# Harper announces big changes.



## sags (May 15, 2010)

In kind of a strange situation, PM Harper announced in Davos, that there will be significant changes in the Canadian "pension" system, in the next budget. Strange because one would think he might want to inform Canadians before announcing it to the world as a done deal.

http://news.nationalpost.com/2012/0...onal+Post+-+Top+Stories)&utm_content=My+Yahoo

Public reaction will be interesting. This is the type of issue that topples governments.


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## jnorman5 (Aug 21, 2011)

I do agree Sags, this could be an issue if we weren't in a majority. Unfortunately, until the next election, we don't have much say in how we feel about the direction the government is heading.

I hope that if OAS eligibility is extended from 65 to 67, it will be phased in in stages. For people that are 62-65, that can be a big hit when they were expecting to get this supplement in the next 12-36 months.


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## MoneyGal (Apr 24, 2009)

Well, to be fair, I think what he announced was a need for big changes. 

Personally I'd rather see the clawback increased rather than the age increased, or potentially a combination of both. 

But average life expectancy at 65 has grown by almost 5 years since OAS was first implemented (in 1952), and the proportion of seniors in the population has grown tremendously with more growth to come. 

The problem of senior poverty in Canada has largely been solved, such that seniors today are the wealthiest age cohort in the country.


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## OptsyEagle (Nov 29, 2009)

Personally, I would like to see a cut across the board, including those receiving it today. Of course that would be the fair thing to do, since everyone should share the cost, not just the ones who are not receiving it ...yet.

However, politically I understand that this cannot happen so I will accept something done now in any form then something done just a few years before I get to the trough.

Call me cynical but it has been costly being born at just the end of the baby boomers. Getting to clean up after their party is starting to get annoying.


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## DanFo (Apr 9, 2011)

I'd be up for lowering the limit at which OAS starts getting clawed back as well at the upper limit at which it's no more. It shouldn't have to support people's escapades in retirement... only to help them avoid the catfood diets. Will it affect people...you bet people like my parents with zero retirement savings in the bank but that's their poor decisions/spending choices and up to my family to deal with not necesarily for the government to support. I know many families that can live on less than 40K without government handouts certainly seniors should be able to manage a meager living.(the alledged number for the reduced claw back was 50K ) I didn't here of any further cuts to people getting the bare minmum government benifits.

..retirement benefits should probably have the starting age gradually increased though as it a fact that the general population is living longer and longer. How to decide who's the first age group to be affected?? that's why we elected these people but irregardless many people are going to cry foul because that's what they do. Some choices politicians make are tougher for themselves politically but in the end are better for everyone..until this new budget releases the details we'll have to wait and see.


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## mind_business (Sep 24, 2011)

OptsyEagle said:


> Call me cynical but it has been costly being born at just the end of the baby boomers. Getting to clean up after their party is starting to get annoying.


I was also born at the end of the baby boomer generation. I feel like all the tax dollars I have been contributing, with the assumption I'd be receiving some retirement benefits, will be going towards 'fixing' the financial security of the first half of boomers entering retirement. I highly doubt I'll see any return on my taxes during my own retirement. OAS is a thing of the past. Hopefully they don't muck up CPP again.


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## Square Root (Jan 30, 2010)

In retrospect OAS seems pretty generous and clearly is unsustainable given current demographics. Faster clawback is probably the best/easiest fix. Agree that being an early boomer seems to be working out pretty well for my cohort (born 1950) at least for those that haven't squandered the advantage through excess life style and borrowing.


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## v_tofu (Apr 16, 2009)

I just hope that the MP's and everyone else in parliament lead by example, especially with some recent headlines and exposes in the press about their well padded pensions they will receive from us taxpayers.

I've already accepted the fact that by the time I'm close to retiring, the pension won't be there. Either due to hyper inflation or a hugt stock market crash. I'm no expert, but i wouldn't be surprised if our pension situation is similar to Greece's. I'm not relying on it at all. If it does happen to be there, then bonus. If not, at least I won't be dumbstruck and find myself homeless with no savings.

But then again I'm one of the crazies that believe in a Global Economic and financial collapse of all fiat currencies and keep lots of stock of ammunition.


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## sags (May 15, 2010)

There is no doubt there is a cost to the OAS and GIS, and one that will continue to increase until the baby boomers flow through, but governments also make decisions on their spending priorities and the collection of tax revenues.

The debate will rage over those decisions and their choices.

One question.....................

If they do change the age from 65 to 67, what happens to pension integration with the OAS?

Are pensions going to have to pay for 2 more years?

It could cost more than they save, if the government has to fund public pensions for an additional 2 years.


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## HaroldCrump (Jun 10, 2009)

What is the definition of this "pension system"?
Does it include only the OAS and CPP systems, or does it include the public sector pension plans?

Is the proposal to further cut benefits of truly public programs such as OAS and CPP, either by increasing age limits, increasing the clawbacks and increasing early CPP penalties, or are they going to address the 800 lbs. gorilla in the room - the public sector pensions?

What the govt. is trying to do is hide the 800 lbs. gorilla under the carpet, while telling the population to look the other way : _look, there is a spider there_.


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## the-royal-mail (Dec 11, 2009)

All good questions Harold. I think many of us are wondering the same thing. It's a bit frustrating when we hear about these things in this manner as a quick comment on some foreign trip. But my guess is this is a simple political ploy to plant a seed. More info will come later by which point of course it will be too late.

Anyone with a vested interest and concerned about these issues might want to get on the phone with their MPs etc post haste to find out what this is really about. 

I also wonder if this will be discussed on Power and Politics today.


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## HaroldCrump (Jun 10, 2009)

My concern, of course, is that the spider will be squashed while the gorilla continues to hide in plain sight.

CPP penalties will be increased, OAS eligibility age will be increased, and the clawback will be increased.
The govt. will declare victory and claim they have "fixed" the pension "system".

While the gorilla continues munching 100 kgs. of leaves a day.


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## somecanuck (Dec 23, 2011)

I don't see how they could cut the defined benefit pensions that some government employees enjoy. They're typically part of a contract signed with a union, and every union out there would strike until the end of time before agreeing to their removal. 

My pension is the only reason I continue at this job and don't look for some where else. Considering that we have 226 people in my union with more than 20 years of experience (1 guy with just over 40 years), I think the feeling must be mutual.

The most I could is new employees being placed on a different plan than the existing ones. Even that would take a long time to be effective, seeing as 70% of the fulltime employees in my union have at least 10 years of experience.


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## HaroldCrump (Jun 10, 2009)

somecanuck said:


> The most I could is new employees being placed on a different plan than the existing ones.


That would be a good start.

The union protected public sector pensions are a big part of the public debt, not the CPP.
Regarding OAS, my personal opinion is to scratch it altogether.
If CPP is made equivalent to a true pension such as the ones in public sector, and GIS amounts increased to catch the lowest tiers of seniors, that will be a better overall solution IMO, instead of constantly tinkering with OAS clawbacks and eligibilities.


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## andrewf (Mar 1, 2010)

Actuarially speaking, there is no need for changes in CPP benefits or contribution rates in order to keep it sustainable over the next 75 years.

OAS/GIS are another story, as they are PAYGO. I suspect OAS eligibility ages might be raised effective 2022 or something.


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## HaroldCrump (Jun 10, 2009)

Right about the CPP.
But the program has to be expanded to cover for the abolition of OAS.
This should ideally be a simple two-tier system - the GIS for the protection of truly poor and needy, and CPP as a single, unified pension system for all workers, private and public sector.
Whatever the income replacement % is (25% or 70%, or something in between), it'll be the same for both sectors of workers.


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## Sherlock (Apr 18, 2010)

But maximum OAS is only six and a half thousand dollars a year, that's already very low, should we really reduce it even further? Remember that many seniors get very little CPP because they did not work much for whatever reason. Many seniors get combined CPP/OAS of around $10,000 a year, which is already just barely enough to pay the bills on an already very simple retirement, how much less could they live on? Maybe a decrease in OAS would have to be accompanied by an increase in the GIS, but then isn't that just digging a hole in order to fill up another hole?


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## DanFo (Apr 9, 2011)

I don't think they're aiming at the seniors getting the benifits who are only getting minimal income each year ...It's more than likely cutting back on people bringing in over 40-50K, and they'd have to gradually bring the changes into affect so i doubt it'd affect current retirees too much.....Until they make some formal announcement about the details though ..who really knows.


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## andrewf (Mar 1, 2010)

Current retirees = CPC supporters. They'll be spared.


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## andrewf (Mar 1, 2010)

I'm actually in favour of a gradual phase-out of OAS, but GIS would need to be strengthened in that event. We should also beef up the CPP.


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## Causalien (Apr 4, 2009)

From my point of view, Harper is trying to placate the bond monster because right now, everything in Canada hinges on the interest rate. If bond rate goes up, it becomes a matter of when short term interest will go up as well and we don't want that to happen within the next 4 years. This idea is a maybe on a revolt in the population.

Or he can entertain the idea of raising tax on foreign ownership of houses in Canada. Which will definitely drive down housing price and definitely causing a revolt/problem.

In the mean time, I am going John Galt, because there won't be any pension left for me when I reach retirement


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## sags (May 15, 2010)

The PMO is already in damage control mode.

Nothing like talking about changing the pension system to ignite a firestorm.

The proposal is to spare current and near retirees from any changes, but change the eligibility age for OAS to 67 for the future.

It is a confusing issue, as CPP - OAS - GIS are often intertwined together.

As a top up benefit, GIS benefits are calculated based on CPP and OAS benefits, and any other income.

Many private pensions have integration with CPP/OAS in their calculations.

There is a question of how costly the OAS program really is. One economist said at it's worst point it will only account for 3% of GDP, compared to 14% for Italy and some Euro nations.

Lastly, there are issues for employers.

Senior employees are often the most expensive for companies to keep. They are at the peak of their earnings, have acquired the most paid vacation time and benefits, cost the most for life insurance and health benefits, and often are declining in their productive value to the company.

Many companies sought to reduce this specific group of employees via transfer to their pension plans in the not so distant past to reduce employee overhead. (early buyouts and retirements)

The time for changes may be now........but I think most Canadians would prefer a fully considered comprehensive solution to any future pension income problems, rather than arbitrary changes without any public consultation or review.

A review of the system as a whole, rather than tinkering with individual parts, could simplify the system, while still maintaining an appropriate and affordable "life income" for all Canadians.

Spending priorities for Canadian governments would have to be part of any discussion of the affordability of any "new" system, but the present government seems to have a different priority ranking for spending than most Canadians would prefer.

Government revenue would also be part of the discussion, and corporate tax rates, oil royalty rates, the legalization and taxation of marijuana, are all elements that could be discussed.

Alas, this would be a discussion the government just doesn't want to have.


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## mind_business (Sep 24, 2011)

From G&M article - PM’s message to Canadians: Rethink your retirement
_"The Prime Minister’s Office and other government officials pointed reporters to the most recent actuarial report on Old Age Security, which estimates the cost of the program will climb to $108-billion in 2030 from $36.5-billion in 2010." _http://www.theglobeandmail.com/news/politics/harpers-message-to-canadians-rethink-your-retirement/article2318298/

Question for everyone, is the $108 billion expressed in today's dollars, or does it account for inflation?

If it's in today's dollars ... OK. However if they've added in inflation, then they're making the numbers look much worse than what they really are. If you index the $36.5 billion over 20 years (at 2%), it will be at $54.3 billion. Therefore, instead of the OAS costing 3X today's costs, it will only be 2X. This would be misleading Canadians to believe it's much worse than it actually is.


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## somecanuck (Dec 23, 2011)

HaroldCrump said:


> If CPP is made equivalent to a true pension such as the ones in public sector, and GIS amounts increased to catch the lowest tiers of seniors, that will be a better overall solution IMO, instead of constantly tinkering with OAS clawbacks and eligibilities.


You'd never get people agreeing to it. Those of us with a defined benefit pension pay into it, it's not handed out for free. Can you imagine the uproar if the government proposed cutting off around 7% of everyone's pre-tax earnings for a pension? The uninformed would see it as an additional tax rather than a benefit.

We actually have fools who, years ago, declined the pension and benefits plan, opting to take an 18% increase in pay over it (the same increase that part-time staff get). Of course, none of these people put the money in a private investment, so now they're looking at zero pension. And any of them with a family with they had dental plans, and so forth.

I'm happy to say that my particular pension fund, HOOPP, does reasonably well.

http://hoopp.com/Investments/Financial-summary/


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## Daniel A. (Mar 20, 2011)

mind_business;109331
Question for everyone said:


> No the numbers don't account for inflation, so yes you are correct the numbers look much worse than what they really are.
> Given that fully 65% of people have no pension other than CPP & OAS combined with some savings this is going to be very difficult for most.
> 
> It's hard to say where all this is leading given the lack of information.
> ...


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## Mall Guy (Sep 14, 2011)

HaroldCrump said:


> What is the definition of this "pension system"?
> Does it include only the OAS and CPP systems, or does it include the public sector pension plans?
> 
> Is the proposal to further cut benefits of truly public programs such as OAS and CPP, either by increasing age limits, increasing the clawbacks and increasing early CPP penalties, or are they going to address the 800 lbs. gorilla in the room - the public sector pensions?
> ...


From some reading I did a while ago on the CPP website, I believe the definition they like for the Canadian "pension system" is a combination of both public and private arrangements, that looks to replace a percentage of working Canadian's income in retirement, with the actual level of replacement the responsibility of individual Canadians. The public part is the OAS, CPP, and GIS (with CPP meant to be a modest base), the private part in RRSPs, private savings, and company sponsored pension plans (which ever though funded by the tax payer, is were the gorilla sits).

Setting aside the issue of how to tinker with the system, something has got to be done! Boomers started turning 65 last year, and by somewhere around 2015 those 65 and over will out number those 14 and younger (first time in Canadian history). By 2036 (remember when 2036 was a very long way away!), somewhere around 25% of the population will be 65 and over (almost double the 14% in 2009), with the working-age Canadians - those 15 to 65 - declining from 70% to 60% (thereby increasing the dependency ratio). Add to this the dramatic rise of the population who will be in the cohort that is over 75 and 85 (and then combine pension and health costs), and one has to at least admit it needs to be look at, studied and most importantly, action (tough love) taken. 

For a visual look at the Boomers moving through the demographic cycle, run the population pyramid (1971 to 2056) found at http://www.statcan.gc.ca/kits-trousses/animat/edu06a_0000-eng.htm

As for the Prime Minister, he does this kind of thing all the time.


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## Daniel A. (Mar 20, 2011)

The fact is Harper is trying to jump on the band wagon.
Canada is no where near the EU or the USA in terms of pension payment.
We have a very conservative system compared to either of the above.

In the EU countries the pension is carried on the backs of the average taxpayer and has been very generous for far to long.

In the USA social security is paid to all no limits on income and pays well.

CPP is paid by the worker and very defined fully funded by contributions.
OAS comes out of general revenue and subject to clawback.
------------------------------------------------------------------------
Setting aside the issue of how to tinker with the system, something has got to be done! Boomers started turning 65 last year, and by somewhere around 2015 those 65 and over will out number those 14 and younger (first time in Canadian history). By 2036 (remember when 2036 was a very long way away!), somewhere around 25% of the population will be 65 and over (almost double the 14% in 2009), with the working-age Canadians - those 15 to 65 - declining from 70% to 60% (thereby increasing the dependency ratio). Add to this the dramatic rise of the population who will be in the cohort that is over 75 and 85 (and then combine pension and health costs), and one has to at least admit it needs to be look at, studied and most importantly, action (tough love) taken. 
--------------------------------------------------------------------------GDP will offset much of the issue that has not been factored in.
( Tough Love) Time to put heavy inheritance taxes in place after all the boomers need to support each other rather than hand the money over to kids that just can't wait to spend it.



On the other hand, Canada is different because, unlike most other countries, our public pension commitments are not a substantial threat to our public finances. The Canada Pension Plan is in long-run balance. Old Age Security currently takes only 2.41 per cent of GDP. Very few OECD countries have lower levels of public pension spending as a share of GDP than Canada. To take the extreme example, Italy spends more than 14 per cent of GDP on public pensions -- up from 10 per cent only a few years ago.

How will spending in Canada grow as the baby boomers age? By 2031 -- at the peak of the baby-boom retirement wave -- the share of GDP spent on Old Age Security will rise to 3.14 per cent, for an increase of 0.73 per cent over today’s level. Now, an increase of 0.73 per cent of GDP cannot be ignored, but neither is it disastrous.


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## sags (May 15, 2010)

Canada collects revenues from many sources in addition to employment income, such as oil royalties, gas taxes, sales taxes, HST etc.

The demographics will have an affect, but it will be much less than the "calamity" that is being described.

All revenue belongs to Canadians, not for the politicians to be directed towards their personal agenda, but to provide the goods and services that Canadians most value.

Choices on spending have to be made, and they should reflect the will of the people.

What is certain, is that "austerity measures", which is basically taking money away from people, reduces revenue from personal spending and the overall GDP. It is a self defeating measure, as Europe is discovering.

Retirees who lose any income.......would be forced to spend less and with a large portion of the population in that age group, government revenues would surely suffer accordingly.

The burden to companies of keeping older, more expensive employees on the payroll hasn't been quantified or factored in to the equation.

I don't believe these changes are about finances, but about ideology.

For some reason, there are powerful forces that seek to eliminate the middle class and drive people into abject poverty, and they have been around for a long time.

As the late Ted Kennedy remarked years ago, in a fiery speech on raising the minimum wage, 

_"What is the price.......we ask the other side? 

What is the price that you want from these working men and women? 

What cost? 

How much more do we have to give to the private sector and business? 

How many billion dollars more are you asking.....are you requiring? 

When does the greed stop........we ask the other side?

What is it about working men and women that you find so offensive?_

http://www.youtube.com/watch?v=SicFn8rqPPE


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## Dmoney (Apr 28, 2011)

sags said:


> Retirees who lose any income.......would be forced to spend less and with a large portion of the population in that age group, government revenues would surely suffer accordingly.


This logic is often repeated but makes absolutely no sense to me. 

Government gives a retiree $100 through OAS GIS etc.
Retiree spends $100, returning $13 as HST to government.
Government has a net expense of $87.

Government gives retiree $50 by cutting benefits
Retiree spends $50, government gets back $6.50
Government has a net expense of $43.50

It's the same logic of the public sector employees "well if you cut our jobs, we stop paying taxes, and government revenues suffer". Yes, revenues suffer, but the bottom line benefits because expenses have fallen dramatically.

People only tend to see the side that benefits their argument unfortunately.


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## lb71 (Apr 3, 2009)

Dmoney said:


> This logic is often repeated but makes absolutely no sense to me.
> 
> Government gives a retiree $100 through OAS GIS etc.
> Retiree spends $100, returning $13 as HST to government.
> ...


It's a bit more complicated than that. First, that $100 went to buy goods and services, and the companies that provided those goods and services paid taxes on their income. Further, those companies employeed people who paid income taxes on their earnings and paid for other goods and services. So reducing the benefit $50 has more of a ripple effect than just the HST impact. The size of the impact is debatable, and I'll leave that for the economists to fight over.


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## Dmoney (Apr 28, 2011)

lb71 said:


> It's a bit more complicated than that. First, that $100 went to buy goods and services, and the companies that provided those goods and services paid taxes on their income. Further, those companies employeed people who paid income taxes on their earnings and paid for other goods and services. So reducing the benefit $50 has more of a ripple effect than just the HST impact. The size of the impact is debatable, and I'll leave that for the economists to fight over.


No, because that $50 doesn't disappear, it just isn't paid out to the retiree. I get that the spending it would have been allocated to would have a ripple effect, but if the government takes $50 from me to give to someone else, it just changes who the ripple effect benefits. 

You could argue that a retiree is more likely to spend the full amount, but you could also argue that it could be more efficiently used elsewhere.


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## lb71 (Apr 3, 2009)

OAS is a federal program. CPP/QPP falls under the provinces, and the federal government administers the CPP. Any changes to the "retirement age" would only apply to OAS, not CPP. The feds would need to get the provinces to agree (need two-thirds approval to make changes to the CPP). Since the CPP is in decent shape, and it would be politically difficult to get all sides to agree, the feds will probably just focus on the OAS. (Although if you increase the retirement age for CPP, you could then increase the benefits or reduce the payroll deductions.)

A lot of other countries have increased their retirement age to 67. France did it last year, joining other western nations like the US, UK, Spain, Germany and Austrailia. 65 was set as the retirement age in the early 20th century, and life expectancy was a lot less than today. A modest increase in the retirement age for OAS should be done to ensure the program is sustainable for future generations.


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## lb71 (Apr 3, 2009)

Dmoney said:


> No, because that $50 doesn't disappear, it just isn't paid out to the retiree. I get that the spending it would have been allocated to would have a ripple effect, but if the government takes $50 from me to give to someone else, it just changes who the ripple effect benefits.
> 
> You could argue that a retiree is more likely to spend the full amount, but you could also argue that it could be more efficiently used elsewhere.


True. But OAS is more a social policy issue as opposed to an efficient use of resources issue.


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## Dmoney (Apr 28, 2011)

lb71 said:


> True. But OAS is more a social policy issue as opposed to an efficient use of resources issue.


Agreed. I think if we were relying on the government to efficiently allocate resources we'd be in big trouble. Unfortunately, we rely on them to allocate upwards of 50% of resources, and government heavily influences the allocation of the remaining 50% that they don't directly allocate. 

I think that raising the retirement age is a no-brainer. Why do we index benefits to inflation but not retirement ages to increases in life expectancy?

I know this issue has come up before, probably in the defined benefit pension thread. Life expectancy has increased something like 5 years since these policies were implemented. The policies were put in place as a safety net for those that simply couldn't function productively any more. My parents are both approaching 65 and show absolutely no signs of slowing down. 

Both are working full time and while my dad can retire with full pension in 2012, he'll likely choose not to. Mom on the other hand is self employed and has no intention of retiring anytime soon. It's ridiculous assuming that a 65 year old can't work in this day and age, and if we continue on this path of extending life expectancy while social support initiatives remain static, we'll soon have more retirees than workers.


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## kcowan (Jul 1, 2010)

I would guess that the most effective thing to do is lower the clawback income and increase the rate of clawback, e.g. $62K and 25%.

That will result in immediate savings. It also affects everyone right away, not just those not yet retired. A more gentle approach would be to just stop indexing the income.


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## mind_business (Sep 24, 2011)

kcowan said:


> I would guess that the most effective thing to do is lower the clawback income and increase the rate of clawback, e.g. $62K and 25%.
> 
> That will result in immediate savings. It also affects everyone right away, not just those not yet retired. A more gentle approach would be to just stop indexing the income.


Stopping to index OAS is far from gentle  If the average person knew how this would affect their income in 10, or worse 20 years time, I think they'd opt for the 65 to 67 approach instead. Problem is that most people aren't money savvy, and don't bother calculating the ramifications.

I still question whether Canada has a real problem, even when looking into the future, with our Pension system. It's represents a very small percentage of our GDP as compared with other countries. 

I'm a bit suspicious that it's simply the Conservatives using this Global meltdown opportunity to push the right wing agenda of Privatization and survival of the fittest. Just because many of the Western Countries are in crisis, doesn't mean that we're even close. Canadians need to take a long hard look at the path we're currently going down. Fact is, most people need a 3rd party to force them to save for their retirement. That was what the OAS was meant to do thru taxation. I can understand Governments being forced to reneg on those agreements with their citizens ... but not when the Country is doing OK.


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## Daniel A. (Mar 20, 2011)

At this point wanting to keep older people in the work force simply keeps young people out collecting EI & welfare. The young crowd complain the older people won't retire and open up good jobs for them.

Now we have the young crowd saying raise the retirement age.
CPP is self supporting and major changes have already been made, contributions were increased and the formula changed to allow people to apply later.

OAS has been in place since 1952 and has been changed to add the clawback clause.
To say life expectancy has increased 5 years so change the age of pensions is simplistic. 
Fortunately for me having a private pension that allowed me to retire anytime after 55 which I did gives me some healthy years to play with and provided a good job for a younger person.

It seems to me that the younger people want to be able to look to there parents for financial support have it all growing up then complain when the free ride stops.
The number of kids living at their parents at 30 years old while they find themselves is selfish to the extreme and this same crowd now would have there parents work till they die.
The 5 years increased life expectancy may very well be spent in doctors offices.


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## Dmoney (Apr 28, 2011)

The young crowd complains there aren't any jobs that will maintain the lifestyle they have grown accustomed to. My parent's generation was not above living in a dingy apartment, getting paid next to nothing while putting themselves through school and graduating debt free. They worked hard, made sacrifices, didn't have iPhones, cable, internet. Didn't go on trips to Mexico, didn't eat out every night etc. The young generation has largely forgotten how to do that.

The idea that there is a finite number of jobs is also absurd. Start a business, you've _created_ a job. Grow that business you've created several more. The knock-on effect of more employees will create yet more jobs and more expenditure. Again, the young generation has largely forgotten how this works. 

To make pensions sustainable doesn't take an overly complicated model. You've got your payments into the plan, growth within the plan, and your receipts out of the plan. Payments + growth has to be equal to or greater than receipts or else your pension is unsustainable.

Three things you can do: Increase payments (greater % per year or longer contribution period ie. work longer), increase growth (market will dictate this so can't necessarily be controlled) or decrease receipts (reduce annual receipts or work longer). 

Pension plans as they stand now are insane. You work 35 years contributing 10% of you salary a year, retire at 55 years and receive 70% of your salary for 30 years. No amount of math can make that formula work, especially when you get the average of your 5 best years (typically your last 5).


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## RedRose (Aug 2, 2011)

> What the govt. is trying to do is hide the 800 lbs. gorilla under the carpet, while telling the population to look the other way : look, there is a spider there.


I Love It!... Good one!


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## Daniel A. (Mar 20, 2011)

Dmoney said:


> ___________________________________________________________________
> Pension plans as they stand now are insane. You work 35 years contributing 10% of you salary a year, retire at 55 years and receive 70% of your salary for 30 years. No amount of math can make that formula work, especially when you get the average of your 5 best years (typically your last 5).


___________________________________________________________________

Now your speaking to Government Employee Pensions not OAS.

Remember this only speaks to a small number of workers out there and it is not clear what the government will be able to do with those contracts.
Are they rich in benefits yes far to rich for the average taxpayer.

For those not on the government payroll OAS is to important to start playing with.


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## Dmoney (Apr 28, 2011)

Daniel A. said:


> Now your speaking to Government Employee Pensions not OAS.
> 
> For those not on the government payroll OAS is to important to start playing with.


Ya, I know, I got a little sidetracked there . 
I agree with an earlier poster that one good way of dealing with this is lowering the clawback income and increasing the rate of the clawback. 

67K seems way to high to be still getting OAS. Should be half that or less in my opinion. If you're getting less than 10K from OAS, why should people making more $50K+ get any OAS?

But still, what if 20 years from now we add another 5 years to life expectancy? Another 10? At some point this is going to have to be factored into pensions, benefits etc.


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## HaroldCrump (Jun 10, 2009)

somecanuck said:


> You'd never get people agreeing to it. Those of us with a defined benefit pension pay into it, it's not handed out for free.


Keep in mind that the tay payers are paying into it as well.
I don't know what the ratio of employee-to-employer contribution is in your case, but with most public sector plans, it is $-for-$, or better.

Some, like the MP pensions, are totally outrageous at $21-for-$ or something like that.



> Can you imagine the uproar if the government proposed cutting off around 7% of everyone's pre-tax earnings for a pension? The uninformed would see it as an additional tax rather than a benefit.


What 7%?
You mean increase CPP contributions?
That is not a tax.



> I'm happy to say that my particular pension fund, HOOPP, does reasonably well.


I am sure it does well.
Unlike many private corporations, there are no shareholders to answer to, no revenue targets, no profit targets, no threat of recession, etc.
Health care is a secure, stable and growing sector.
I am sure the folks that run the plan don't look the GM plan or the Manulife plan and say to each other : _Gee, I wish I were running that fund_.


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## somecanuck (Dec 23, 2011)

HaroldCrump said:


> Keep in mind that the tay payers are paying into it as well.
> I don't know what the ratio of employee-to-employer contribution is in your case, but with most public sector plans, it is $-for-$, or better.


It's $1.26 for every $1 up to the annual MPE, and then a reduced amount after.



HaroldCrump said:


> What 7%?
> You mean increase CPP contributions?
> That is not a tax.


I mean if the government said "we're going to increase everyone's pensions at the cost of an additional 7% off of each pay cheque". People would consider it a tax, even if it isn't.


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## HaroldCrump (Jun 10, 2009)

somecanuck said:


> It's $1.26 for every $1 up to the annual MPE, and then a reduced amount after.


That is indeed very generous, I am sure you will agree.

My point above (now buried among 2 pages already) was that it is wrong for the govt. to talk about further reducing and clawing back truly public programs like CPP and OAS (which are open to everyone without any bias) which pay peanuts anyway to even those that have contributed life-long, while at the same time continue overly generous (and in some cases totally outrageous) public sector pension plans.



> I mean if the government said "we're going to increase everyone's pensions at the cost of an additional 7% off of each pay cheque". People would consider it a tax, even if it isn't.


CPP is no more a tax than any other public sector pension plan.
The key difference is that any increase in the employer portion of CPP contributions will affect private corporations and businesses.
Whereas in the case of public sector and federal/provincial/municipal plans, the employer is the tax-payer.


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## Daniel A. (Mar 20, 2011)

I tend to agree with your view HaroldCrump.

On one hand we know that those without pension savings over and above CPP & OAS are in for a hard ride as it is.
Fully 65% don't have much in the way of pension so why the move to play with what is there.
Maybe the feds have a way of downloading this responsibility to the provinces.


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## somecanuck (Dec 23, 2011)

HaroldCrump said:


> My point above (now buried among 2 pages already) was that it is wrong for the govt. to talk about further reducing and clawing back truly public programs like CPP and OAS (which are open to everyone without any bias) which pay peanuts anyway to even those that have contributed life-long, while at the same time continue overly generous (and in some cases totally outrageous) public sector pension plans.


I agree, but dang nabbit, I don't want to lose my pension.



HaroldCrump said:


> CPP is no more a tax than any other public sector pension plan.
> The key difference is that any increase in the employer portion of CPP contributions will affect private corporations and businesses.
> Whereas in the case of public sector and federal/provincial/municipal plans, the employer is the tax-payer.


Agree again, but I still think the public perception, while misinformed, would be that it's just less money in employees pockets.


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## sags (May 15, 2010)

An aging population in the workforce creates problems of it's own.

High cost, low productivity, health issues would be among the concerns.


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## Square Root (Jan 30, 2010)

it's funny. When we see the problems in Greece we tend to scoff at them as being lazy, under taxed, unrealistic, greedy, etc. When rational concerns about cost and deficits are raised here the discussion invariably turns to entitlement and fainess. Not surprising I guess that the discussion here should focus on only half the issue ie the expenditures. Do people want higher taxes? Because that would inevitably be the result of the status quo.


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## lb71 (Apr 3, 2009)

Daniel A. said:


> At this point wanting to keep older people in the work force simply keeps young people out collecting EI & welfare. The young crowd complain the older people won't retire and open up good jobs for them.


There is also a real concern of labour shortages in some areas, in particular with the boomers starting to hit retirement. So there is also a benefit to the general economy.


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## andrewf (Mar 1, 2010)

CPP is a tax in one sense: it costs you directly and indirectly 9.9% of your YMPE. Only 6% of that goes to cover the cost of the benefit you will receive. 4% goes to make up for previous underfunding when CPP was treated as a PAYGO. Thus, doubling CPP benefits would only require an additional 6% of income. But that 4% is a tax, taken from you with no concomitant direct personal benefit.


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## Brenner (Jan 17, 2012)

HaroldCrump said:


> That is indeed very generous, I am sure you will agree.
> 
> My point above (now buried among 2 pages already) was that it is wrong for the govt. to talk about further reducing and clawing back truly public programs like CPP and OAS (which are open to everyone without any bias) which pay peanuts anyway to even those that have contributed life-long, while at the same time continue overly generous (and in some cases totally outrageous) public sector pension plans.


To be fair the government has started working on these public sector pension plans. If you look at recent CBAs they've been hiking the contribution side of the equation significantly. 

But I fully agree they need to tackle the benefit side as well, seems to be a complete non-starter with unions though. The boomers have quite the ponzi scheme setup enjoying low contribution rates and occasional pension "holidays" while make the next gen fork the bill.


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## kcowan (Jul 1, 2010)

andrewf said:


> OAS/GIS are another story, as they are PAYGO. I suspect OAS eligibility ages might be raised effective 2022 or something.


OAS was introduced in 1952 and it was funded by extra taxes.


[Url=http://publications.gc.ca/Collection-R/LoPBdP/MR/mr58-e.htm]Government of Canada[/Url] said:


> The Old Age Security Act provided for an earmarked old age security tax to finance the universal pension. The special levy, effective in 1952, was actually a composite of three taxes – a tax on the manufacturer’s selling price ore duty-paid value of all items covered by federal sales tax, a tax on personal income, and a tax on corporation income. With the exception of the 1952 tax year, the tax rate was initially set at 2% for each component, with a limit of $60 per year on the tax on personal income as applied to the first $3,000 of taxable income. The combined levy became known as the "2-2-2 formula" and tax receipts were paid into an Old Age Security Fund kept as a separate account in the Consolidated Revenue Fund. No actual change in the overall sales tax rate occurred, since 2% of the 10% sales tax rate was re-allocated and credited to the new Fund. Benefits were paid out of the Old Age Security Fund, with the Minister authorized to make temporary loans to the Fund if pension benefits payable exceeded credits to it. The Minister was also required to review the state of the Fund annually.
> 
> In 1959, the 2-2-2 formula was changed to a 3-3-3 formula, so that the tax rate on each of the three components was increased, on a staggered basis, to 3% from 2%. As well, the maximum for the personal income tax component was increased to $90 from $60 annually. The personal income tax component was again increased effective 1 October 1963, with a 4% rate applied up to $120 per year.


So some could argue that we have already paid for OAS much like US citizens have paid for their Social Security. It is just the government of the day that wants to pretend these extra taxes never happened.


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## andrewf (Mar 1, 2010)

Nonsense. Current year taxes paid for current year benefits (pay as you go aka PAYGO), if anything. Nothing was 'prepaid'.


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## MoneyGal (Apr 24, 2009)

Keith. From later on in your own link: 

_The old age security tax was eliminated effective 1 January 1972, although the Fund was not abolished until 26 June 1975 by an amendment to the Old Age Security Act. The sales tax component became part of the regular sales tax, with no net change in the amount paid by the tax-payer. Abolition of the personal income tax component, beginning in the 1972 taxation year, was accompanied by a major restructuring of personal income tax rates implemented by the 1971 Income Tax Act. As well, each year the Minister of National Revenue was required to credit the Fund with an amount equivalent to the net amount lost by these changes. Currently, all old age security benefits are paid directly from the Consolidated Revenue Fund on a pay-as-you-go basis.​_


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## fraser (May 15, 2010)

Every time I think of MP pensions I think of the stunt that the Alliance Party did years ago in Edmonton with a wheelbarrow full of loonies.

They publically announced that every Alliance MP would leave the government superanuation pension plan and refuse the pension.

What was not made very public was that at the end of the day only ONE of those individuals did not take the MP's pension....including one of the stars of the event (I think she was holding the wheelbarrow). They were subsequently allowed back (after quietly requesting it several times) by an order in counsel signed by Jean Cretien I believe. Guess who never took the pension to this day??? If you said Preston Manning you would be correct. All of the others are happily drawing their tribute to this day.

So if the Alliance members took the pension, and most Tories feel an entitlement, what are the chances of getting the current cabinet and caucus to agree to any clawbacks???? Often times you cannot tell the real colour of the pig when it is wallowing in dirt and mud, fighting like the devil to get to the trough.


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## sags (May 15, 2010)

Bill Robson, President of the right wing CD Howe Institute says...........

He "hopes" employers are "enthusiastic" about keeping older employees working.

It sounds like this was really thought through........................not.


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## Daniel A. (Mar 20, 2011)

It is very difficult to know what to think at the moment sags.

The last hook thrown was with the changes to CPP effective in 2011.
My concern with the OAS is that I'm already retired yet seven years away from OAS.

I remember in the nineties when the government went nut's with taxes and gouged us in the higher income group and was pleased when taxes started to drop. The nineties still takes the cake for high taxes.


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## dubmac (Jan 9, 2011)

This article sure puts the "math" behind the decision into perspective ...
No question in my mind - cuts are a'comin for OAS...
http://www.canada.com/life/Coyne+Boomers+howl+they+change+math+cuts+coming/6074665/story.html


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## Daniel A. (Mar 20, 2011)

I'd rather deal with facts.

http://www.theglobeandmail.com/news/politics/research-belies-pms-warning-about-oas/article2320279/

The Conservative government won't see another term.


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## MrMatt (Dec 21, 2011)

I didn't think he actually announced any changes, just that it needs to be looked at.

There is a simple fact that we need to acknowledge, in 20 years we will have a lot of people drawing OAS and other retirement benefits, and not as many people to support them.

Everyone (even in the "no problem" article) agrees that the costs will increase by more than inflation over that time.
Likely the increase will be more than inflation+taxpaying population growth IMO.

Now, just really simply if the spending increases faster than inflation, long term won't we run out of money unless we do something?

Saying it's only a 50% increase in "real dollars", or that it's some small fraction of government spending doesn't mean that it isn't a problem. Those types of statements and stats are just to try and get people to ignore the problem.

Future retirement funding is a problem (small in Canada, big in the EU) and we need to be thinking of it. 

To look at things now, so early corrections can be made far in advance is reasonable and prudent. I don't like the fearmongering that he's going to destroy everything. I'd much rather the adjustments get planned now, than waiting 30 years and telling me "oh we're short, your OAS is going to be cut 50%".


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## Square Root (Jan 30, 2010)

Agree Matt. The sooner we deal with this the better. Sticking our head in the sand- like Greece, would be a mistake. Bottom line is people should do their best to provide for their retirement and not rely entirely on the state.


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## Four Pillars (Apr 5, 2009)

I don't understand why we need to have an OAS payout that is only partially income tested after about $65k in individual earnings (ie about $130k per couple).

A couple making ~$130k needs their full OAS payment? I can't recall the upper income limit for receiving OAS but I think it's over $100k. So a couple making $200k can still get a small amount of OAS.

This is stupid.

I would suggest getting rid of OAS and increase the potential GIS payout by the same amount that OAS used to pay which in effect would make the OAS:

1) Fully income tested
2) Only available for people who really don't make much moola.


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## andrewf (Mar 1, 2010)

OAS is welfare for rich people. It is a bit nuts. 

Beyond that, OAS as a problem pales beside the cost implications of health care provision. We should be dedicating way more institutional attention to that than OAS. It is the single biggest problem out government is facing over the next few decades.


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## Square Root (Jan 30, 2010)

andrewf said:


> OAS is welfare for rich people. It is a bit nuts.


I get your point. But to be more accurate it's welfare for most people including many that could do without it.


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## Four Pillars (Apr 5, 2009)

andrewf said:


> Beyond that, OAS as a problem pales beside the cost implications of health care provision. We should be dedicating way more institutional attention to that than OAS.


Agreed, but improving OAS (ie removing it) is much easier than improving the health care system, so it does make sense to work on both.


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## Zoombie (Jan 10, 2012)

I think making some minor changes now is a good idea as well, as the demographics require it. 
I think more people of my generation (mid 20's) need to realize that they will have to fund their own retirement, because there simply won't be anything left unless there is another boom or surge in population on the way.


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## kcowan (Jul 1, 2010)

andrewf said:


> Beyond that, OAS as a problem pales beside the cost implications of health care provision. We should be dedicating way more institutional attention to that than OAS. It is the single biggest problem out government is facing over the next few decades.


The feds have addressed that by limiting the transfer to the provinces to 6% inflation which is below the actual rate of increase. This eventually means the end of universal healthcare as each province decides who will get what. My own plan is to move to Alberta but only live there in the summer! 

I already get OAS so I will probably be somewhat protected. I expect the clawbacks to be increased and the threshhold reduced. But it is unlikely to impact me in a big way.


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## kcowan (Jul 1, 2010)

MoneyGal said:


> Keith. From later on in your own link:


Yabbut this just puts it in the same category as US Social Security. The elimination of the Chinese wall in funding happened in both cases.


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## MoneyGal (Apr 24, 2009)

kcowan said:


> Yabbut this just puts it in the same category as US Social Security. The elimination of the Chinese wall in funding happened in both cases.


Yours is a strange argument. 

You argued (earlier) that Canadians have "paid for" OAS via targeted taxation, "like in the US". 

I posted (from your own link) that any direct connection between a tax paid and a benefit received ended in 1972. 

Now you are claiming that OAS is in the same category as US SS. 

US SS (the old age component, which is what we are discussing) is primarily funded via dedicated payroll taxes under FICA. 

??????


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## Daniel A. (Mar 20, 2011)

First very few people retired have the kind of retirement income some of you speak of probably less than 5%.
My guess is that if a couple retired from senior management government jobs they would be in that range of income.

Comparing the problems of the EU to Canada they are vastly different in almost every respect.
The average retirement income in Canada is less than 30,000.00 per household.

The G&M post I made tells everyone what the top professionals who studied the issue have to say.
This is no different than the crime bill the Conservatives are pushing through,crime is dropping no need for the changes say the experts yet change is coming at a very high cost to all of us.

True the government has not yet said what changes it is going to make, but since being elected and looking at their direction it won't be good.

Attempting to play the demographic card is a red herring. If one is under 50 years old no problem with the future change time is on your side.
For those of us over 55 years already retired this may be a big problem.

Lets say the government came along and said tomorrow we will put in place an inheritance tax of 30% it won't affect my bottom line why would I care.
We'd sure hear from all those under 50 who have their calculators out.

This government won't be elected in the next election, if they had even mentioned these changes in the last election they would not be in power.

Finding a balance for expenditures everyone can agree is needed.


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## sags (May 15, 2010)

I wouldn't be surprised if Conservative MPs are getting an earful from their constituents, and Harper may face a revolt in his own caucus.


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## kcowan (Jul 1, 2010)

MoneyGal said:


> Now you are claiming that OAS is in the same category as US SS.
> 
> US SS (the old age component, which is what we are discussing) is primarily funded via dedicated payroll taxes under FICA.
> 
> ??????


The tithe is the same but in Canada it stopped being earmarked for a separate fund. In the US, the tithe is still specific but is no longer earmarked for a separate fund. It is the lack of the separate fund that is the same. All working people have contributed to OAS (albeit indirectly).


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## MoneyGal (Apr 24, 2009)

Hmmm. I think we're going to disagree on that point. The US Social Security Trust Fund is a real thing, comprised of two separate funds. 

The specific one we are discussing is the Old Age and Survivors Insurance (OASI) Trust Fund, which holds (in trust) special interest-bearing federal government securities bought with surplus OASI payroll tax revenues. 

The trusts (both the OASI and the disability insurance fund) typically run surpluses which are exchanged for special U.S. government securities, which are deposited into the trust funds. 

The funds are considered "off budget" and are treated differently from other government spending in many regards...but the existence of a separate fund is very much in evidence and I'm not sure how anyone could argue otherwise. Unless you are arguing that the treatment of the surpluses invalidates the existence of a separate fund?


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## kcowan (Jul 1, 2010)

No I admit that I do not know all the details, MG. However, both programs are at risk because they are not projected to be self-funding during the boomer bubble, but the Canadian Government has forgotten that OAS was "self-funding" when it was established and for 20 years after that. It is now widely-considered to be a form of welfare.


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## MoneyGal (Apr 24, 2009)

OK, but it *is* welfare, so it makes sense that it is "widely considered to be welfare." 

Whether or not it was self-funding in the past - I don't see how that applies to today. 

The OAS system hasn't been self-funding for at least 40 years (2012-1972) and it often ran deficits (charged to the federal treasury) when there was a separate fund in existence.


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## MoneyGal (Apr 24, 2009)

The link you posted shows that the fund ran deficits for 12 of the 21 years for which data is presented (1952-1972).


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## LondonHomes (Dec 29, 2010)

Seems like Harper has touched the 3rd rail of politics and is backing off now. The talking points seem to have moved from strategic direct to a policy review.


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## Spidey (May 11, 2009)

With an aging population, increasing life-expectancies and more costly health-care most experts seem to agree that the current system is unsustainable. However, the government probably have to give potential retirees at least 20 years lead time so they can adjust their savings, etc. to adapt to the OAS changes. That's likely what the Harper government had in mind. But there's a problem. Regardless of government denials regarding changes not affecting current pensioners, opposition members will scare the bejesus out of current pension holders and those close to retirement. The government then has a dilemma -- do they pay the price for making changes, to ensure the integrity of the system, that will have no significant fiscal benefit for 20 or more years down the road or do they leave the problem for a future government to deal with? Unfortunately survival probably means the latter option is the only viable one.


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## kcowan (Jul 1, 2010)

Yup just expect politicians to kick the can down the road to save their own asses.


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## stephenheath (Apr 3, 2009)

Spidey said:


> With an aging population, increasing life-expectancies and more costly health-care most experts seem to agree that the current system is unsustainable. However, the government probably have to give potential retirees at least 20 years lead time so they can adjust their savings, etc. to adapt to the OAS changes. That's likely what the Harper government had in mind. But there's a problem. Regardless of government denials regarding changes not affecting current pensioners, opposition members will scare the bejesus out of current pension holders and those close to retirement. The government then has a dilemma -- do they pay the price for making changes, to ensure the integrity of the system, that will have no significant fiscal benefit for 20 or more years down the road or do they leave the problem for a future government to deal with? Unfortunately survival probably means the latter option is the only viable one.


Or they get out and get ahead of the message and own the issue. Make sure they are clear and straightforward about it not impacting people currently or imminently getting it, and make sure they are letting the younger generations (who already expect changes need to be made to be sustainable) know this is necessary for their benefit? The liberals did that during the deficit fighting 90's and Paul Martin is still hailed as one of our best finance ministers.


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## andrewf (Mar 1, 2010)

Backing down? That doesn't sound like the strongstablenationalmajorityconservativegovernment we (38 ish % of the 60 ish percent of electors) voted for.


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## Daniel A. (Mar 20, 2011)

Had they put the issue on the table at election time they would not be there.


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## pwm (Jan 19, 2012)

*The war against seniors’ pension reforms is a war against the young.*

Great item in today's G&M by Margaret Wente on this topic. As she says: "The war against seniors’ pension reforms is a war against the young." 
I agree with her completely. I'm retired and my "after tax" income is more than when I was working. My tax rate is so low, I'm embarrassed to even admit it. 

We have to have an intelligent discussion on how we will fund retirees going forward, and the opposition parties are not helping by demonizing Harper for even trying to open the discussion.


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## Daniel A. (Mar 20, 2011)

I also read the Margaret Wente piece and don't agree, there is no war against the young.
The fact is those who conducted a study on the issue for the Conservative government stated clearly that there was only a small issue.
When Harper made the announcement his own people could not understand why after being advised he would take the position he did.
Harper does have a committee working on the OAS issue yet refuses to say what the possibilities might be.

I'm trying to understand how your after tax income can be more than when you worked ?

I'm retired as well and now in a lower tax bracket but so is my income.

We can rid ourselves of the young V boomers argument for starters.
The young stand to benefit from the wealth of boomers going forward not something they wish to admit it's called inheritance so to save the young from paying down the road in taxes maybe a 30% tax on the assets of boomers when they pass away. 

In Italy fully 14 % of their GDP goes to fund pensions.
In Canada 3.0% for OAS not much, expected to rise by 0.7% at the peek. 
Maybe we should turn the clock back to the nineties when taxes were extreme I know because I was paying the lions share.

Fund pensions going forward a small increase in tax rates will take care of it or integrate OAS & CPP instead. The problem with this is the number of people who don't get the current max on CPP.
The average paid out in CPP is around 525.00 per month at this time.

I do feel perplexed with the Boomers V Youth issue.

Canada is a very social country none of us has the freedom to pick and chose where our tax dollars go, this is the system we chose or path we chose from the start of Confederation.

The expectations have changed, had I been working in the USA for my working life I personally would have saved much more just in taxes alone at the expense of others.
That is not the system we chose in Canada.
I personally have contributed far more in taxes working than services that benefit me personally.
It is not about me !!! it is about supporting an inclusive system.


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## arrow1963 (Nov 22, 2011)

(Long, summary: don't touch the retirement age. Lower the OAS clawback threshold. Decrease the marginal rate of clawback.)


It's all speculation until the Fed. Conservatives come out with an actual plan, though I have to say, I think this is largely a manufactured crisis. There are tradeoffs to be made in funding public pensions in the long term, but much of the discussion is framed solely with irrelevant facts, including the nominal (not inflation adjusted) projected increase in OAS costs over time, and the proportion of the population at working age. Real consideration of these issues will relate to pension spending as a proportion of GDP (with OAS rising from 2.3 to 3% by 2050 if I remember K. Milligan's (UBC) numbers correctly) and the resulting impact on marginal tax rates. Too often these discussion take place with no numbers, or with irrelevant figures intended to fearmonger.

There is no inherent reason why there should be a discontinuity as to how society treats 64 and 65 year olds. As a result of culture, existing laws, and shared assumptions regarding how lives should progress we have our existing retirement system, which should be open to review and revision.

Increasing the retirement age is not, in my opinion, the best way to reform the system, though I can see why it is attractive. If the fed. government was to move to a retirement age of 67 for those under 50, that would likely have support from those above 50 (doesn't affect us and minimizes the likelihood of future reforms which impact us) and those under 35 (who might rationally worry more about tax burden than retirement age). So that's likely to pass the median voter test.

The problem with this change is that it's regressive. A social gradient exists in health, such that Canadians have lower (average) life expectancies and self-reported health status at each step down the income ladder. This is an extremely robust research finding, but for one example:

Income disparities in health-adjusted life expectancy for Canadian adults, 1991 to 2001 (Statistics Canada)
http://www.statcan.gc.ca/pub/82-003-x/2009004/article/11019-eng.htm#a3










At age 25, men in the 1st income decile could expect to life to 62, men in the median deciles could expect to live to ~71.5, and men with the highest incomes could expect to live to 76. 

Raising the retirement age may mean that the poorest Canadians don't qualify for generous retirement funds (relative to EI, or disability support) when they are in their 60's and are unable to work due to health. For wealthy Canadian men, they may be expected to lose 2/11 of their lifetime OAS funding, if they even qualified for it (they may have retirement incomes which are too high). A median Canadian male may expect to lose 1/3 of his OAS support.

I haven't seen a breakdown on the relative costs of different proposals, but I think a much better approach to pension reform would be to lower the OAS clawback levels and decrease the marginal rates of clawback. I would support $30,000 for individuals and $50,000 for couples, with a clawback rate of 10%. If the couple specific figure is untenable, then probably just $30,000 for individuals.

Ideally we would better integrate CPP, GIS, and OAS so as to mitigate the ridiculous marginal tax rates that may discourage low income Canadians from saving for retirement. Effective use of TFSAs should provide a great retirement vehicle for low income Canadians to avoid pension clawback, but it may always be unclear whether that's a feature of the TFSA system, or a percieved loophole which will be under legislative threat.


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## Sasquatch (Jan 28, 2012)

*Silly me*

When I first read "Government to look at Pensions" I thought, good, they're finally going to look at their own outrageous pensions 
Little did I know that they were going to look at "OUR PENSIONS" 

Unless they are ready to committ political suicide, they had better look at their own shameful robbery of the public purse disguised as "MP's pensions", before they even consider looking at pensions of John Q. Public.

That's all I'm going to say on this, since any more would probably get my post deleted and this is only my second one


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## sags (May 15, 2010)

I'm not sure how many people it would affect, but another option to look into is if OAS should be paid to people living outside of Canada.

I am not sure why Canadian taxpayers should fund OAS payments that are of no benefit to the Canadian economy, although there may be significant reciprocal foreign pensions being spent here.


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## kcowan (Jul 1, 2010)

I know that UK pensions are paid here. The only thing they give up is COLA by living outside the country.


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## sags (May 15, 2010)

US Social Security is paid here as well, but those are pensions akin to our CPP. 

There are other options to think about as well, such as paying OAS for a 10 year stay in Canada. 

From what the government is claiming, perhaps we shouldn't be so generous as to give people OAS for such a short residency period.

I know some Chinese people who complained the grandmother they recently brought to Canada, had to wait 10 years to collect. (This was when the government was talking about a 2 year residency period).

Why are we paying OAS to elderly immigrants who locate here for the pension and health benefits, or who stay in the country long enough to collect benefits and then go home? (as in all the people we had to rescue from Lebanon a few years ago)

I am not sure.......but do we top up their reduced OAS with GIS as well?


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