OAS a grow­ing con­cern

Talk of change to old age pen­sions rings alarm bells

The Southern Gazette - - FRONT PAGE -

will jump from $35.8 bil­lion to $107.7 bil­lion.

How­ever, any po­ten­tial change is only un­der re­view at this point, ac­cord­ing to Alyson Queen, a spokes­woman for the of­fice of Min­is­ter of Hu­man Re­sources and Skills De­vel­op­ment Diane Fin­lay.

“Clearly, in­ac­tion is not an op­tion. There are a num­ber of things to re­view, and right now our fo­cus is to en­sure Cana­di­ans un­der­stand the sit­u­a­tion we face as a coun­try when it comes to de­mo­graph­ics and when it comes to pro­grams, like OAS, that are 100 per cent funded by taxes.”

Un­like the Canada Pen­sion Plan (CPP), which is cov­ered by a por­tion of the wages of Cana­dian work­ers, OAS is sup­ported en­tirely by taxes. New­found­land and Labrador Fed­er­a­tion of Labour pres­i­dent Lana Payne sug­gested that may need to change.

“The labour move­ment has said we’re go­ing to have some­what of a pen­sion cri­sis if we don’t deal with some of this, but cer­tainly rais­ing the age by which Cana­di­ans would be el­i­gi­ble for OAS and GIS (Gen­eral In­come Sup­ple­ment) is not the way to solve what is ba­si­cally a prob­lem of sav­ing that we have in the coun­try.”

Her main con­cern re­gard­ing po­ten­tial OAS el­i­gi­bil­ity changes is how it might ef­fect se­niors liv­ing on the edge of poverty.

“All we will do is pe­nal­ize low in­come se­niors or low in­come work­ers through­out their life­time, be­cause they’re re­ally the ones who are not able to save.”

Ms. Payne would pro­pose en­hanc­ing the CPP by re­quir­ing em­ploy­ees to di­vert more of their earn­ings to­wards it. She also made note of the fact the per­cent­age of gross do­mes­tic prod­uct de­voted to OAS and GIS ex­pen­di­tures in the years to come is pro­jected to rise by less than a per­cent­age point.

Num­bers from the 10th OAS Ac­tu­ar­ial Re­port back her claim. The ex­pen­di­tures as a per­cent­age of GDP for 2011 is 2.4 per cent. That fig­ure is pro­jected to jump to 3.2 per cent in 2030 be­fore dip­ping be­low three per cent in sub­se­quent decades - 2.9 in 2040, 2.6 in 2050, and 2.4 in 2060.

“It’s not a huge jump when you con­sider other things are go­ing to grow a lot more. I think there’s an at­tempt here to cre­ate fear that we have to ab­so­lutely do this be­cause the Euro­peans are do­ing this.”

Ms. Payne said mid­dle in­come earn­ers could also feel a pinch. Ac­cord­ing to her, 63 per cent of all work­ers in the coun­try do not have a com­pany pen­sion plan.

The is­sue of pos­si­ble OAS changes has been the hot topic for phone calls St. John’s South-mount Pearl NDP MP Ryan Cleary had fielded.

“There’s this whole, for lack of a bet­ter word, panic. Peo­ple are think­ing, ‘ What is hap­pen­ing here? Can these changes be made this quick? Will we have a say?’”

Mr. Cleary in­di­cated a de­bate on OAS needs to hap­pen.

Bon­av­ista-gan­der-grand Fall­sWind­sor Lib­eral MP Scott Simms, who noted cen­tral New­found­land has an ag­ing pop­u­la­tion base, is of the same mind.

“I think it’s the big­gest is­sue in my rid­ing. If they’re go­ing to start­ing rais­ing the age of el­i­gi­bil­ity for OAS, you’re go­ing to start see­ing a big­ger de­mand for wel­fare ser­vices and ob­vi­ously loans, se­niors res­i­dences, long-term care, and other things.”

Ms. Payne is sur­prised the is­sues did not come up in the last fed­eral elec­tion and sus­pects some vot­ers may have cast their bal­lots dif­fer­ently had they known the Con­ser­va­tives in­tended to in­tro­duce sub­stan­tial changes to OAS.

Ms. Queen ac­knowl­edged the fed­eral gov­ern­ment has no spe­cific time­line for in­tro­duc­ing changes to OAS. As for whether it may prove dif­fi­cult to sell the public on a plan that may force them to wait longer for OAS, she said they need to un­der­stand the re­al­i­ties at play.

“To en­sure to­mor­row that se­niors con­tinue to re­ceive their ben­e­fits, it’s im­por­tant that we take ac­tion to­day so that the pro­gram re­flects both our fis­cal and de­mo­graphic re­al­i­ties.”

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