# OAS - is it fair ?



## osc (Oct 17, 2009)

I think OAS is an unfair payment. I am all for being taxed to help the poor, but I think OAS is totally unfair.
Since OAS is income based, there are lots of multi-million net worth old people receiving what is essentially a transfer of cash from the working generation, which are usually quite poor. So the working poor, who cannot afford a house, is paying those high taxes, which are used to pay OAS for old people who live and own houses worth 2-3 million. Is it just me who sees something fundamentally wrong in that picture?


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## NorthernRaven (Aug 4, 2010)

If you really don't mind being taxed for income support programs, is there really an issue? I'd suspect the number of recipients who have houses worth "$2-3 million" that don't also have taxable income heading into the clawback range isn't that large. Even without full clawback, they will have taxable income of some sort, and so are still contributing tax revenue. If they really have such big homes and small incomes their estates (or eventual sale by heirs) will likely be kicking in capital gains and maybe probate fees into the system. 

I don't know what the actual numbers would be, and there may be completely separate issues about OAS and future demographics, but making judgements on social policy based on a vague feeling that someone, somewhere may be an outlier doesn't seem reasonable.


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

If you paid into a fund, you should be able to withdraw from that fund. 

I also think it's an extreme form of socialism that scrutinizes payments to all, just because there are some less fortunate out there. If people don't have enough money to make ends meet, that's why there's higher education and working to better yourself. Stop expecting society to help those who won't help themselves, at the expense of those who have worked hard to build up their wealth.


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## OptsyEagle (Nov 29, 2009)

osc said:


> So the working poor, who cannot afford a house, is paying those high taxes, which are used to pay OAS for old people who live and own houses worth 2-3 million. Is it just me who sees something fundamentally wrong in that picture?


The working poor pay pretty much nothing in taxes compared to rich people. The tax system was never meant to be fair and because of this rich people get the pleasure of looking after the poor people. As the other poster said, most people living in those expensive houses probably are being clawed back OAS and if not, they most likely paid something more then their fair share of taxes over their lifetime. 

I am sure there are a few exceptions, but it is not the norm.


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## sags (May 15, 2010)

No, it isn't fair,

To be fair.........either

Retired people and people on welfare should be allowed unlimited assets

Or

Retired people and people on welfare should not be allowed to keep assets.

That would be fair, but life isn't fair.

It all depends on who makes the rules.


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## kcowan (Jul 1, 2010)

OAS is an Entitlement Program. What is unfair is that the eligibility test is income-based. It should be asset-based. As it stands, it rewards people who live in their own homes, and penalizes people who have sold their homes to fund a senior living facility. There should be a geographic exemption for assets needed for an average family home. Any assets above that level result in a progressive clawback.

But will it change? Not without a lot of effort by CARP and other concerned parties.


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## osc (Oct 17, 2009)

kcowan said:


> OAS is an Entitlement Program. What is unfair is that the eligibility test is income-based. It should be asset-based.


I agree.


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## GeniusBoy27 (Jun 11, 2010)

An asset-based program is fraught with issues as well. It's not too hard to hide and/or shift assets, so that they're not easily measured (e.g. offshoring in numbered companies).


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## kcowan (Jul 1, 2010)

To say that making the system more equitable is futile because of tax evaders is specious. The vast majority of Canadians are law-abiding, income tax paying citizens. And that is where the social programs need to be focused.


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## Square Root (Jan 30, 2010)

Maybe it should be asset based but it is after all the INCOME Tax Act. There is currently very little in personal tax law relating to assets other than capital gains which are income. Filing a personal balance sheet each year would be a huge departure from current law and I suspect too complicated for most people.


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## andrewf (Mar 1, 2010)

It should be phased out, but slowly. I'm willing to concede that current retirees have paid in to the system and deserve some payout from it. I'd start by gradually lowering the clawback threshold and reducing the benefit rate based on year of birth. Each new wave of retirees would receive a smaller benefit until, in 25 or so year, it can disappear almost entirely.

Personally, I'd rather we directed those funds to a minimum income (something like GIS, but for everyone).


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## MoneyGal (Apr 24, 2009)

You and Hugh Segal (one of my former profs in the School of Policy Studies at Queens' University). Segal has long been a proponent of a guaranteed annual income.


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## OhGreatGuru (May 24, 2009)

osc said:


> I think OAS is an unfair payment. I am all for being taxed to help the poor, but I think OAS is totally unfair.
> Since OAS is income based, there are lots of multi-million net worth old people receiving what is essentially a transfer of cash from the working generation, which are usually quite poor. So the working poor, who cannot afford a house, is paying those high taxes, which are used to pay OAS for old people who live and own houses worth 2-3 million. Is it just me who sees something fundamentally wrong in that picture?


There are so many things wrong with this post, and some of the replies, that I don't know where to begin. I will content myself with a simple rant.

You have an unseemly envy of the poor widow in North Vancouver who, together with her late husband, scrimped and saved to buy a home for $25K 50 years ago, all the while paying taxes for 45 years to subsidize rents for the "working poor", and now finds herself barely able to pay the property taxes because offshore money pouring into the real estate market has inflated the market value of her little bungalow to $2M. Your solution is to kick her out into the street before she can receive the OAS that she and her husband worked for all their lives.


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## MoneyGal (Apr 24, 2009)

Well, she could just defer those property taxes until she dies.


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## OhGreatGuru (May 24, 2009)

kcowan said:


> OAS is an Entitlement Program. What is unfair is that the eligibility test is income-based. It should be asset-based. As it stands, it rewards people who live in their own homes, and penalizes people who have sold their homes to fund a senior living facility. ...


I fail to see any difference in reward or penalty. Both would receive the same OAS.

Eligibility for OAS is not primarily income-based. It is based on your years of residency in Canada between the ages of 18 and 65. The only income basis for OAS is that for income over ~$65K the government starts to claw it back at a rate of 15 cents for each $1 above the threshold.

I think you and other posters are confusing OAS with GIS.


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## osc (Oct 17, 2009)

OhGreatGuru said:


> You have an unseemly envy of the poor widow in North Vancouver who, together with her late husband, scrimped and saved to buy a home for $25K 50 years ago, all the while paying taxes for 45 years to subsidize rents for the "working poor", and now finds herself barely able to pay the property taxes because offshore money pouring into the real estate market has inflated the market value of her little bungalow to $2M. Your solution is to kick her out into the street before she can receive the OAS that she and her husband worked for all their lives.


OAS and GIS are welfare programs. I don't see why rich people should get them. She could buy a better house in a retirement community and have $1.5M left to live off. That should last at least 30 years. I don't see why the young generation who cannot afford the same house that she could 50 years ago (or any other house) should pay her property taxes through a welfare program.


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## osc (Oct 17, 2009)

MoneyGal said:


> Well, she could just defer those property taxes until she dies.


Another program to transfer money from the taxpayer poor to the high net worth rich. At least the interest should be what anyone else would pay for a home-equity loan.


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## HaroldCrump (Jun 10, 2009)

osc said:


> Another program to transfer money from the taxpayer poor to the high net worth rich.


Yes, I absolutely agree with that.
This program should be scrapped.
Folks that need to use this program should be required to get a reverse mortgage.


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## OhGreatGuru (May 24, 2009)

osc said:


> OAS and GIS are welfare programs. I don't see why rich people should get them. She could buy a better house in a retirement community and have $1.5M left to live off. That should last at least 30 years. I don't see why the young generation who cannot afford the same house that she could 50 years ago (or any other house) should pay her property taxes through a welfare program.


The problem is your definition of "rich" is based on net worth, not income. Followed to its logical conclusion, we should get rid of income tax, GST, and HST and simply go back to taxing people's property. 
A couple of minor problems:
- Property taxes are already considered to be a regressive form of taxation. You propose to extend the same regressive principle to all assets.
- Since most people's main asset is their home, residents of Vancouver, Calgary, and Toronto will start paying an even bigger portion of the tax bill;
- to avoid paying taxes the rich can just avoid accumulating any assets. Rent or lease everything, and spend the rest on high living.


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## kcowan (Jul 1, 2010)

OhGreatGuru said:


> The problem is your definition of "rich" is based on net worth, not income. Followed to its logical conclusion, we should get rid of income tax, GST, and HST and simply go back to taxing people's property.
> A couple of minor problems:
> - Property taxes are already considered to be a regressive form of taxation. You propose to extend the same regressive principle to all assets.
> - Since most people's main asset is their home, residents of Vancouver, Calgary, and Toronto will start paying an even bigger portion of the tax bill.


No not if we make the average asset value of a house in their neighborhood a deduction.


> - to avoid paying taxes the rich can just avoid accumulating any assets. Rent or lease everything, and spend the rest on high living.


Yes but we will tax them heavily through HST. This is more progressive than taxing their income. By taxing income, we are discouraging people from taking their capital gains. This is what aggravated the Nortel widow fiasco, both for share holders and for pension funds.


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## osc (Oct 17, 2009)

OhGreatGuru said:


> The problem is your definition of "rich" is based on net worth, not income.


It's both net worth and income. Both should be considered when people are awarded welfare.



OhGreatGuru said:


> A couple of minor problems:
> - Property taxes are already considered to be a regressive form of taxation. You propose to extend the same regressive principle to all assets.
> - Since most people's main asset is their home, residents of Vancouver, Calgary, and Toronto will start paying an even bigger portion of the tax bill;


Not really, I was talking about welfare, not increasing taxes.



OhGreatGuru said:


> - to avoid paying taxes the rich can just avoid accumulating any assets. Rent or lease everything, and spend the rest on high living.


Again, it's about welfare, not additional taxes. 
High living is taxed too, with sales taxes, which I think should be a larger portion of the tax revenue anyways.
If people would stop living in houses they could not afford (like a retired on welfare living in a $2M house) then the price of houses would come down.


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## GeniusBoy27 (Jun 11, 2010)

osc said:


> If people would stop living in houses they could not afford (like a retired on welfare living in a $2M house) then the price of houses would come down.


I doubt the retirees who cannot afford to live in large houses will lead to a house price correction. I don't think the numbers of those are THAT high.


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## OhGreatGuru (May 24, 2009)

osc said:


> It's both net worth and income. Both should be considered when people are awarded welfare.
> ...
> Again, it's about welfare, not additional taxes.
> ...
> If people would stop living in houses they could not afford (like a retired on welfare living in a $2M house) then the price of houses would come down.


Since you begin with the a priori conclusions that:
a) there are retirees living in $2M homes who are on "welfare" (and at least a sufficient number that we should be worried about it from a public policy perspective); and
b) OAS is the same as "welfare".

it rather rules out the possibility of reasoned debate.


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## osc (Oct 17, 2009)

GeniusBoy27 said:


> I doubt the retirees who cannot afford to live in large houses will lead to a house price correction. I don't think the numbers of those are THAT high.


In Vancouver and most of its suburbs, most houses are worth more than $1M and are owned by the following categories of people:
- wealthy businessmen (income over $300k/year) 
- domestic speculators
- international speculators and criminals (for money laundering purposes)
- people who bought more than 25 years ago

Most working people (at least those making less than $200k/year) cannot buy a house at the current prices. The retirees could have bought those houses 30-40 years ago and can afford to live in those houses now because they can avoid paying property taxes (the government allows deferral till after death) and are sponsored by taxpayers through very generous welfare programs specifically targeting the old generation and which are not available to people younger than 65. 
So I think it's a real possibility that there is a large number of retirees living in houses worth over $1M and who wouldn't afford them if the government were not so generous.
I don't have official statistics about this, so this is speculation. I am opened to change my position about this if someone could point me to official statistics about the age of house owners.


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

OhGreatGuru said:


> Since you begin with the a priori conclusions that:
> a) there are retirees living in $2M homes who are on "welfare" (and at least a sufficient number that we should be worried about it from a public policy perspective); and
> b) OAS is the same as "welfare".
> 
> it rather rules out the possibility of reasoned debate.


I agree with this. osc continues to play the same broken record in every thread he posts to in this forum. Clearly a laughable position to say the least. We've seen posters like this in other forums, they all exhibit the same trollish behaviour.


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## dogcom (May 23, 2009)

Even though I disagree with osc on many points he does have the right to make an argument. Laughable or not I like the arguments you guys make against him. 

These arguments help us see both sides even if it is extreme as long as it is civil.


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

Sure. But osc keeps making the exact same point, in virtually every single thread he participates in. If not trollish, it is borderline obsessive and VERY predictable. He seems to think that an 18 year old who hasn't paid into the system deserves, by virtue of their mere existence, the same benefits than a 65 year old who worked all their life and paid into is entitled to. Oh and let's not forget the value of said 65 year old's home. The argument has been discussed and refuted by virtually every participant, yet he keeps making the same point over and over. It has gotten quite old. This is not adding value to the forum.

Just drop it osc.


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## kcowan (Jul 1, 2010)

osc said:


> In Vancouver and most of its suburbs, most houses are worth more than $1M and are owned by the following categories of people:
> - wealthy businessmen (income over $300k/year)
> - domestic speculators
> - international speculators and criminals (for money laundering purposes)
> - people who bought more than 25 years ago....


I live in West Vancouver and I am willing to accept your assertion for the sake of argument. So you would want the ones who purchased 25 years ago to sell their homes and rent somewhere else so that they can pay more taxes to support the government. Is that it in a nutshell?

Dont confuse what the government does with the money. They will do whatever they choose with the taxes. They always do.


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## osc (Oct 17, 2009)

kcowan said:


> I live in West Vancouver and I am willing to accept your assertion for the sake of argument. So you would want the ones who purchased 25 years ago to sell their homes and rent somewhere else so that they can pay more taxes to support the government. Is that it in a nutshell?


If they can't afford the property taxes, they should sell. They could then buy a much cheaper (but otherwise identical) house in a retirement community (let's say in Parksville) and live off the difference for the rest of their lives. They wouldn't need government redistribution (OAS is paid from income taxes) and could live just as well.
As a side effect, house prices may come down in the cities and current generations of workers could again buy houses close to work instead of having to commute for one hour or more (or live in tiny apartments with their children).


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## osc (Oct 17, 2009)

Most people on this forum don't seem to agree that OAS is welfare. Some even declared they are offended by my assertion that OAS is welfare. Others thought it's laughable.

I was not born in Canada. After I moved to Canada, I always thought about OAS as welfare. Please help me understand why don't you think OAS is welfare and what exactly do you think it is.

Here is why I think OAS is welfare:
- it is a payment made by government from income taxes
- it is a payment made to people with incomes lower than a certain level
- it is not a reward for hard work, because even people who didn't work a single day get it and people who worked really hard probably have an income above the cut-off limit and don't get it (I certainly hope I won't qualify for OAS)
- it is not a payment for being old, as not all old people get it (the ones with higher incomes don't get it; old people who have been less than 10 years in Canada don't get it)
- it is not a pension: it is not paid from profits made from previous contributions (like CPP)


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## kcowan (Jul 1, 2010)

osc said:


> If they can't afford the property taxes, they should sell. They could then buy a much cheaper (but otherwise identical) house in a retirement community (let's say in Parksville) and live off the difference for the rest of their lives. ...


Ok so you want old people to move to a place that requires them to drive. In W Van, they can live very comfortably without a car: Shopping, the seniors' center, the library, the medical clinic.

We looked at Parksville but rejected it for a number of reasons.

(BTW I am a senior and I don't get OAS. But then I rent in WVan because the property prices are insane, and always have been since I have lived here.)

OAS is an entitlement program. Is it also a welfare program? Yes by definition. But the problem is that welfare carries a stigma in our society. Many seniors are on OAS because they paid so much of their earnings to the government when they worked.


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## sleek (May 13, 2009)

@osc

Old Age Security recognizes that not all people who contribute to society have paid work. A woman who stays at home to raise children, who will become future taxpayers to the benefit of other Canadians, is entitled to receive something for her contribution to society.

Hence, the residency requirements you stated, as someone who is out of the country is not contributing to Canadian society.

As for the clawback provisions, this is simply a feature of our progressive Canadian tax system, something most Canadians agree with that helps to provide a more stable society.

So, to answer your question, OAS is not welfare, nor is it unfair.


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## osc (Oct 17, 2009)

sleek said:


> @osc
> Old Age Security recognizes that not all people who contribute to society have paid work. A woman who stays at home to raise children, who will become future taxpayers to the benefit of other Canadians, is entitled to receive something for her contribution to society.


It is not very clear why that help to the woman raising children is not provided when she actually needs it, when she is raising the children. Why is it provided when she is over 65 and maybe she and her husband have an income of $100k (they can split the pension and both may qualify even with that income)?

And why elderly newcomers are discriminated against? Most are probably parents of immigrants and they are helping them raise their Canadian children, so, based on your motivation, they should get it.

Another failure of the system from this point of view (as a reward to contributors to Canada's wealth) is that it rewards the lucky ones. The ones who live the longest get rewarded the most money from the government. If someone contributed by working for 50 years and then unfortunately dies at 65, then she will get no reward. 

Wouldn't it be simpler to reward people while they are working, by taxing them less and also properly helping other indirect contributors by better assisting them while they contribute?


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## osc (Oct 17, 2009)

kcowan said:


> Ok so you want old people to move to a place that requires them to drive.


No, I don't want that. That was just a suggestion. They could do what you are doing, rent. 
Myself, I would prefer Parksville and a big investment account (and no OAS from government).


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## sags (May 15, 2010)

We paid a significant amount of taxes over the past 40 years, but to believe that we "deserve" the OAS is a bit of a stretch, considering that Canada has a 60 Billion dollar deficit this year and a pile of debt to pay off.

Since we have a deficit and long term debt at the Federal level, and even more long term debt at the Provincial levels, and there is no segrated fund to pay the OAS, it looks to me like the Government already spent all the taxes we paid over the years, and then some.

We have already put off enough of our debt to future generations.


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## kcowan (Jul 1, 2010)

If you think OAS is expensive now, just wait until the next wave of boomers with no savings get to 65!


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## OhGreatGuru (May 24, 2009)

_And why elderly newcomers are discriminated against? Most are probably parents of immigrants and they are helping them raise their Canadian children, so, based on your motivation, they should get it._

To throw your "welfare" argument back in your face, why would we allow immigrants to bring in their parents & grandparents (who would not otherwise qualify for immigration) under the "family reunification policy", and then reward them with welfare cheques?

_Another failure of the system from this point of view (as a reward to contributors to Canada's wealth) is that it rewards the lucky ones. The ones who live the longest get rewarded the most money from the government. If someone contributed by working for 50 years and then unfortunately dies at 65, then she will get no reward._

Welcome to the world of annuities and pensions. That's how they work.


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## MoneyGal (Apr 24, 2009)

OhGreatGuru said:


> Welcome to the world of annuities and pensions. That's how they work.


Pensions and annuities are voluntary. Paying income taxes - which fund OAS contributions - is not. OAS is a form of forced annuitization (for those over 65) funded via a wealth transfer from all taxpayers to a subset of taxpayers.


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## osc (Oct 17, 2009)

OhGreatGuru said:


> _And why elderly newcomers are discriminated against? Most are probably parents of immigrants and they are helping them raise their Canadian children, so, based on your motivation, they should get it._
> 
> To throw your "welfare" argument back in your face, why would we allow immigrants to bring in their parents & grandparents (who would not otherwise qualify for immigration) under the "family reunification policy", and then reward them with welfare cheques?


Why do you need to throw something in my face?
I don't want to reward anyone with welfare checks, unless they need it for basic needs (like food and shelter). My question was just a consequence of the previous argument (of OAS as a reward to parents who take care of future Canadian taxpayers).

We allow immigrants to bring in their parents because they agree to sponsor them for 10 years (i.e. no government assistance) and because otherwise highly qualified immigrants may have another reason to not come to Canada (in some countries it is customary that children, instead of government, take care of their parents if they need help at old age).



OhGreatGuru said:


> Welcome to the world of annuities and pensions. That's how they work.


So, in your opinion, OAS is a forced annuity or pension? 
If so, why don't we give it to wealthy retirees (making over $110k)? I don't think I ever heard of another annuity or pension that has a cut-off income level. 
Also, pensions and annuities, as I know them, are based on individual contributions. The more you contribute, the more you get afterward. At least, that's how CPP works.


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## MoneyGal (Apr 24, 2009)

osc said:


> Also, pensions and annuities, as I know them, are based on individual contributions. The more you contribute, the more you get afterward. At least, that's how CPP works.


That's one element of how annuities and DB pensions work: greater contributions during your working years lead to higher monthly payments. 

However, the total payments from an annuity or DB pension to an annuitant/pensioner are much more highly dependent on your longevity (the number of months you are alive to receive a payment) than on the size of your monthly payment. 

Someone upthread used the example of a worker who contributes (let's say at the maximum rates for the sake of argument) during their entire working life but then dies before the first CPP payment is received: all they are entitled to is a very small death benefit of $2,500 (IIRC). (If they have a survivor, the survivor may be entitled to a survivor's pension - but the original pension dies with the annuitant/pensioner.) 

In contrast, someone who contributed smaller amounts during their working life leading to a small monthly payment in retirement but who lives for many months in retirement can receive much, much more in total payments than a higher-contributing, shorter-lived annuitant.


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## osc (Oct 17, 2009)

MoneyGal said:


> That's one element of how annuities and DB pensions work: greater contributions during your working years lead to higher monthly payments.
> 
> However, the total payments from an annuity or DB pension to an annuitant/pensioner are much more highly dependent on your longevity (the number of months you are alive to receive a payment) than on the size of your monthly payment.
> 
> ...


That's one reason I find these retirement plans unfair. We, as a society are rewarding the lucky ones, who live longer. At the same time we penalize the unlucky people who die younger and cannot directly pass on to their children the results of their work.
For this reason, I think all these plans should be optional.
We should be helping old people who really need help (GIS is already covering that); but beyond that, leave the individual alone to manage his own money and his own work.


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## OhGreatGuru (May 24, 2009)

osc said:


> That's one reason I find these retirement plans unfair. We, as a society are rewarding the lucky ones, who live longer. At the same time we penalize the unlucky people who die younger and cannot directly pass on to their children the results of their work.
> For this reason, I think all these plans should be optional.
> We should be helping old people who really need help (GIS is already covering that); but beyond that, leave the individual alone to manage his own money and his own work.


Someone needs to read a little socioeconomic history of Canada for the past century (or even some popular histories) to see how much better off people were before CPP, OAS, GIS, Health Care, EI, etc. Our parents & grandparents who lived throught the Great Depression elected governments to create those programs so that people would never again be left destitute by the vicissitudes of our free market economy, and by governments who believed it was not the business of government to interfere in people's economic affairs.


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## osc (Oct 17, 2009)

OhGreatGuru said:


> Someone needs to read a little socioeconomic history of Canada for the past century (or even some popular histories) to see how much better off people were before CPP, OAS, GIS, Health Care, EI, etc. Our parents & grandparents who lived throught the Great Depression elected governments to create those programs so that people would never again be left destitute by the vicissitudes of our free market economy, and by governments who believed it was not the business of government to interfere in people's economic affairs.


I think they have overshot and didn't do it properly. As a result, the country has a huge debt and an annual deficit.

I hope is not the business of government to interfere in people's economic affairs. The business of government is to regulate the free market (as I don't think that corporations are people) and to help those in need in the most economic and fair ways possible. 

Having 100 programs with 100 bureaucracies is the worst way to help people in need. We should have a single welfare program for anyone in need, without discrimination based on age or other criteria.


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## MoneyGal (Apr 24, 2009)

Yes, OGG; but you need to temper that argument with some facts about longevity in Canada. 

In 1921, the life expectancy (at birth) was a mere 61 years for women and 59 years for men - it is now 83 (for women) and 79 (for men): a gain of 20 years or more for both sexes. 

If we added as many years to the retirement age in Canada as we've added in longevity gains over the past century, OAS would not begin until age 85. 

(For what it's worth: I am relatively apolitical in this discussion...but I do think some of these factual arguments are very important.)


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## osc (Oct 17, 2009)

MoneyGal said:


> In 1921, the life expectancy (at birth) was a mere 61 years for women and 59 years for men - it is now 83 (for women) and 79 (for men): a gain of 20 years or more for both sexes.


Following OGG advice, I checked the history of OAS. Funny thing: the initial age for OAS was 70 years. It was dropped to 65 in 1969:
Overview of OAS


An example of the protective value of OAS these days:
-> a 65 years old couple making $118k from pensions and annuities, can split the income and will get another $12k OAS from the government (which will directly increase the deficit and debt as the government does not really have enough money).


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## John_Michaels (Dec 14, 2009)

OSC - thanks for the thread. I don't agree with it all but I think this is just the medium can't communicate the nuances of the statements...but it's given me some thought.

"The business of government is to regulate the free market "

Just to go on a tangent...one could argue the sole purpose of government is for the protection of private property  all else flows from there. 

But, since this is a forum for discussion and ideas, back to matter at hand. I'll throw some out.

Since this about seniors, I'd say there are a multitude of programs, lobbyists and advocates out there already and I'm not feeling sorry for them. As this is where the votes are, the politions are pandering to much to this segment of society to the detriment of everyone else. Discounts this, stipend that, I'd advocate reducing these programs and redistributing the wealth to the single mothers, primary education, school meals, Covenant House-type programs.

Start by de-indexing OAS.

(well, at least until I'm old enough and then _cry havoc_ so that I can gorge at the trough of course  )


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## steve41 (Apr 18, 2009)

Remember the Seniors Benefit? 

It was introduced to replace the OAS.... I forget the changes, but it was enough of a re-work to invoke a lot of discussion. You can't appreciate the power of the seniors lobby, until a change like this rears its head. 

Collectively, the voting power of this block of voters was mobilized (make that MOBILIZED), and the government that floated the idea quietly folded up their tent and slunk away. The OAS (social security) safety net is here to stay IMHO.


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## sleek (May 13, 2009)

osc said:


> I hope it is not the business of government to interfere in people's economic affairs.


The ideal society is a meritocracy. That requires government intervention to provide an equality of opportunity.

Picture two immigrant families arriving in Canada. One family struggles hard and gets ahead, the other does not and falls behind. There is inequality and that is a good thing.

Now comes the second generation. The rich family sends their kids to university, the poor family does not. Now you have an ingrained inequality where success depends on what family you are born in, basically, a caste system.

A meritocracy contains the seeds of its own destruction. Without government intervention, it rapidly turns into a plutocracy.

I do agree with many of your points. I think if the government provided more help at the beginning of peoples lives, like providing free post-secondary education, etc., there would be a lot less help needed by people in their older years.


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## osc (Oct 17, 2009)

sleek said:


> The ideal society is a meritocracy. That requires government intervention to provide an equality of opportunity.
> 
> Picture two immigrant families arriving in Canada. One family struggles hard and gets ahead, the other does not and falls behind. There is inequality and that is a good thing.
> 
> ...


I think a progressive tax system could avoid most of these issues. Right now, our tax system is progressive only for lower income. But over a certain level, the tax rate is the same and it actually goes down, because some income sources, specific to wealthy people (capital gains or dividends), are taxed at a lower rate.
And I am all for a non-discriminatory negative tax for people with zero or low incomes (this could replace all welfare programs).
I think this would allow the development of a healthy capitalist society without runaway disparities between the rich and the poor and would also avoid most government waste.


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## sleek (May 13, 2009)

osc said:


> ...some income sources, specific to wealthy people (capital gains or dividends), are taxed at a lower rate.


You are aware of course of the issue of double taxation. Dividends are entitled to the Dividend Tax Credit in lieu of taxes paid at the corporate level. Capital gains are taxed on income that may or may not have been taxed at a previous time (i.e., previous work income or investment income), hence the partial taxation. Bear in mind that excessive capital gains taxation can lead to lower investments which result in less jobs, something governments also have to worry about.

High tax rates on the rich at a rate of 90% were tried in the UK at one time. The rich left with their money. What is 90% of nothing? Remember, unlike labor, capital is mobile (and so are capitalists).


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## Brian Weatherdon CFP (Jan 18, 2011)

*avoiding oas clawback*



kcowan said:


> OAS is an Entitlement Program. What is unfair is that the eligibility test is income-based. It should be asset-based. As it stands, it rewards people who live in their own homes, and penalizes people who have sold their homes to fund a senior living facility. There should be a geographic exemption for assets needed for an average family home. Any assets above that level result in a progressive clawback.
> 
> But will it change? Not without a lot of effort by CARP and other concerned parties.



ONE CAN consider: (a) life annuity for healthy senior (say age 72+). (b) home equity line of credit if still owning home. (c) dividends. If home is sold, life annuity & dividend income offer high income, low tax, maybe no clawback.


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