April 3, 2012 – As was widely anticipated, the federal government announced changes to the eligibility rules for Old Age Security benefits by raising the age from 65 to 67. But notwithstanding the widespread concerns, there will not be specific measures that will protect low income pre-retirees and just some provision for groups already on government assistance.
Low-income seniors left in the breach
Without special provision for seniors with low-income, people in need of income support who cannot wait the extra two years for their OAS and GIS will have to turn to provincial income support programs. Although the Government will compensate provinces and territories for net additional costs they face resulting from the increase in the age of eligibility for OAS benefits, these individuals would presumably have to apply for social assistance programs, which carry both stigma and are unlikely to match the OAS/GIS pension amounts.
The age of eligibility for OAS and GIS will be gradually increased from 65 to 67, starting in April 2023, with full implementation by January 2029. An 11-year notification period, followed by a 6-year phase-in period. According to the budget, the 11 year notification period is being provided to ensure that individuals have significant advance notification to plan their retirement and make adjustments.
This proposed legislative change to the age of OAS/GIS eligibility will not affect anyone who is 54 years of age or older as of March 31, 2012. Thus, individuals who were born on March 31, 1958 or earlier will not be affected. Those who were born on or after February 1, 1962 will have an age of eligibility of 67. Those who were born between April 1, 1958 and January 31, 1962 will have an age of eligibility between 65 and 67.
OAS changes undermine original government reasons for change
The delayed and gradual changes notwithstanding, the OAS changes repudiate the government’s original reasons for going after the OAS. In the first instance, the government stated that OAS changes were necessary in the face of the massive Baby Boomer generation. The government argued that there were simply too many Boomers to sustain funding the OAS. As it happens, the gradual and delayed changes to OAS mean that most boomers will receive OAS before the full effect of the changes takes place.
That leaves the second reason, that OAS changes were necessary now to help younger generations of Canadians. But, it is precisely the younger generations who now face a delayed retirement and OAS benefits. According to CARP Polls in the past two months, CARP members roundly rejected raising the OAS eligibility age and see better ways to help younger Canadians– such as increasing job opportunities.