Seniors benefit costs to skyrocket: report
RISING OLD AGE SECURITY SPENDING DAMPENED BY CPP INCREASES
The federal government’s largest seniors benefit program is on course for all-time highs in spending over the coming years with waves of baby boomer retirements — spending levels that could be even higher if not for changes to the public pension program.
The figures in the chief actuary’s report on old age security provides the first glimpse into how seniors spending will be influenced by a decades-long expansion of the Canada Pension Plan.
Spending on old age security is forecast to hit about $247 billion by 2060, an almost five-fold increase from planned spending this year, as more Canadians hit retirement and live longer, meaning more beneficiaries drawing payments for longer periods of time.
The extra money to be doled out through CPP, funded by an increase in premiums, is expected to reduce the number of low-income seniors — meaning $3 billion less in spending on the guaranteed income supplement in 2060 — and reduce overall spending on old age security benefits, which are scaled back above $75,000 in annual income.
The chief actuary’s report says assumed investments in tax-free savings accounts would lessen the decline in the number of retirees eligible for the income supplement and the clawback because TFSA withdrawals don’t count as income.
Angella MacEwen, a senior economist with the Canadian Labour Congress, said senior poverty rates have increased since the 1990s, requiring legislators to think of new ways to direct funding to retirees most in need and prevent further increases in senior poverty rates.
The most recent census figures showed the ranks of seniors grew by the fastest rate in 70 years, with Statistics Canada projecting there could be 12 million seniors by 2061, as well as fewer young people to replace them in the workforce and less income tax flowing into federal coffers that fund old age security.
The previous Conservative government raised the age of eligibility for old age security to 67 from 65 to save on costs and prod people to work longer. The Liberals reversed the decision in their first budget.