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Hands Off OAS: Pension Changes Make Canadians Work Poorer, Not Longer

Posted: 02/ 3/2012 11:57 am

The Prime Minister should calm fears that a major pillar of our social safety net will be attacked. His announcement in Davos that he's looking for savings that will make our retirement system sustainable has sparked panic that the government might raise the age of eligibility for Old Age Security from 65 to 67. It is a surprising turn of events since they recognized the plight of Canada's poorest seniors with the Guaranteed Income Supplement top-up in the recent election.

He could have added a few words to deny that he's planning to raise the OAS age but he hasn't. In fact, Finance Minister Jim Flaherty just refused to back away from reforming the retirement security program.

His surrogates have filled the gap with apocalyptic visions of aging boomers in their retirement nests with their maws gaping wide for public largesse. The latest is Margaret Wente's attack on CARP and aging boomers generally.

Perhaps they recall how we all sat around waiting for our parents to fill our world with their industry. Boomers have done just that for their children while paying the lion's share of taxes to fund schools, universities, hospitals and yes, nursing homes. So to expect some modest income support as they approach retirement is not a lot to ask.

If all this is about sustainability, let's talk dollars and sense. There are other places to find the money. From our rough calculations, raising the eligibility age will save $2 or 3 billion a year. Withdrawing from Afghanistan is estimated to save $1 to 2 billion a year. Revamping the health care system by bringing in pharmacare, diverting demand by providing continuing care at home and decent palliative care could save tens of billions of dollars a year. That's why not renegotiating the Health Accord was a missed opportunity -- not because the province didn't get the fight they wanted.

Rest assured, no one is going to quit working just because they will now get about $600 a month. But this will be very meaningful for those now living on less and even for those working for low wages especially since access to GIS is tied to receiving OAS. Provincial support programs, including drug coverage, are dependent on GIS or OAS eligibility. Raising the OAS age will target those least capable of doing without it.

If Canadians must erode the OAS just because the Europeans are trying to dig themselves out of penury -- not a great reason but why else announce this in Davos -- then there are better ways. OAS used to be universal but is now clawed back at around $67,000 of income. Reducing the clawback threshold is an option that would leave the less well-off alone. Since CARP's message is to get the savings elsewhere, we'll let the government propose that solution.

They might want to first consult Brian Mulroney who brought in the claw back in 1989 and resigned in 1993 as one of the most unpopular prime ministers since opinion polling began. Maybe it was the GST -- or the clawback -- I'm just saying.

It's no solace to say that OAS changes will take effect years from now. Even people in their 30s don't want us to let the social safety net get torn up on our watch. Besides, any change is more likely to take effect sooner. What government is so altruistic as to shoulder the political price for a measure that pays off several election cycles in the future?

And a final thank you to Ms. Wente, for reminding readers that CARP is a membership organization and depends on their support to make our voice heard when governments attack our collective sense of well-being. Our phones have been ringing off the hook and the online sign-up page is crashing. But keep trying!

 
The Prime Minister should calm fears that a major pillar of our social safety net will be attacked. His announcement in Davos that he's looking for savings that will make our retirement system sustain...
The Prime Minister should calm fears that a major pillar of our social safety net will be attacked. His announcement in Davos that he's looking for savings that will make our retirement system sustain...
 
 
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Egotism is a weakness
11:55 PM on 02/04/2012
A sort of interesting parallel to draw when the Eurozone is in utter ruins and the public are clinging to what's left of the social safety net, and even then there's no stomach for what is going on. In the end everything becomes sacred and untouchable.

Under the real threat of global economic collapse with the next 5-10 years, I think the least of everyone's worries will be having to work two more years to get access to pensions.

In three years we'll see how the world is doing. If everything is falling around us then well the changes done today may end up being the steps towards the direction of keeping the government solvent. If everything miraculously turns around, and everything is great again; well the Conservatives will be voted out and whoever is voted in will simply change things back. That's just how politics tends to go.

Sides, as the average life span of Canadians continues to edge up year after year; the more seriously we'll have to look at pensions as time goes on. Eventually pensions will kick in at 'middle-age' instead of the 'golden' year when people start living on average over 100 years.
07:37 AM on 02/08/2012
The problems of the eurozone are not caused by the safety net, they are caused by the lack of a lender of last resort for the countries which causes a risk of runs on any one of those countries, and one of these countries already has been caught in such a run. When subject to such a feeding frenzy, the debts skyrocket as interest rates skyrocket, whilst a country like Japan with a lender of last resort has a 250% debt to GDP ratio with 10 year bonds going at 1%. The logic of refusing to have a lender of last resort for countries is this idea that a lack of a safety net causes discipline, which in a market economy means essentially a low growth deflationary situation that causes more poverty. However, the private banks DO have a lender of last resort. A most perverse situation where private for profit banks outrank the countries in the EU.
07:23 PM on 02/04/2012
This will quickly lead to the last term of a Conservative government no one in this country believes its a requirement he has to scare us way more and drop funding to all education levels if he is hopeing to establish a solid Republican North party.
11:06 PM on 02/03/2012
How true.

If you could only hear my sigh of relief upon reading this article!

Thank you for your views and the contents of this story.
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TonyOnly
Truth matters.
08:54 PM on 02/03/2012
The CPP and OAS are two different things. The Canada Pension Plan is fully funded by payroll contributions from employees and employers. There's no sustainability issue with the CPP. It will continue to start at age 65 and it amounts to about $600. per person.

Old Age Security or Old Age Supplement, as it's commonly known in Canada, is the supplemental part of the pension plan designed for people with little or no income aside from the CPP. It can be up to about $550. a month. It's supposed to provide those seniors with a more manageable income. It's only source of funding is from general taxation. This OAS is what the Harper government is talking about postponing the age eligibilty for.

The Guaranteed Income Supplement, which Flaherty promised 300 million in funding for, would provide a small increase for seniors collecting the full amount of the OAS. In other words, only the poorest of the poor seniors would be eligible to collect the full amount of the OAS and GIS.

If the Harper government raises the age of eligibilty for the OAS to 67, the only income many of these people will have from age 65 to 67 is the basic $600. per month CPP. A few provinces have their own small pensions. But most people would still have an income level many thousands of dollars below the poverty line.

Harper is going after the poorest of seniors while giving away tens of billions in corporate tax cuts.
08:42 PM on 02/03/2012
What about all that money that Governments of all Stipes have wasted , somehow lost and gave
padded contracts to those special friends. ???

How about Cutting MP's pensions. to $ 30,000 per year with the same benefits as Government workers ??? How about MP's must be in office for at leat 25 years before they can collect a
pension ???

I think 6 years to collect those MP's pensions is an insult to the Canadian People !
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TonyOnly
Truth matters.
07:22 PM on 02/03/2012
As mentioned in the article, in the first budget of Harper's majority, Flaherty promised 300 million dollar in funding for a Guaranteed Income Supplement for Canada's poorest seniors on the Canada Pension Plan. Which isn't even enough to keep them in line with cost of living increases.

But now, less than 6 months later, Harper announced they plan to raise the age of OAS eligibilit­­y. So the people who need the benefit will more than pay for the increase in funding by having 2 years less of eligibilty­­.

Who do the Harpercrit­es think they're fooling?