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 the government will push Old Age Security eligibility up two years 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 are 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 an-other $500 a month, on aver-age.
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. At today's low interest rates, saving enough to replace the OAS's $500 a month payment would mean putting aside about $200,000.
According to a 2011 Statistics Canada study, more than 40 per cent of retirees had less than $25,000 in savings and in-vestments.
It's clear why the government is worried about old age security. 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.
That's a compelling number, but solutions will be tough to find. 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. How-ever, by the time such a gradual solution is fully in place, the problem will abate on its own as the baby boomers die off.
Quicker change would leave more money in the government treasury, but it's unfair to seniors and potential political suicide.
Canada has a wise policy of ensuring that seniors don't have to live their final years in abject poverty. This is not an entitlement. This is a commitment. An entitlement is the absurd pension MPs awarded themselves at the public's expense.
The OAS is exactly what the government itself calls it on the Service Canada website, "a modest pension."
There are plenty of ways for government to cut costs. Taking money from low-income seniors should not be one of them.
Original Article
Source: ottawa citizen
Author: --
Speculation that the government will push Old Age Security eligibility up two years 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 are 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 an-other $500 a month, on aver-age.
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. At today's low interest rates, saving enough to replace the OAS's $500 a month payment would mean putting aside about $200,000.
According to a 2011 Statistics Canada study, more than 40 per cent of retirees had less than $25,000 in savings and in-vestments.
It's clear why the government is worried about old age security. 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.
That's a compelling number, but solutions will be tough to find. 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. How-ever, by the time such a gradual solution is fully in place, the problem will abate on its own as the baby boomers die off.
Quicker change would leave more money in the government treasury, but it's unfair to seniors and potential political suicide.
Canada has a wise policy of ensuring that seniors don't have to live their final years in abject poverty. This is not an entitlement. This is a commitment. An entitlement is the absurd pension MPs awarded themselves at the public's expense.
The OAS is exactly what the government itself calls it on the Service Canada website, "a modest pension."
There are plenty of ways for government to cut costs. Taking money from low-income seniors should not be one of them.
Original Article
Source: ottawa citizen
Author: --
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