Cutting OAS will hurt poor seniors the most

Scott Brison, MP, Finance Critic for the Liberal Party of Canada, talks about Old Age Security.

Last month’s federal budget made it official: the government is raising the age for Old Age Security (OAS) from 65 to 67. Any Canadian born after March 31, 1958 must wait up to two years longer before receiving their OAS pension. What will these cuts mean for Canada?  Let’s consider who depends on OAS. Today, four out of every ten Canadians who receive OAS are living on less than $20,000 per year. Single women are more likely to rely on OAS as their main source of income. Rural communities, with their older populations, are also more likely to be hurt by cuts to OAS.

The OAS program includes the Guaranteed Income Supplement (GIS), which is a monthly allowance for low-income seniors. By raising the age for OAS, the government is also raising the age for GIS – a move that will hit Canada’s most vulnerable seniors the hardest.  Making Canadians wait another two years before receiving OAS takes away more than $15,000 per year from the very seniors who can least afford it.

The government’s message to these Canadians is clear: You are on your own. You should work longer. You should have saved more.

If you are 50 right now, you may have been counting on receiving OAS when you turn 65. Now you must try to find an additional two years of income to live off.

Unfortunately, working longer isn’t an option for many baby boomers and future seniors.

For workers with physically demanding jobs – such as construction workers, miners, and those who work on their feet all day on a plant floor – by the time they reach the age of 65, their bodies may not allow them to continue working. High local unemployment may keep others from working longer.

According to the latest tax returns, almost half of all Canadians earn less than $25,000 per year. You can’t save for tomorrow when you can hardly pay the bills today. The inevitable result of cuts to OAS will be increased hardship for many seniors, while provincial governments are left picking up the tab with new seniors on social assistance. Cutting the pensions of the most vulnerable is not right in a successful country like Canada.

The federal government says it must make these cuts to OAS in order to make the program sustainable. Nothing could be further from the truth.

Experts from the OECD and World Bank, the Parliamentary Budget Officer, and even Canada’s own Chief Actuary have all said that Canada’s OAS system is already sustainable. It doesn’t need to be cut.

The government’s own experts have looked at population and economic projections and concluded that “there is no pressing financial or fiscal need to increase pension ages in the foreseeable future.”

If the government truly believes – against all evidence to the contrary – that OAS must be cut in order to be saved, why didn’t the prime minister say this during the election last year? After all, we’ve known about the baby boom generation for some time.

But the Conservative Party did not warn Canadian seniors about their plans to cut OAS. Instead, this is what the party promised in its 2011 election platform:“We will not cut transfer payments to individuals or to the provinces for essential things like healthcare, education and pensions.”

OAS is a transfer payment to individuals for pensions. For our most vulnerable seniors, it is their only source of income.

According to recent public opinion polls, Canadians believe that income inequality – the growing gap between rich and poor – is the most important issue facing the country.

By cutting OAS, the government is doing something about income inequality. It is making it worse.

Scott Brison, MP

Finance Critic for the Liberal Party of Canada