OTTAWA – Making Canadians wait until age 67 to collect Old Age Security benefits would boost the cost of other support programs for low-income seniors and create a huge financial burden for provinces and municipalities, opposition parties said Wednesday.
Prime Minister Stephen Harper accused the opposition of “fear-mongering.”
But pension experts echoed some of the opposition concerns and at least one province joined the chorus.
Quebec Employment Minister Julie Boulet said such a move would have a negative impact on senior citizens and be a drain on the province’s coffers. She said the age hike would cost her province ”tens of millions of dollars” in welfare payments to low-income seniors between the ages of 65 and 67.
Parti Quebecois Leader Pauline Marois also lambasted Harper.
”You know very well that if he goes ahead with this it will have an impact on provincial budgets,” Marois said.
Harper sparked a raging debate over the OAS during a speech last week in Davos, Switzerland, when he said Canada’s public pension system needs a serious overhaul to remain financially sustainable as the population ages. Officials made it clear the government is targeting the OAS, the annual cost of which is expected to rise to $108 billion in 2030 from the current $41 billion.
While the government has offered no details, it is widely believed to be looking at boosting the age of eligibility by two years.
Interim Liberal leader Bob Rae said such a move would create a “domino effect” that the government does not appear to have considered.
He pointed out that eligibility for the Guaranteed Income Supplement, an income-tested top-up for low-income seniors, is tied to eligibility for the OAS. And qualifying for the GIS/OAS is tied to qualifying for provincial drug plans and other provincial and municipal support programs for seniors.
“He is not only dumping on the vulnerable senior citizens,” Rae told the House of Commons. “He is also dumping on the provinces, dumping on municipalities, creating a cascade of injustice because of a totally manufactured crisis on his side.”
Harper shrugged off the accusation, calling his assertions “nonsense” and “fear-mongering.” He reiterated that the change contemplated by the government will not apply to anyone currently close to or over the age of 65.
“What we are dealing with is people far off in the future who are very worried about their income security because they understand the pressures we are under,” the prime minister said.
“We are going to protect them as well.”
NDP finance critic Peter Julian questioned why the government can find $30 billion for new fighter jets and $19 billion for prisons but claims it can’t afford the maximum $540 monthly OAS payment to seniors.
“We do have an obligation to protect all Canadians, whether that be through our military so that we can protect against foreign invasions or, indeed, to protect their financial security,” Human Resources Minister Diane Finley responded, prompting guffaws from the opposition benches.
Julian later said Finley was “throwing Hail Mary passes up to defend financial decisions that are simply not supported by the Canadian people.”
Some pension experts were not so dismissive of opposition concerns.
Andrew Jackson, chief economist for the Canadian Labour Congress, said raising the age of eligibility for OAS to 67 from 65 would likely result in “a very significant increase” in poverty among seniors. And that, in turn, would increase the costs of social assistance, disability and drug programs for provincial governments.
Matthew Mendelsohn, director of the Mowat Centre think-tank, agreed.
“It certainly makes sense to have a real discussion about retirement ages and programs and generosity but stealth downloading of support from the federal government to provinces for low-income seniors … is going to put way more pressure on provincial governments that have real fiscal pressures and deficit challenges already,” Mendelsohn said in an interview.
Bob Baldwin, a pension consultant and former adviser to the Ontario Expert Commission on Pensions, said there are “certainly some knock-on effects that’ll have to be thought through.”
For instance, if the age of eligibility for the GIS were to rise in lock step with the OAS, he said that would boost social assistance costs for the provinces.
However, Baldwin pointed out that access to provincial support programs for seniors, many of which are currently triggered when an individual qualifies for GIS, would also be delayed for two years. That could offset some provincial costs, although with potentially devastating effects on the poorest seniors.
That said, Baldwin said it’s possible to de-link the GIS and OAS, allowing low-income seniors to continue collecting GIS benefits at 65, while waiting longer for OAS. Provincial support programs could similarly be de-linked.
“I don’t regard it as wrong-headed to ask a question about the age of eligibility for these benefits but I think that a lot of work is required to make sure you don’t do any more damage than necessary,” Baldwin said.
Both the NDP and Liberals are planning opposition motions to keep the debate over the OAS boiling in Parliament. They’re clearly hoping fierce public opposition will force Harper to back down – as two previous governments were forced to do.
Rae said more than 12,000 Canadians have already signed an online petition started by the Liberals, and his MPs have heard loud complaints from constituents.
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