Nothing can bring out panic in Western nations faster, and Canada is obviously no exception, than to threaten entitlements. For example, during the past twenty-four hours, following Prime Minister Harper’s speech in Davos Switzerland, when he mentioned that government pension reform was going to be necessary, a lot of people of all political persuasions have been up in arms. What some Canadians don’t seem to know is that for most of the history of the Old Age Security, eligibility was actually age 70 and only dropped to age 65 in 1970.
So, why are some people so upset? Is it that the OAS “entitlement” is so untouchable, we can’t face reality? Is that not what we condemned the Greeks and other Europeans for not so long ago? Remember when the Greeks were rioting in the streets over their lost entitlements, we bloggers scratched our heads wondering what was it about affordability or sustainability they didn’t undersand? Well, welcome to our own entitlement awakening.
But, think about it. In 2011, the first year of the baby boom generation — those born in 1946 – turned sixty-five. Meaning, that for several decades into the future, there are going to be more people retired than working and paying taxes. So, how can we expect our grandchildren and great-granchilden to have a lower standard of living than we had simply because they must pick up the tab for one of the most privileged generations in Canadian history? Well, in my opinion, we shouldn’t.
Remember too, that provinces offer social assistance to seniors in need. Meaning, this is Canada. No senior is going to starve if the OAS age of eligibility is increased. Interesting fact, as I said earlier, age 70 was the age of eligibility for most of the history of the OAS, beginning as early as 1927. Here, for example is the Ontario plan, which no doubt would have to be adapted if the OAS age of eligibility increased.
Here (for a PDF file on the History of Pensions in Canada) and here are some quick facts:
(1) The first Old Age Pension Act was passed in 1927 by the William Lyon Mackenzie King Liberal government for seniors who were 70 years of age or older and had resided in Canada for a minimum of 20 years. It was also means tested meaning eligibility was based on financial need. Now, those eligibility criteria would have been very tough. I mean, twenty years in Canada would have eliminated most of the seniors population at that time.
(2) In 1951, under Liberal PM Louis St. Laurent, the Old Age Pension Act was replaced with the Old Age Security Act. Still for seniors aged 70 or older, it became universal in nature in that financial need no longer had to be established. It isn’t clear if the 20 years in Canada expectation still applied or if it was changed to ten years, as it is today.
- “From 1927, Canada had a system of means-tested pensions in effect for British subjects 70 and older who met residence requirements. Not until 1952 was this superseded by a universal pension. Beginning in 1965 the age of eligibility for a universal pension was gradually lowered, reaching 65 years in 1970.” (Source). In other words, the eligibility age of 65 became effective in 1970 — not that long ago.
- The Guaranteed Income Supplement, which is income tested, was insituted in 1967, under the direction of Liberal Prime Minister Lester Pearson.
- In 1989, under the Brian Mulroney Progressive Conservative government, a clawback of OAS was instituted based on financial need, with the OAS being reduced by fifteen cents for every dollar that a senior earned over the threshold of $53,215.00. The threshold in 2012 is $66,335.00 – certainly affluence by retirement standards.
- In 1996, the Liberal government of Jean Chretien removed OAS universality. What that meant was that the amount of OAS a senior received was pre-determined by the government – with the result that some seniors receive less than others while those who are more affluent receive nothing at all — which remains the current practice.
The crux of the matter is, then, that all things in life change including our entitlements. And, even though I would personally be affected by a change in age of eligibility for the OAS, I know it is going to be the right thing to do.
Endnote: For other blog posts and excellent discussions on this topic, check out Iceman, Blue Like You and Dr. Roy. C/P Jack’s Newswatch.
