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

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This article was published by the Huffington Post on February 3rd 2012.  To see this article and other related articles on the Huffington Post website, please click here.

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 Huffington post