The Canadian Association of Retired Persons (CARP) is hearing rumblings of a pending attack on Old Age Security benefits, and is bracing for a fight.
Generation Squeeze is an academic think tank at the University of British Columbia. Its lobbying arm has been getting increasing attention for its position that the Old Age Security (OAS) benefit is an overly generous subsidy, and the money would be better used to fund programs for younger Canadians.
Generation Squeeze also suggests reducing OAS benefits for wealthier seniors could lift thousands of other seniors out of poverty.
Stella Song is CARP’s policy and research analyst. She says the existing OAS system already includes clawbacks on high-income seniors, and that groups like Generation Squeeze are unnecessarily pitting seniors against young people.
“CARP sees OAS as one of the foundations in Canada’s retirement system. And so we are concerned by this growing campaign to portray that OAS is unaffordable, that it should be restricted to a smaller group of people and have them change the thresholds,” Song said.
“But the description that the proposal portrays ignores the fact that OAS is taxable and already subjected to income-based clawbacks, and it’s supplemented by a more targeted Guaranteed Income Supplement already,” she said.
CARP’s position, she said, “is to preserve OAS as an accessible, predictable benefit that many retirees or seniors who are still in the workforce or depending on for retirement security—and plan their retirement based on—that they will receive once they hit 65 or 67.”
CARP further argues that increases to OAS should be applied to all recipients, not just those ages 75 or
older. “There was no real evidence to claim that once you turn 75, your living costs will increase your math drastically from when you were 74,” Song said.
“The younger cohort of seniors also face the same high living costs, health care prescriptions, long-term care costs as 75 and older. [It’s] a little bit of a discriminatory policy.”
At present, OAS benefits are clawed back from individuals who receive approximately $90,000 annual pre-tax income. And higher-income seniors (CARP says the proportion of seniors making $100,00 per year is about six per cent) are taxed at a higher rate, resulting in a further reduction to their net benefit.
“The new proposal that the think tanks have been proposing is that they want to change the policy to household income,” Song said. “Although it sounds nice and everything, once you read through the actual data, what they’re striving for is if a household makes $100,000, they should be clawed backed and shouldn’t receive OAS. But that means a couple making $50,000 each would not receive OAS. “So it’s not wealthy seniors that will be targeted,” she said. “It’s the ordinary seniors that are middle class.”
A CARP policy brief says that Canadian seniors are far from a burden on society. In addition to having contributed throughout their working lives, the brief says that seniors pay 20 per cent of the income taxes and 40 per cent of property taxes. They also pay sales taxes and other levies, representing $100 billion in annual taxes paid by Canadian seniors.
This includes taxes paid on their OAS income.
Song says blaming seniors for the genuine pressures younger Canadians face is a mistake. She says threatening OAS as a tool for financial security not only affects current seniors, “but tomorrow’s seniors as well.
“Because if we’re lucky, we will be able to grow old and receive OAS if we’re fortunate enough,” she said.
“But it creates this intergenerational narrative that pits seniors [against] the younger generation. They’re calling for these narratives where the younger cohorts are taking away from essentially their parents and their grandparents, which doesn’t really make sense.”
In its policy brief, CARP says over the years OAS has reduced seniors’ poverty from 40 per cent to six per cent. But in recent years, senior poverty rates have been creeping upward, from 3.1 per cent in 2020 to 5.6 per cent in 2021, and 9.9 per cent in 2022.
“Women, immigrants, and single seniors are hit the hardest. For example, 16.9 per cent of women aged 65 and older live in poverty,” the brief reads.
OAS is “not a luxury, but a lifeline,” Song said. “A lot of ordinary seniors are what we call house rich but cash poor, just ordinary seniors who fortunately were able to acquire a home.”
But while a home has equity value, it doesn’t pay for food and utilities. Song says many seniors, even homeowners, are still struggling with daily living.
The CARP policy brief says “OAS is more than a monthly cheque. It’s a promise—a promise that Canada will protect its older adults from poverty and neglect. CARP is demanding that this promise be kept.”
Song adds, “we reject any narrative that pits intergenerational fairness against the seniors and younger cohorts.”
