Is CARP’s “Hands off OAS” campaign starting to take root?

This article was published on the Financial Post website on February 21st 2012.  To see this article and other related articles on the Financial Post website, please click here.

Judging by the muted remarks about Old Age Security made by Minister of Human Resources Diane Finley Tuesday, the Conservative government is starting to tread very carefully about phasing in changes to the OAS program.

As colleague Scott Stinson reported here this afternoon, Finley said little that hasn’t been said before but emphasized that “today’s seniors will not be affected.”

The thrust of the talk to the Canadian Club in Toronto was that long-documented demographic pressures (falling fertility and aging population) are putting pressure on the retirement system. But now we have the minister’s personal assurance there will be no changes for seniors already collecting OAS (and thus the GIS). She added there won’t be any impacts for anyone “close to retirement,” although it’s not yet clear how close “close” is.

Is 57 “close” to retirement?

I was out of the country last week when the latest round of OAS blowback occurred but was informed by a concerned friend that “close” to retirement means being older than 57, based on various media reports. As Morneau Shepell chief actuary Fred Vettese wrote in our Saturday paper — here — with respect to raising OAS eligibility to 67,  “We have already been assured it won’t happen at least until 2020, so it will not affect Canadians over 57.”

We won’t know for sure until next month’s federal budget but odds are anyone still in their 50s will at worst experience only a slight impact if OAS is  gradually hiked from age 65 to age 67. Given the huge number of votes already retired seniors command, not to mention million of baby boomers on the cusp of retirement, I can’t imagine the Tories would dare to radically change the rules in mid-stream for either cohort. Younger people 45 and below are a different story but they still have plenty of time to prepare for what will be likely a phased-in rise in OAS eligibility.

As Parliamentary Budget Officer Kevin Page said before CTV’s Question Period on February 12th, the government has known about the old age demographic for decades. The week before his office released a report that suggested Ottawa can afford to enhance senior benefits, despite the Prime Minister’s contention that the current model is unsustainable. Page said it was a “bit disingenuous” to put the blame for a looming fiscal crisis on the rise in OAS recipients.

Of course, the Conservatives are free to float such a proposal in the hope it will be greeted with shrugs of indifference. But that was never going to happen. Predictably, CARP (which represents both seniors and boomers 45 plus) has responded with its “Hands off OAS” campaign, which you can find here.

CARP vice president of advocacy Susan Eng says OAS is responsible for only 2% of the nation’s GDP and the government could find bigger savings in health care. Besides, “If they get pension reform right, people don’t have to even care about OAS.” That said, CARP’s members are “raging mad” because such a basic attack on the social safety net was never mentioned in last spring’s federal election campaign.  70% of CARP’s members are already retired and presumably not directly impacted by the planned OAS changes.

Eng says CARP was disappointed by the lack of substance in Finley’s luncheon speech Tuesday:

We poll our members regularly and in this case, their opinion is that making this change unilaterally will affect their votes. Over 4,000
members voiced their opinion on the poll that we issued last Friday … If the government is bound and determined to make this change, then there should be a full public review of all the facts and evidence with all the stakeholders at the table.

Echoes of “Hands off our RRSPs” campaigns past

This campaign reminds me of a long-ago trial balloon to tax RRSPs, which resulted in a similarly named “Hands off our RRSPs” campaign. The RRSP tax never happened, although RRSPs are ultimately taxed anyway when they become Registered Retirement Income Funds (RRIFs). And of course if RRSPs and RRIFs become big enough, they will result in a clawback of OAS benefits. I still wouldn’t rule out a sneakier adjustment of clawback rules for the semi-affluent rather than an across-the-board hike in the OAS eligibility age.

 

.© The National Post