to keep a roof over their heads and food on the table.