London seniors concerned with possible changes to Old Age pension plans

Worried Senior Couple

This article was published by the Londoner on February 8th 2012.  To see this article and other related articles on the Londoner website, please click here.

Last month in a speech at the World Economic Forum in Davos, Switzerland, Prime Minister Stephen Harper said that changes to Canada’s retirement income system would have to be part of his government’s efforts to ensure Canada’s prosperity into the future.

It was widely reported afterward that the government is looking to change the age of eligibility for OAS to 67 from 65 in order to keep the system sustainable into the future.

However those exact numbers are not certain, nor was it clear when such a change might kick in.

“On the poorer side of people receiving OAS security, that extra two years will be critical,” said Ken Marshall of the Canadian Association of Retired Persons, London. “I would rather see them adjust the clawbacks than take away from those who rely on old age security.”

His thoughts were echoed by London Fanshawe MP Irene Mathyssen, who happens to be the opposition critic for seniors’ issues.

“It’s going to be devastating to the poorest among seniors because they’re the ones who depend on the OAS,” Mathyssen said. “And that’s the only thing they can depend on because CPP is based on wages, years worked, etcetera. What we’re going to see is people struggling and not being able to enjoy any kind of lengthy retirement.”

Although the government has not made clear what sort of a timeline they might use to implement changes, Mathyssen said she doubted whether it would be long enough to shelter all those who fit into the category of ‘about to retire.’

Marshall agreed.

“I think a longer time period would certainly give people some time to adjust, to work longer or save differently or whatever the case may be,” he said. “On the other side of the coin, would the government want to wait 20 years before they see budget relief? I think it’s wishful thinking.”

Responding to concerns, London West MP Ed Holder said the question of how much time people will be given to adjust to OAS changes is a fair one that will ultimately be answered through the budget process.

“All seniors who are on OAS will not have their benefits changed,” Holder told the Londoner. “The government is going to determine what kind of a phase-in it will likely be, when it will be implemented and what the age will be.”

He said while he understands those near retirement might be concerned about the changes, modifications to the OAS program are ultimately necessary in order to keep the program sustainable.

“You’re ultimately going to have a whole lot more participants and a whole lot less taxpayers. And if you want to maintain the viability of OAS, then you’ve got to make sure it’s sustainable,” he said, adding the government expects the number of people over 65 to increase from 4.7 million to 9.3 million over the next 20 years. In that same period it expects the number of taxpayers per senior will fall from four to two.

“The decision to do nothing would mean OAS would ultimately become too expensive,” Holder said.

Mathyssen disputed that idea, saying the government’s own data show the cost of OAS will rise approximately one percentage point by 2030, from its current level of 2.4 per cent of GDP. She added that puts Canada “lightyears ahead of other countries” in Europe, where similar income security programs for seniors costs as much as 8 per cent of GDP.

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