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Old Age Security Deferral – How it will impact you!

OAS/GIS in a NutshellRetirement Ahead Warning Sign

Canada’s old age security system, established in 1965 by the Liberal government of Lester Pearson, has very successfully minimized poverty amongst seniors.  It includes the Canada Pension Plan (CPP), the Old Age Security Pension (OAS) and the Guaranteed Income Supplement (GIS).

The full OAS monthly pension of $564 is payable to any Canadian aged 65 and over whose individual income at that time is less than $114,815 and who has lived in Canada for at least 40 years after age 18. Partial pensions are available to those with 10 to 40 years of residence in Canada.

GIS supplements OAS with up to $764 monthly for single low-income seniors (annual income < $17,088).  As well, younger spouses of OAS recipients may be eligible for $1,071 monthly Allowance on turning 60 provided their combined income is less than $31.854. Widowed Canadians may qualify at age 60 for a monthly Allowance of up to $1,199.

Together these benefits ensure that even the lowest-income single seniors have at least $15,938 annually on which to live in modest retirement, and couples have a minimum of  $25,694.

What has Changed

In April 2012, the Harper Conservatives introduced Bill C-38, a mammoth omnibus budget implementation which amended some 70 different pieces of legislation, thereby evading adequate Parliamentary scrutiny and public input.  One of those measures raised the eligibility ages for OAS, GIS and the Allowance by 24 months.

Impacts on You and Others

Older couple walking awayThe new eligibility rules are being phased in starting April 2023. Those born before April 1958 (currently 57 or older) are not affected. Those born from April 1958 to  January 1962, will lose between 1 and 24 benefit months. Everyone born after January 1962 will lose two full years. Few yet realize the degree to which those lost months will reduce their retirement resources.

Most single Canadians will lose $13,530 in OAS benefits and couples $27,000.  Those on low incomes who depend on the GIS will face a much worse hit: single seniors up to $32,000 and couples up to $51,000.  A Laval University study predicts that this will raise poverty rates in seniors between ages 65 and 67 from 6% to 17%, with women more heavily impacted.

A Phony Rationale

The Harper Government justified its decision to raise eligibility ages on the basis of rising life expectancies.  Then-Finance Minister Jim Flaherty stated in the House of Commons that the changes were necessary “action to ensure the sustainability of the old age security program”, choosing to ignore the Parliamentary Budget Officer’s analysis which showed the existing system to be already sustainable.

In his March 2015 Budget, Mr. Harper has himself put the lie to his Government’s rational for cutting back on old age security.  The long-term costs to the federal treasury of just two of his new tax breaks which primarily benefit the most affluent Canadians (family income splitting and doubling of TFSA contribution limits) are in the same ballpark as projected long-term savings from old age security changes.

This is fundamentally an issue of fairness and equity.  Mr. Harper has chosen to take billions of dollars every year, not just out of the pockets of middle-income seniors but even more from the least well-off and hence most vulnerable in our society.  And what is he doing with those savings?  He plans to transfer them to the most affluent!

Ironically, the very people who Mr. Harper will most penalize under the guise of coping with rising life expectancies do not fully share in that longevity (Statistics Canada health-adjusted life expectancy data show that at age 65, Canadians in the top 20% income category can look forward to 16.2 more years on average as opposed to those in the bottom 20% who can only expect 12.9 years).

By acting like a reverse Robin Hood, our current Prime Minister is choosing to seriously violate core Canadian values.

The Liberal Position

Justin at CARP AGM 2014-10-24The Liberal Party has taken a clear stand on this issue, which was best articulated by Justin Trudeau when he addressed the Canadian Association of Retired Persons (CARP) annual general meeting on October 24, 2014:  “As an immediate first step, a Liberal government led by me would restore the starting age for Old Age Security and the Guaranteed Income Supplement to 65.

What can Kingstonians Do?

When a government stops listening to its people, favours the wants of special interests over the needs of the majority, or strays from democratic principles, it’s time to replace them, which can only be done through the ballot box.  Under our system of parliamentary democracy, that requires enough like-minded eligible voters getting out to vote to defeat the Conservative candidate in more than half of Canada’s 338 ridings.

Here in Kingston and the Islands, that choice is Liberal candidate Mark Gerretsen.  To get involved, whether as a campaign volunteer or a donor, please visit www.markgerretsen.liberal.ca.

Perhaps the most important thing that you can do right now is to make a solemn vow to yourself to get out to vote in the federal election expected in October of this year, regardless of how busy you may be at the time.  Then identify five to ten people in your circle and ask them to make the same vow, including reaching out in turn to five or ten others.  Come Election Day, follow up with each of those contacts to confirm that they have indeed voted.  If some of them live in other ridings, you could well make a difference not just locally but nationally.

Finally, you can sign our Petition to Parliament on this issue, which will be open for signature until May 1, 2015.  Please click here to go to our petitions page.