OAS

What Might the Future Hold?

Referring to our image from Canada Spends, did you know that Old Age Security is the single largest expense of the federal government?  Larger than debt service.  As large as health transfer to the provinces and children’s benefits combined.

Did you also know that an individual gross income of $95,000 puts you in the top 15% of earners, according to Statistics Canada?  Similarly, a couple’s household income of $190,000 puts them in the top 10%.  What do income levels have to do with Old Age Security?  These levels are the threshold at which the Canadian Government starts to pay less (or claw back) a portion of the OAS you receive.

Think tank Generation Squeeze has taken this combination of information and advocates for reforms to end seniors’ poverty and improved affordability.  More specifically, they suggest retired couples receive reduced subsidies starting at $100,000, which is the top 25%.  For reference, the top 25% for individuals is $80,000.

They suggest if a couple’s full $18,000 annual pension income from OAS be reduced by $3000 per year, poverty could be eliminated for 400,000 seniors or a million people could be helped with more affordable rent.  I would add another possible use, being to lower government deficits and debt.

Now, on the other hand, we have all dutifully paid income tax to the government throughout our working lives and continue to do so into retirement.  All along we understood the government was collecting a portion of those tax payments to be returned to us in our retirement.  Could it be considered unfair for them to now reduce the amount of payment a portion of the population is due?

I am unaware of any actual effort by the federal government to consider changing the OAS pension.  But I can see where this could become a topic in the future as poverty, affordability and government debts all continue to rise.

Be Prepared.  Be aware of possible changes that could affect you down the road.