What is OAS?
The Old Age Security pension is a monthly payment available to Canadians aged 65 and older who apply and meet certain requirements. The requirements are: you must be a Canadian citizen and legal resident living in the country & have spent 10 years in Canada after turning 18 years of age OR if you live outside of Canada; you must be a Canadian citizen who was a legal resident in Canada for at least 20 years after turning 18 years of age.
The average monthly amount of OAS is $508.35 in the last quarter of 2011.
The government claws back OAS payments from high-income earners.
The Progressive Conservative (PC) Plan to Cut Security and increase seniors living in poverty:
Stephen Harper is breaking yet another promise. On January 26, 2012, the Prime Minister disclosed his plan to slash old age security – he wants to remove the safety net for seniors at age 65 and 66; delaying eligibility for OAS payments until age 67.
Was this an election promise? Did Canadians know of this plan in May? No. Quite the opposite:
- In June of 2011, a motion was passed UNANIMOUSLY in the House of Commons committing the federal government to lifting every senior out of poverty. The Progressive Conservative MP’s and our Prime Minister who voted in favour of this motion have now agreed to cut gaping holes in the security net designed for Aging Canadians.
- In the 2005 election campaign, Stephen Harper pledged that “his government will fully preserve the Old Age Security (OAS), the Guaranteed Income Supplement and the Canadian Pension Plan, and all projected future increases to these programs. And we will build on those commitments.”
[Quote: Dec. 9, 2005, election campaign speech to seniors in Guelph, Ont.]
PC Excuses for CUTS:
Stephen Harper indicated to the media, “We’ve already taken steps to limit the growth of our healthcare spending…We must do the same for our retirement-income system.” [Globe & Mail – January 26, 2012]. In short, it is expected that there will be significant cuts in the upcoming federal budget – one such cut involves the proposed changes to OAS. Official Opposition Nycole Turmel comments on this announcement, “Conservative have billions for the purchase of F-35s, his costly prisons agenda and corporate tax giveaways, but the cupboard is bare when it comes to benefits for vulnerable seniors” [Federal NDP Press Release, dated February 21, 20120].
Is the OAS Sustainable?
A report by Parliamentary Budget Officer Kevin Page released in early February, 2012, confirms that the OAS income support program for Canadian Seniors is sustainable and affordable, given the federal government’s projected revenues and economic growth and particularly in view of the government’s announcement in late 2011 to tie Canada Health-Transfer payments to GDP after 2016-17. In essence, Canadians should not have to bear both cuts to health care funding and slashing of the Old Age Security program. While Page acknowledges that the number of recipients of OAS is expected to almost double over the next 2 decades, he estimates that the cost of OAS plus other elderly benefits will increase from 2.2 per cent of GDP in 2010-11 to a peak of 3.0 per cent of GDP in 2031-32. By 2080, he projects the cost will decrease to 1.8 per cent of GDP [CBC News, Meagan Fitzpatrick – February 8, 2012 12:54 PM ET].
How will changes to the OAS effect your retirement planning?
If you are a healthcare worker, you are covered by Saskatchewan Healthcare Employees’ Pension Plan (SHEPP). Public sector pension plans such as SHEPP are defined benefit plans. Your pension payments are determined by a formula which is based on your contributory earnings and years of participation, or credited service. In addition, there is provision for early unreduced pension; you can retire with an unreduced pension as soon as your age and years of credited service add up to 80. Under SHEPP, you will also receive a bridge benefit to 65 years of age.
So, how will the changes to OAS impact your pension? There will have to be negotiated changes to your Pension Plan in order to keep your benefits whole. In our experience, positive changes to SHEPP have been hard fought over the years. If successful in negotiating them, the cost becomes a future liability to your Pension Plan. This is not good news.
If you work in the Community-Based Organization, Education and Allied, or private sector, you may be in a defined contribution plan. Defined contribution plans are designed so that the risk and volatility of the market is borne solely by the worker. That means if the market is down, so is your pension. It is even more important for you to be concerned about secure funding for OAS and CPP as larger pension plans like these can withstand the market fluctuations.
What we don’t know?
Will Stephen Harper extend his plans to cut security for retirees and attack public sector pension plans as well? If so, how will that affect public sector plans in Saskatchewan – do you trust the Saskatchewan government with your security?
Action Plan – Contact your MP
Tell them this is not a time to tow the party line.
It’s time to listen to their constituents.
Tell them to protect your future and the future of your loved ones.
Printable version of the Fact Sheet: Just the Facts Old Age Security
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