No. Of course not. Even if the government waves around scary large increases in nominal dollar terms.
As has been widely reported, the most recent OAS actuarial report shows that total program expenditures will rise from $38.8 billion in 2011 to $107.9 billion in 2030. However, the dollar figure reflects, not just an increase in the number of OAS beneficiaries (from 4.9 million to 9.3 million), but also inflation. And the economy will grow over the same period. ...Read more
Canadian Press have put out a story based on a research paper by Richard Shillington which was commissioned by HRSDC from Informetrica, and obtained by the CLC through an Access to Information request.
Receiving OAS is required to makes seniors eligible for the GIS top up, which provides one in three seniors with a supplement which ensures they have a minimally adequate income in old age.
Raising the retirement age from age 65 to age 67 or higher would impact all future seniors, but would especially impact those who would qualify for the GIS supplement. Many older workers, especially the single, near elderly, already face very high rates of poverty. ...Read more
Since the announcement that his government was considering raising the eligibility age for Old Age Security (OAS), Stephen Harper has backed off slightly, assuring the public that such reforms are years away. Nevertheless, media and experts of all kinds have fired into gear, speculating on the possible motivations for OAS reform, and exploring its potential implications.
One question that hasn’t received much attention – yet – is the impact of a higher eligibility age on the job prospects and economic well-being of younger workers just entering the labour force. In other words, we’ve yet to see much discussion of the intergenerational consequences and character of OAS and related social security reforms. ...Read more
Tags: Employment and Labour·Pensions·Youth
To reprise a now topical earlier blog, hiking the age of eligibility for OAS will have the biggest impact by far on future seniors who are in low income. Many if not most of this group are unable to work due to disability or ill health.
If the age of eligibility for OAS and GIS is raised, low income seniors on social assistance will see the transition from deep poverty to a bare bones income on GIS postponed accordingly.
And those working but in low income will lose a hefty portion of the OAS/GIS benefits that would otherwise have been paid to them. ...Read more
Raising the age of eligibility for Old Age Security/Guaranteed Income Supplement (OAS/GIS) benefits is the worst possible way to deal with the retirement income security crisis facing Canadians.
Experts such as former Assistant Chief Statistician Michael Wolfson project that one half of all middle income baby boomers face a severe cut to their living standards in old age. This is due to falling employer pension coverage (down to 25% in the private sector), rising household debt combined with low savings, and the big hit to “fend for yourself” RRSPs which comes from high fees and low investment returns. ...Read more
Canada’s population, we are frequently told, is rapidly aging. The big baby boomer cohort is headed out of the workforce, meaning that we face a future of very slow labour force growth and even possible shortages of workers. CIBC Economics has just gone so far as to argue that the Bank of Canada can afford to be more relaxed about unemployment due to demographic changes which will lower the demand for jobs.
Canada’s rate of labour force growth will indeed be slowing. Everybody gets one year older with every year that passes, and the large baby boom generation will indeed stop working some day. We do already see some shortages of workers with specific skill sets in specific areas of the country. ...Read more
Tags: Employment and Labour·Pensions·Unemployment
Amidst the plethora of media reports on “payroll tax” increases for 2012, there was little mention of increases in benefits.
For example, the Toronto Sun, cued by the Canadian Taxpayers Federation, reported:
If you feel a hand grabbing at your wallet next week, calling the cops won’t do any good because it’s the federal government picking your pocket.
It’s that time of year again when tax collectors at the Canada Revenue Agency, at the behest of their political masters, siphon more from the pay stubs of Canadians while giving corporations a New Year’s bonus. ...Read more
Following up on my post on wealth and income of the top 1%, Eric Pineault wrote to add some data on financial wealth distribution for Canada. He had a research assistant comb through microdata from Statcan’s Survey of Financial Security from 2005, and notes: “the 1% richest (all households are classed according to net worth rather then income) hold 22% of mutual fund assets, 27% of stocks and bonds, 9% of RRSP’s. You’ll notice that rights on pension funds are the most democratically distributed form of financial asset.” ...Read more
Tags: Economy & Economic Indicators·Occupy Canada·Pensions·Poverty and Income Inequality
When it comes to the Canada Pension Plan, a major talking point from the right is that the CPP has “unfunded liabilities”, with the implication that is not affordable and financially unsustainable. This is nonsense, a scare tactic based on an accounting fiction that counts only future expenditures but does not count future revenues.
For example, John Robson writes in the Ottawa Sun just the other day:
An even bigger reason for worry [about Canada's debt] is soft unfunded liabilities for things such as the Canada Pension Plan and the Canada Health Act. In 2006 the Chief Actuary of Canada formally estimated the unfunded liabilities of the CPP at $620 billion. ...Read more
Tags: Federal Budget·Pensions
Barrie McKenna’s appraisal of party positions in the Globe today wrongly assumes that the NDP proposal to double CPP benefits would require a doubling of CPP premiums.
The current combined employee/employer premium rate of just under 10% of covered earnings was set a few years back to make up for a prior period of under funding when CPP operated on a pure PAYGO basis.
The Chief Actuary in the most recent report pegs the go forward rate needed to finance the program at under 6% of covered earnings, much less than the current premium. The go forward rate is theincrease that would be needed to double the CPP benefit moving forward on a fully pre funded basis, as is required by current legislation. ...Read more