Tories add years to working lives

Eligibility for old age benefits hiked two years from age 65 to 67

OTTAWA— If you are under 54 and counting on a government old-age security cheque to bridge you to retirement at 65, think again.

The federal Conservatives say you’ll be expected to work until you’re 67.

Under Prime Minister Stephen Harper’s push to secure the longterm “viability” of Canada’s Old Age Security and Guaranteed Income Supplement programs, the age of ordinary Canadians’ eligibility for retirement support will rise from 65 to 67.

The move, which will be phased in gradually beginning in 2023, was immediately condemned by NDP Leader Thomas Mulcair and Liberal interim leader Bob Rae as demographic scare-mongering by an ideologically driven Conservative government.

“Every objective analysis that’s been done, whether by the parliamentary budget officer or the OECD has said our system is absolutely sustainable,” said Mulcair. “It’s a classic straw man that the Conservatives have set up so they can knock it down, it’s a sop to their base.”

Susan Eng, spokesperson for the Canadian Association of Retired Persons, said her small-c conservative membership of 300,000 believes the government is making a huge mistake in raising the retirement age, and predicts the government will lose key voter support.

The Conservatives tried to ease the sting, pegging the changes to start only 11 years from now, and phasing them in over a six-year period after that. If you’ve already hit your 54th birthday by Saturday you’ve been spared. You will still be eligible for up to the maximum annual benefit of $6,481 when you turn 65. But the rest of us just got told to keep our noses to the grindstone as part of a long-term budget plan to save the public treasury about $10 billion a year, according to a senior finance official. There were more significant changes that levied more pension pain in the federal budget — changes that will hit public sector employees directly, including MPS and senators. They’ll have to kick in more to fund their own pension plans, matching the federal government contribution dollar-for-dollar. The changes will affect pensions for the military, the RCMP, as well as parliamentarians. But buried in the federal budget document is a catch: The pension changes for MPS and senators don’t kick in until after the next election, likely not until late 2015. Meanwhile, tough bargaining begins right away with public sector unions. The Conservatives intend to change the rules in 2013 so that employer and employee pension contributions are equal — 50/50 — a change from the current government-worker ratio of 64-36 that was already set to shift to 60-40. On top of that, workers who join the federal public service starting in 2013 will be expected to retire at 65, not 60. Finance Minister Jim Flaherty said the public sector pension plan must be “sustainable and financially responsible . . . more in line with those available to Canadians working in the private sector.”

The unions are bracing for a fight with the Conservatives who have a majority.

“This is an austerity budget, make no mistake about it,” said Public Service Alliance of Canada national president John Gordon.

The government hopes to eventually save about $500 million a year on the public sector pension plan, said an official. Meanwhile, other changes meant to offset the bad news for Canadian workers will kick in sooner.

Workers now near 65 may — starting in July 2013 — choose to work longer and defer drawing on OAS, in order to get a bigger payment down the road. The changes will not affect Canada Pension Plan retirement benefits that workers and employers now kick into, or the survivor or disability benefits under CPP.