Poor pension plan

An editorial in the Ottawa Citizen: Prime Minister Stephen Harper would have been wise to develop an actual plan and some rationale more compelling than cost before he floated the idea of worsening Canada’s already meagre public pensions.

Speculation that Ottawa will push Old Age Security eligibility up to 67 is creating alarm, and justly so. For Canada’s lowest income working people, it means two more years on the job, whether they’re healthy or not.

While the Canada Pension Plan retirement age will remain at 65, decoupling the OAS from that magic number effectively means some people can’t afford to retire. The maximum CPP Benefit is just under $1,000 a month. Not many people can live on that. The OAS adds another $500 a month, on average.

People with large incomes are fond of lecturing the poor on how they have to save for their own retirements, but that’s tough to do when you’ve spent your life scraping by on $30,000 a year.

It’s clear why the government is worried. The program cost $36.5 billion in 2010, but will rise to $108 billion by 2030 as the vast postwar generation advances into old age. A fair approach would phase in changes over 20 years, so that people have at least a theoretical opportunity to save more money of their own. However, by the time such a gradual solution is fully in place, the problem will abate on its own as the baby boomers die off.

There are plenty of ways for government to cut costs. Taking money from low-income seniors should not be one of them.