Hyer on the Hill – Old Age Security Under Threat


Bruce Hyer MPTHUNDER BAY – Leader’s Ledger – You may have heard: the retirement security of Canadians is under threat. At the World Economic Forum in January, Stephen Harper called the future of Canada’s Old Age Security (OAS) program into question. OAS provides supplementary income to 98% of Canadians over the age of 65. The government has since said they are considering raising the age of eligibility for OAS from 65 to 67. The number of Canadians over 65 is expected to double by 2030, and the government has said they will not be able to afford the program unless changes are made.

As the baby boom generation starts to retire, Canada is facing a major shift in priorities. Healthcare and financial support for the elderly will soon become more expensive. But the government’s claim that we will face a financial crisis without a major OAS overhaul is exaggerated. Right now, Canada spends 2.4% of our gross domestic product (GDP) on OAS, a figure that will rise to 3.1% by 2030. While this is a substantial increase, it is by no means unsustainable (Italy, for example, spends 14% of their GDP on support for the elderly – that’s a real crisis!). While prudent steps need to be taken to lessen the impacts of these costs, drastic changes to OAS are not the answer.

Many low-income seniors depend on OAS to stay out of poverty. Canadians who have worked in lower-paying or lower-skilled jobs tend to depend more on OAS, in part because labour-intensive work is difficult to maintain in old age. For these people, access to a number of provincial support programs often depends on eligibility for OAS. What’s more, raising the age of eligibility to 67 will strain the provinces, either driving up the cost of welfare programs or simply leaving seniors without a social safety net. In sum, those who need OAS the most will be the ones that suffer from the government’s proposed change.

Many experts, including the government’s own Budget watchdog, have said that there is no crisis and we can afford to maintain OAS as-is. Our grey demographic shift is real, but it is only temporary. The costs of the program will peak in 2030 before coming back down by 2055. Spending priorities will indeed need to be shifted during that period, but Canada already spends less than other developed countries to support seniors, and an immigration policy centred on skilled workers will help to offset a shrinking workforce.

Raising the age of OAS eligibility is not the only option before us; many experts have suggested others. Some have proposed an ‘actuarial adjustment,’ meaning that seniors would have the choice to take their OAS at a lower rate at 65, or a higher rate at 67. Sweden, for example, coordinates their eligibility with life expectancy. Another solution could be to take back a greater sum of money from the highest income seniors, to ensure that every aging worker stays out of poverty.

In their 2007 budget, Stephen Harper committed to publish a report detailing how an aging population would impact our economy and social services. He has yet to fulfill that commitment. It’s important because the greying demographic shift will have far-reaching impacts that will be felt for generations. The government must do everything it can to ensure that the solutions they are proposing are in the best interest of Canadians. A decision like this on OAS can only be made with extensive consultation and research.

I welcome discussion about how we can better support our seniors, but to choose the best route forward we need to know the long-term consequences of any solution – especially for the poorest of us. Canadians who have worked their whole lives to support their families, and build Canada, deserve nothing less.

Bruce Hyer, MP

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