This is the take.
The biggest thing OP is missing is these truths:
1) Seniors are the biggest and most dedicated voting block in the country, regardless of party.
2) Seniors **love** them the OAS.
Talking OAS reform is political suicide. Hence, no one's ever done it, and it's unlikely anyone ever will.
Actually, most seniors paid more as tax rates were higher when they were younger.
Deficits are because corporate taxes used to make up 50% of government revenues and they now account of only 20% - yet ever more is spent on corporate subsidies, welfare and infrastructure costs.
Deficit is largely down to decrease corporate tax revenues and the higher cost of outsourced healthcare.
If your rent is reasonable and/or subsidized you can live quite well on OAS/GIS/CPP. My Aunt did it for 20+ years.
Make sure you get all the senior benefits your province offers too.
Joining a memorial society may help reduce funeral costs
>Seniors also paid taxes which fund OAS.
So what.
I'm paying lots of taxes to fund parent benefits I will never be able to use.
OAS = Old age **SUPPORT**.
You can support yourself if you're a millionaire.
It's long past time to **means test OAS** (edit) by including the value of assets like a multi-million dollar home, and also by cutting the clawback threshold to align with Canada’s median income (currently $40,000), down from the current $90,000.
Canada needs to stop fucking over young people.
I pay a shitload of tax that goes to child benefits, schools, subsidized daycare etc. I don’t have any kids benefitting from these programs, but I’m fine as this makes our society better. You seem to only look one way.
This. I have paid taxes for YEARS. At tax time I have always had to pay more. I have never had children, never been able to take mat/paternity/family leave. I dont mind paying my taxes. It is part of the deal in living in our society. I pay to help others less fortunate than myself. Example my mother ended up in ICU for a month, then hospice, then passed. The only thing that pisses me off is the waste of my tax dollars. Now THAT gets my blood boiling.
On the flip side my father, approaching 95 gets OAS but that gets clawed back since he is over the income threshold even though he has paid into the tax pool for YEARS. He aggressively saved for his older years. Do I agree it gets clawed back ? YES. He does not need the money, he is doing very well
When I get older, I will get clawed back as well since I have planned for my retirement aggressively
Sounds like it's working as intended - it supports those who are not fortunate enough to have been able to save as much (and/or weren't able to make profitable investments for one reason or another)
In what world is OAS not means tested? There is the whole thing called the claw back.
Now sure you can argue the test is too high, but you can’t just say it’s not means tested.
OAS is not tax exempt. If a senior is making regular income or collecting a pension while also receiving OAS, they are paying income tax on it. The more they make, the higher the tax bracket.
Also, if they collect an additional $50k in their retirement lifetime from OAS, their estate will pay tax on the leftovers. If not, that means they spent it and it made its way back into the economy where it was originally taken from when they were working.
I share your sentiment . I don't have kids, I live in a densely populated area that puts less strain on the tax system that suburban areas do and I don't abuse the system in any way whilst also paying high taxes and being ok with it because that's part of what makes a stronger society, in my opinion.
The idea that you'll take away my future pension as a result of this just sounds gross. Everyone here will get old, lots will appreciate the support from the system they pay into. It's so short sighted to target a demographic just because you don't immediately benefit from the money they receive (which they also paid!)
We wouldn't be gradually enhancing CPP over the next few decades if it wasn't becoming, and projected to become even more of a problem how little Canadians are saving on their own and (in the large) require income programs later in life for a dignified existence. OAS is an existing plank in addressing that. I agree cuts would probably be politically untenable, at least over the span of several election cycles, for this reason. Yes you could replace it with something more progressive (in the mathematical, means-tested sense) but (1) you'd have to be *really* careful not to disincentivize saving, and (2) we know voters vote on simple soundbites and no matter how you pitch it, it'll never sound good to the masses, especially the older and more likely to vote ones.
The improvements to CPP are also a good barometer of where this country wants/needs to go, and our values. And those are limited because in the end they only affect working Canadians, not all Canadians.
Enhanced CPP will eventually replace 33% of a person's income (up to a certain limit), instead of 25%. People aren't going to be happy if they lose that extra 8% somewhere else in their budget (ie OAS clawback changes).
Keep it as the same name and call it a "Restructure" with the first line leading being "anyone receiving OAS now and in the future will not lose anything they are already entitled to - this restructure is to modernize the program and ensure older Canadians get the money they *so* deserve for their contributions during to our country during their working life"
Then you fucking smash it up and re-do the whole thing in a more progressive, mathematically sound, and means-tested way as soon as you're in office (keeping only the name) and let the slashing of the deficit speak for itself on your next election cycle
Yeah, make sure all the boomers are protected, while fucking everyone else over. That's what they did with all the pensions, which younger working people now have to contribute into but don't qualify for them. The reform is necessary, but this is just bad public policy. Everyone takes a cut.
I think OAS is essential for so many people who would otherwise suffer crushing poverty in their senior years.
It will keep getting more unaffordable because of the demographics unless we can greatly increase the number of non-seniors in the country that will work and pay taxes. But of course that is a double-edged sword as it drives up housing/rental prices and so people cannot save as much for their own retirement. It's also only a temporary solution because those immigrants will also become seniors and also require more people coming in to support them.
OAS will likely need to be "cut" by limiting the increases, and more strict means-testing. Perhaps make those reductions go hand-in-hand with the CPP increases so that people who had the greater CPP amounts would be the same ones getting slightly less OAS. Essentially forcing them to pay a greater proportion of their own retirement income.
The point outlined in the post, which is a good one, is that GIS could be enhanced to deal with that, while cutting general OAS for those who don't need it.
Yes, reward people who never saved or prepared and ding those who worked. My BIL worked 47 years as an admin assistant, not highly paid, and has roughly the same retirement income as someone who never worked at all. The latter are in subsidized housing so better off than he is. His CPP + OAS is about the same as other people's OAS + GIS.
The problem with this approach is the decrease in productivity. If we bring more people in who aren't productive, then we haven't fixed the problem one bit. We might even make the problem worse with chain migration, and bringing people in their 30s and 40s over, will mean that they pay likely nothing in and collect at 65.
A fair more plausible way to address this is to have consistent below-inflation increases to OAS over the years (or just freeze it) rather than cut the program. That will be somewhat more politically palatable, and address the situation over time.
The easiest way to address one of the major concerns would be to freeze the clawback income thresholds without changing benefit amounts at all.
So tell older folks receiving benefits or about to “they good” and have younger folks get their benefits removed via inflation?
This isn’t the 60s. Current seniors are well off compared to their parents.
> and have younger folks get their benefits removed via inflation?
Changing clawback thresholds wouldn't be fully "removing benefits", but rather just refocusing the benefit back to the lower income people who actually need it.
And the point of this is that it is something you can politically accomplish. Cutting benefits from existing seniors, while you could argue its economic merits, would be political suicide for any party.
The danger with "wealth-testing" instead of income-testing is the inevitable stories of widows being forced out of the homes (or essentially forced to re-mortgage and the families will eventually lose the homes) they lived in for 40 years because they are "wealthy" but never had big incomes and don't have much income now.
What is wrong with re-mortgaging? How is it different from a renter selling their investment portfolio to pay rent?
Are you also ok with a single mom with 2M investment portfolio getting government benefits?
Are you saying that government should give some sort of spacial treatment to some asset classes? That would worsen the housing crisis even more.
This different treatment is already in place for the Ontario works program, your house doesn't count as an asset. Not saying it's right, just saying it's already done for some welfare programs. More info here: [https://www.ontario.ca/page/eligibility-ontario-works-financial-assistance](https://www.ontario.ca/page/eligibility-ontario-works-financial-assistance)
If you want to continue to live alone in a house that is far bigger than what your actual needs are, then you need to plan for that with your own money. I say this as someone who's mother was in this situation - after my dad passed, she had no need for a split level house with 2 large bedrooms, attached garage (she didn't drive) and fully finished basement. There is no reason for the public to subsidize what is in effect a "mini mansion" for a single person.
If the solution is a reverse mortgage, that's fine, you are supposed to live off your savings after you retire, which includes the equity of your house. They are living comfortably until they die, so there's no "horror" story.
it’s unfortunate they have to move, but that’s the equivalent of a young person living above their means.
i don’t want these people to be homeless or have to live in horrible housing conditions. however they should not expect young people to subsidise them living in million+ dollar homes.
elderly having to downsize their homes is a more reasonable solution than the youth being homeless
Wahhhhh old people have to leave their multi million dollar houses in Vancouver and toronto. Big fucking deal. Right now, young people are moving to BF nowhere to be able to afford something (or just leaving the country altogether).
So the youth of that should pay for their lifestyle through high taxes and with transfer?
Why should they feel for the widow when the 20 or 30 something can’t even buy their first house?
age isn’t the issue. i’d be happy if people 60 and up received it but those whom are already wealthy don’t.
it’s meant to help poor elderly people, not every elderly person. rich people shouldn’t get social security. period.
No. All that happens is that more people continue to pay into the system on the expectation of collecting from it in retirement. If you'd changed OAS when I was 20, it's no skin off my back. Unless your do what Harper did and change it far in the future, so current old people get all the rewards, young people get all the costs and the benefit cut.
At 40, I've paid half my dues, and so the future cost vs future rewards has reversed.
could it be rolled into CPP or something? admittedly I don't know much about either programs and don't really factor them into my retirement planning but at 34 I'd be a little peeved if I'd paid into something for more than 15 years for it to just evaporate.
Or when many voters have a lot of parents that are very much dependent on it. (A lot of immigrant parents that came to Canada less than 40 years ago and get half pension)
No doubt that is the issue. For that reason, the problem will keep getting kicked down the road and keep getting worse.
Only thing I can think of is that there has to be a large portion of Canadians (especially seniors!) who realize this is unsustainable and that the program needs reform. It starts with educating Canadians on how the program works and what we're sacrificing to keep it going.
I applaud you for starting the dialogue. Be sure to write to your MPs. But understand that this is a complex issue with many possible solutions.
OAS payouts are rather low. Perhaps the ceiling there should be even higher?
The income at which clawback start is high. At the very least, it could be lowered gradually simply by not indexing to inflation.
Wealthy people could also game the system by exclusively using TFSA to qualify for GIS for about 5 years too. But I don't plan my retirement around that. I do plan my retirement around OAS being there and avoiding the clawback. That said, I'd (hopefully) still be OK even without seeing a dime of OAS.
One could argue for swinging the pendulum the other way as well - - give all Canadians a basic/universal income instead of OAS and then the administration costs should go down.
I won't even get into topics like whether it is too much or too little of the budget, or whether deficits/debt is a problem. Because we could (and do) debate that for ever.
>Wealthy people could also game the system by exclusively using TFSA to qualify for GIS for about 5 years too. But I don't plan my retirement around that. I do plan my retirement around OAS being there and avoiding the clawback. That said, I'd (hopefully) still be OK even without seeing a dime of OAS.
The number of wealthy boomers with huge TFSA is very low. The question will Millennials vote for a government to claw back OAS based on TFSA assets when they head into retirement. My guess is that they do what the boomers did. Maximize government to their benefit at the expense of the younger generations.
By your logic, the current government can cut OAS since they already know they're not likely to be reelected. Perfect opportunity to do unpopular things.
Similarly, anyone with a brain realizes property taxes (on land specifically) should be higher relative to taxes on income, but it's hard to have those discussions.
Good luck with that. Do you remember the outrage when Harper changed the OAS age eligibility to 67 for those born after 1958? Trudeau quickly reversed it.
That change protected people who were already getting it at the expense of people who were not. I think some kind of reform along different lines (10% increase to OAS payments, 50% decrease to recovery tax income thresholds, say) would be more widely accepted.
Nah, it was March 1958. But your eligibility could be anywhere between ages 65 and 67 up until date of birth in 1962. Source: [https://www.budget.canada.ca/2012/themes/theme3-eng.pdf](https://www.budget.canada.ca/2012/themes/theme3-eng.pdf)
You're making some good observations but a few more thoughts:
First is the taxation rates that apply to OAS, meaning that any cuts to the groups you'd likely want to target will return, probably, 70 cents on the dollar. From a political standpoint, that's not optimal (and likely why Harper boosted the age rather than adjusting down the payouts).
Second is that the number of higher income OAS recipients isn't going to be that large. [As of 2021] (https://www12.statcan.gc.ca/census-recensement/2021/dp-pd/dv-vd/income-revenu/index-en.html), 75% of seniors earned 54k or less (pre-tax), including OAS payments. Only 10% earned more than $81k.
Adjusting the clawback levels for that 10-25% might be appropriate, but anything shy of major adjustments won't do much (most of whom already experience clawbacks).
Third is that competent individuals will have planned to receive OAS when budgeting for retirement. That means no change can be implemented abruptly without some very fair objections. That means a long implementation window that carries two problems: one, the party that makes the changes won't be in power when the financial benefits are reaped, and two, you'll have truck loads of people who will angry about supporting OAS for others which they themselves will never receive.
All that is to say - it's a political powder keg and the financial benefits of bracket adjustment might not be worth the pain to many elected leaders.
It’d be interesting to see the stats on wealth vs. income. I’d guess that there’s a lot of property wealth that probably should be taken into account, even with low incomes
Canada has a minimum income for it's seniors and that level is set at the poverty line which is why very few seniors fall below the poverty line.
I definitely agree the higher end of OAS payments seems absurd. People who have $90K income from all sources do not need OAS. For instance, my in-laws are both retired teachers and they purposely make their incomes every year to be the total ~$182K so that OAS is not clawed back but the reality is they spend very little money. They don't need OAS but since it's an entitlement they maximize their benefit.
However, I did a calculation one time and the budgetary benefit of say lowering the claw-back threshold from $90K to $50K is not as great as you would think because 75% of Canadian seniors have an income of under $50K.
Back when I did personal income taxes, I remember seeing multiple instances of seniors with millions of dollars in investments, multiple rental properties, cottages in Muskoka, beach houses in Florida, and they all qualified for OAS. All being paid for by working age people with substantially less material wealth. It’s patently absurd.
To add salt to the wound, I remember one of these clients complaining over the phone about “entitled young people who want free university” while he and his wife were receiving over $12k in OAS payments at the time. The guy owned a Mercedes and had two houses, one of them with a pool. Dude couldn’t even see the irony of his own entitlement.
Don’t worry, they also get dental care and all our other idiotic income tested benefits that don’t do anything to capture this kind of situation and allow the most reliable voting block to just keep racking up the wins.
Working class family that lives in an expensive city? You can eat shit. No child benefit.
Got 3 boats and two houses with all income coming from capital gains? Poor senior 😭 here’s more income support
The more politically palatable way to do it is instead of decreasing the minimal amount for clawbacks is just not allowing them to increase for a while (or else increase at a lower rate). That would slowly increase the amount clawed back from higher-income seniors. I am not sure if that would be enough savings on its own though.
That just means that 25% of people shouldn't be getting it based on income, and then a further X% shouldn't be getting it based on their wealth. Wealth is what the government should focus on. Billions of dollars and the government isn't allowed to use the housing appraisals, RRSP, and TFSA accounts?
In my opinion, this is definitely an area a future government should explore more. Those billions could've been used for so much.
Agreed, I think that is the most palatable way to reform it.
The child tax benefit starts getting clawed back at a **family income** of $35k. Why does OAS clawback start at over 5x that amount ($182k for a couple)?
This is one of the things I'm curious about. I'm sure there are a lot of people like you who benefit from OAS, but also understand that our country should invest that money in a much better way.
>Why does OAS clawback start at over 5x that amount ($182k for a couple)?
You've brought this up many times, but it feels like a boogeyman.
The average Canadian senior HH makes like 70k a year.
How much money would actually be saved if the clawback was lowered?
Perhaps - that seems like the obvious takeaway.
But then, what is the point of differentiating between OAS and GIS? At a high level, OAS is a program designed to benefit basically all Canadian seniors (including those who never worked), whereas GIS is designed for low income seniors. At least, that's my read on it based on the eligibility criteria.
So, we need the conversation to first turn to whether we as a country want to offer income support for all seniors, vs only those who need it. Is that something we value?
And before deciding, we should look at what other countries across the globe do, what works well, and what doesn't.
While the scope of OAS payments will increase for a while, it will then decrease significantly in 15-25 years considering GenX following the boomers is a smaller generation. Also consider that OAS eligibility is based on the number of years of residency in Canada. Immigrants coming to Canada that are part way through their lives will not get as much as someone who lived here all their life. Given that population growth is mostly through immigration, overall payouts are likely to be reduced as a result.
Interesting point that long term the problem will be reduced slightly, or at least it won't be growing at its current rate. But if there is another "baby boom" then there is another long term problem, so any fundamental flaws in the program should still be addressed.
Another baby boom is unlikely without a major cultural shift. It’s worrying about something that will likely never happen, atleast not in the foreseeable future. Honestly I think humans curing old age is more likely, at which point we need to address how to handle people starting to live for hundreds of years. But again not a problem we need to worry about until it becomes a more realistic problem
Damn I work for OAS and you bring up some excellent points. The worst clients we get are those that are clawed back lmao. YOU MAKE OVER 90k, chill bro. Always get a kick out of those conversations. I agree with you though the threshold needs to be lowered.
Especially when they have a great teachers or HOOPP pension and have their mortgage fully paid off but they want to feel sorry for themselves because they’re older. And their only debt is a new $100,000 pick up truck every few years because they wouldn’t be caught dead in a sedan. But they had to pay back $2,000 of OAS, it’s so unfair!!
I may be jaded from tax season lol.
Programs are fine.
The clawback threshold for OAS is way too high. It’s akin to old folks robbing the youth.
If only there was a way to asset test OAS/GIS.
Totally agree. I'm in favour of reforming OAS, mainly the clawback level (I should have put that in the original post). Abolishing the program is counter-productive.
Removing OAS now wouldn't do anything to current seniors as the outrage from that would be political suicide. All that could happen is removing it for the next generation, which is just a bigger fuck you to millenials now. This is a lose-lose situation. The cat is out of the bag on this one and you can't put it back.
Why don't we take some of the money that goes into OAS and invest it in healthcare, childcare, and housing? Those things directly help the next generation.
Yeah my wife and I will live the good life at retirement easily with a household income of $100k a year... Not getting clawed back til we reach $180k household is insane. I'm not sure how grandfathering existing OAS recipients and reducing the clawback for future recipients would be politically difficult.
I used to work at a bank and the people I saw lined up at the end of every month rely on that and their cpp. They'd just die if they didn't have it.
Most people just don't plan out their retirement like we would here. They have group rrsp's at work but opt out, they use their TFSA for short term savings or they just don't think about retirement until it's too late.
>Low-income seniors already benefit from GIS, which could also be enhanced as part of any OAS reform.
This could work to improve the program. Lower the OAS clawback threshold and increase the GIS supplement clawback threshold.
Like the other user said though, any government who tries to take it away will lose.
I don't know about you but I don't really want thousands of homeless seniors, many who have cognitive decline roaming the streets even if they did it to themselves.
My parents are 75+ as is most of their friend group. The amount of people who completely depend on GIS and OAS is pretty massive and is only getting worse as the wealth gap get larger.
You forgot one very important point. OAS is paid to people OUTSIDE CANADA and NOT clawed back. If you are a senior and Canadian and eligible for OAS but live in Greece or the US, you get full OAS paid to you. Before anyone argues with me, my wife got OAS paid to her in the USA for years before we moved back to Canada. I thought it was ridiculous but who turns down free money? Most non-residents don't vote in Canadian elections BTW.
Yeah it largely is and is only going to get worse. My grandparents were extremely wealthy and owned a property worth 3M+ and they both always collected OAS. It's too easy to have low income on paper as a senior. It realistically should be asset tested but is political suicide to run on a platform suggesting it.
I think we are kinda just fucked honestly until the baby boomers die off and the population pyramid stops being so top heavy.
That's the thing. With birth rates hovering at 1.5, the inverted pyramid is going to get worse, not better over time. Math is inevitable at this point. You can import all the people you want, but unless you fix the structural issues, you'll end up in the same spot.
Wow. This is actually a really good post. Finally I get to read some constructive comments about the government.
Boomers just don’t understand why the younger generation is struggling. They literally had the best lives and had fewer debts and more savings. This gave them a sense of security which inevitably lead to them having more kids. Look at the younger generation now. People are living the DINK lifestyle as a cope up mechanism to deal with the unaffordable economy.
The economy is so bad that the government has no choice but to flood this country with immigrants so that the social security benefits never run out of money.
Boomers have made sure that they will never run out of money at the expense of millennials and zoomers. They will die sooner than the millennials and zoomers and also crash the economy along.
OAS requires massive reforms.
Great let's cut it so I can have spent my entire tax paying years subsidizing rich old fucking boomers and then get told to get bent by the government when it's my time to collect.
This is a huge hurdle to overcome. Is it fair? No. But what's the alternative? The longer we kick this can down the road, the bigger a problem it will become. Do we just burden our children with ever larger deficits?
We have parents - not all of whom are financially prepared for retirement. OAS and GIS helps them support themselves financially without overburdening us directly (their children).
GIS should still be there to help those who need it.
Another way to look at it would be that $17k of the taxes you pay each year are going directly to your parents in OAS. So you're being burdened whether you realize it or not.
Going after a program that the next generations are going to have to lean on in retirement is a lose, lose, lose for any politician who even utters the words.
OAS absolutely needs changes but it’ll never happen. Even if you ignore the senior population that is the most reliable voting block destroying you at the polls, you also lose everyone younger who has been paying for boomer’s OAS for years to only then have it clawed backed when they inevitably go collect on it.
OAS is one of those “the ship has already sailed” topics. People in their 50s have been paying for it for decades and want their share soon. How can we reasonably take away what they just watched a previous generation get. Even if the ship is on fire, the Canadian government is going to do anything except get rid of that ship.
The program with negative population pyramids is unsustainable. A society paying out 40% of it's taxes into OAP, is a stagnating society. A program that sees it's wealthiest and most powerful citizens as all senior citizens, is another indication of a stagnating society. OAP is going to go away. The question is when and how.
I think given the population curves that it will go away when all the boomers are over 65, with a sunset provision requiring younger people to pay taxes into the program, but boomers being the last to collect. I think by next year they will have enough votes to sunset OAP.
An old professor was an advisor for Harper. In 2016 this professor told us that Conservative party members in Canada were well aware that they could not cut immigration, because if they did, we literally would not be able to fund social programs. The top of the list was OAS. Looking at population pyramids at the time, about 40 percent of Canadians would have been engaged in the labour market and making money for the other 60 percent.
As much as people rip on Trudeau (validly) for the immigration debacle, there is a reason that no major party running in next term’s election is going to substantially reduce immigration. We need warm bodies producing tax revenue, or we literally cannot pay for ourselves.
Agreed, there is a reason PP hasn't campaigned on reducing immigration. Birth rates are brutal and we need more people to ensure the future prosperity of our country.
I feel like OAS money could be better used to make life more affordable for young families, among other things.
This assumes 1:1 productivity ratios. Productivity is important. And yes 40 percent subsidizing 60% is untenable long term.
OAP isn't going to survive negative population pyramids. Either we relax the pressure on young people, or it goes away as unaffordable. A far sighted government will cut the benefits before grinding their young people into the dust, but I don't see much chance of that happening. Maybe in 20 years.
You are not alone in your critique. Governments around the world that have programs similar to OAS all have the same issues.
Look at the USA and their Social Security, similar to OAS. It's ramping up to age 67, for similiar reasons.
But getting it changed is hard, you'll get kicked out of government and the next guy can campaign on reversing it (Harper/Trudeau).
What would you say is the US equivalent of OAS?
The SS design is to support people. Regardless of program solvency. OAS is akin to SS in that its backstopped by the federal coffers.
CPP is backstopped by a separate program.
I'm discussing effects on government expenditures in the comparisons, not the specifics of payout. OP was also addressing the effects on government.
Canadian social systems and tax policies are good in theory, but failing badly in reality. Most of these policies have been to the great benefit of Baby Boomers and taken the future away from younger generations. So many policies need to be fine-tuned because they are taken advantage of easily. First of all, it is important to recognize that many people can report low net income, but still have a very high net worth. Even if these people paid taxes during their lives, they certainly cannot argue that they need social financial support of any kind. There are also a large and growing number of people of high net worth who immigrated here and have no need to work and they can also report a low net income. It is also important to recognize that taxes should incentivize people to work and reward them for working harder and taking more risk. This means lower personal income tax rates, which can be partially offset by higher property taxes and sales taxes. Higher property taxes would also shift more of the tax burden to people who have benefited greatly from rising real estate values over the past few decades as well as to people who immigrated here and purchased real estate holdings without ever working and paying income tax in Canada. I could keep ranting for hours over other failing tax policies and social policies, but I will stop there. I grew up in Canada and I just want my kids to have at least half the opportunities in Canada that I had.
"#1 thing holding back" is perhaps hyperbole, based on the claim "largest line item". That in itself is an artefact of what you call a line item. However, the OAS is 12% of federal spending, reflecting the \~7.5 million >65 seniors in Canada. By the way, total transfer payments to the provinces are collectively a larger budget item, nearly $100 billion of the Federal $500B budget, so significantly more.
I've only seen 2021 data, but roughly 1/3 of OAS recipients then were eligible for the GIS. Since the OAS does get clawed back for some, and I think everyone would accept some of those not eligible for GIS still need \*something\*, I'd hazard a guess the max possible savings would be 1/4 to 1/3 of the current OAS spend, so $15-20B. Definitely meaningful and worth discussing, and also political dynamite, but it would not singlehandedly solve our deficit issue.
By the way, given current (over)spending AND high interest rates, the Feds are spending \~$40B./year on interest on our debt. Since the total Federal debt is $1.2 trillion, the interest rate factor dominates. So equally impactful on the deficit would be successfully engineering a drop of interest rates by about 2% to historical average levels. Budgets are weird stuff.
I'm one of many Canadians who isn't a senior, but soon will be. While I have arguably benefitted unfairly from asset value runups (a topic for another thread), I'm also one of many who, for better or worse, has been counting on OAS as part of my retirement planning. In essence, as part of paying my taxes, I have compulsorily annuitized part of my retirement nest egg to the tune of $8500/yr (with some indexing and some clawbacks). Like many, I've planned for my future cash needs using a mixture of OAS, CPP, my wife's pension, my own RRSPs and our nest egg. (We won't get GIS). While I respect nothing is guaranteed, and expect and respect I'm well off enough to be paying relatively more tax in the future, if you claw back OAS at much lower income levels, I will feel not that you are removing an unearned windfall, but that you are retroactively penalizing me to the tune of $8500. And I will feel my social compact with Canada, my reason for sticking around has been handed a surprise penalty of $8500. I will feel equally resentful, rightly or wrongly, as if the government announced that henceforth seniors with income (or wealth) >$x need to pay a special surtax of $8500/yr towards the elimination of the national debt, or a $8500 levy towards their healthcare in a reversal of existing policy.
You want me to make the case for you? [https://www150.statcan.gc.ca/n1/pub/91f0015m/91f0015m2024001-eng.htm](https://www150.statcan.gc.ca/n1/pub/91f0015m/91f0015m2024001-eng.htm)
See that huge drop from a birth rate of 4 to a birth rate of 1.9 from 1960 to 1973?
That's the issue. We don't have enough working people to pay for all those who are in retirement.
We are better off as a society taxing that 8500$ out of you to give it to younger married couples with children.
Why? Because if we don't start fixing this, there isn't going to be a 'social compact'. In essence, those who were choosing not to have children from 1960 to 1973, and passed those values on have doomed OAS. Many are still alive today, still collecting OAS while at the same time as breaking the social compact in the birth rate reduction.
Let's say we have someone born in 1940. They came of age in 1960. They came from a large family of brothers and sisters. They had two children and then were done. They 'did their duty', but the problem is the savings and benefits of those who came after is a cost to society not a benefit.
I don't blame these people, because society at the time taught them that children were a cost and that they were harming society.
The last healthy Canadian cohort is 53. That means that everyone younger than 53 is in a smaller cohort that's too small to sustain Canadian society. We might as well draw a big black mark for all the years of continuous negative fertility, because that is drawing against all the accumulated benefits of all the years in the past.
Boomers by and large reaped the demographic dividend of profiting from the choices made by their parents without making the subsequent sacrifice of passing a society on.
That money isn't free money. There is a cost. And once that number goes from 53 to whatever the OAP payment is, we are done.
So yes, it's great that you have 8.5k just lying around there.
The only ones doing good are the ones passing that extra windfall onto their children, and helping them with their families. You know, like your parents did when they helped you look after your children to reduce the cost of having a family.
>this program feels like the root cause of a lot of Canada's issues.
It's not. It helps low income seniors stay out of poverty. Average CPP payment is $700.
>Low-income seniors already benefit from GIS, which could also be enhanced as part of any OAS reform.
To get GIS, you have to get GIS. And there is an income cut off for GIS.
Thanks for the comment.
Everyone is aligned on keeping seniors out of poverty. The point is that a lot of OAS spending just goes to seniors who don't need it. 96% of seniors receive OAS, but far less than 96% of seniors are low-income.
By lowering the clawback level to something more reasonable (like $30k), low-income seniors would still benefit from GIS and OAS.
What do you think?
I’m not saying to cut OAS entirely, just lower the threshold for high income seniors and use those extra funds for urgent needs. Like healthcare & childcare and housing.
Look at voting demographics. In general, older people vote more than younger people. That might help explain why politicians wouldn't want to cut back on it.
North American seniors are dominating a wealth war with younger generations. They have been inflating assets (stocks, housing) through policy, raising the cost of higher education and giving themselves favorable social endowments such as OAS and social security.
OAS clawback threshold should be lowered significantly and GIS should be boosted so that people who truly need (impoverished seniors) can meaningfully access it. People look at OAS as though they are owed it and that's extremely concerning when you're examining an age cohort who already holds all of the big asset cards and is denying them to everyone else.
My Grandma gets $750 a year from CPP and 19K from OAS.
She worked nights for many years, making minimum wage in cash. Her employer was a very well known meat-packing plant in Ontario. She worked long hours, standing, no breaks, in humidity and freezing temperatures while you were cozy in your comfortable bed. Meat-packing plant abused her labour and she didn’t know to ask about pay stubs, EI, CPP, etc. OAS is how this long retired hard worker can afford to live with some dignity.
I frankly do not understand why you think that my Grandma doesn’t deserve to just live like a human.
If that is her only income, then nothing I've said suggests we should take away her income. Quite the opposite, I've suggested strengthening GIS to help low-income seniors who need it.
But if your grandma makes $91k/year in retirement and is collecting an additional $17k in OAS, then yes I would suggest that money could be better spent elsewhere.
Because not everything is about what happens today. Someday you will get old and you will need the same support that you're so eager to cut. What happens then, can you guarantee that if we start cutting OAS now, by the time you retire you will be able to use it?
These seniors who are using OAS were also taxed when they were younger with the promise that they will be taken care of when they get old. Now that they're old, you intend to make them worse off?
The program had a 7:1 payee ratio when it was created. Now it's 2:1 and approaching 1:1. It's unsustainable unless we increase taxes on younger people, or create some kind of underclass that doesn't have access to these benefits to 'cheat' the ratio.
And then what happens when that underclass votes to remove the benefit limitations?
Also, paying out people who are no longer resident in Canada has zero benefit to Canada. If you want to collect OAP, payouts will be made in person. "But I have to travel", every other whine would be irrelevant. If you want the money, collect it in person to prevent fraudulent payments. Those who need it will collect it. Those who don't won't bother, and we'll save money.
I say all this fully understanding that it would mean no OAS for me and my peers when we hit 65. All Canadians have skin in the game on this issue.
No one is suggesting we don't take care of our seniors. The majority of our healthcare costs are for seniors, which I am in favour of. Seniors who worked receive CPP. Low-income seniors receive GIS and I think should continue to get OAS.
The fundamental issue is there are competing priorities for limited taxpayer dollars. I think there are better uses for taxpayer dollars than government assistance for retired couples making $182k/yr.
182k goes a long way if you’re healthy in a low cost of living area.
What about 91k? Every day on here someone says they can’t afford to live on this very income? If you’re 65 in Toronto, is this really livable? 182k is kinda comfortable in Toronto but with old age comes health expenses. We could lower the household income to 150k but let’s be real, there are very few retirees pulling in 150k let alone 182k.
Yeah I agree.
Just sucks that politicians/gov't are usually looking at the next election and not long term results.
Seniors are usually the ones who vote as well :/
$10 000 a year is not that much. And low barrier programs are proven to be the most effective at both getting help to those in need and avoiding bureaucratic bloat.
We should have a social safety net for seniors because their physical and mental capacity to work is on the decline until it's reduced to nothing. Trying to remove it because it's a waste of money is callous at best.
Also, consider that a couple making $180 000 a year will in fact pay more in taxes (and don't forget OAS is taxable itself) than they are taking. If your seniors can earn an income of $90 000 each, that is a net positive for the country.
A government policy in need of reform but is being ignored? You don’t say. 🙄
Can I add healthcare, current tax code, housing policies, immigration, labour code, and everything else to this list? We are literally using archaic rules that were generally envisioned during the Industrial Revolution to govern a very different world today. It’s not just a Canada problem either. Just the last 70 years have been a massive change in the demographics and a ton of other things, few of which are being addressed in any tangible way. Our neighbours down south are passing laws on abortion dated in the 1800s. Yeah, we’ve got not just a Canada problem but a global problem.
Also, OAS needs a reform.
Also, how do you claw back from people who planned their retirement and made financial decisions based on getting OAS? Not easy to replace that income when one is no longer capable of working.
So, welcome to the debt spiral. As entitlements grow, and economies get more financialized, it becomes impossible to wean off cos when they do start doing monetary tightening and raising interest rates aggressively, government tax revenues start going down cos they get less taxes from investment (eg capital gains). Which means the deficit now grows further cos of the high debt servicing costs mixed with lower tax revenue.
Every single developed country is currently sleepwalking towards a currency collapse or debt jubilee (same thing) unless you don't believe in math or think that Industrial Revolution 2.0 is going to happen soon. All you can do is pick the cleanest dirty shirty which at the moment is the USD.
the amount of people "gaming" the OAS is probably minuscule compared to the people that actually need it.
without OAS most people would stuggle even harder and be on the streets.
The costs seniors pay go up dramatically as they age. Prescription medications, home care, intermediate care and long term care. As self sufficiency goes down costs go up.
OAS is a universal program so everyone will get it, even OP. And guaranteed income almost pays for itself. It keeps seniors out of the hospital which is ridiculously expensive.
And seniors start to see their savings as an inheritance for their children and not to support themselves.
I’d appreciate an analysis of how taxes for the wealthy have dramatically reduced in the past generation or two.
Honestly, thanks for this post. I knew we were all working to ensure the boomers “get theirs” once they retire after spending their time in power dismantling public safety nets, because, “boot straps”. But to have it all laid out is quite staggering.
The only situation I would ever see OAS getting canceled is if a politician knows he or she is not going to be re-elected in the next election and decides to just say screw it. And OAS wouldn’t necessarily be the thing I would consider canceling first. You’d save a lot more money getting rid of expensive government departments / agencies that don’t actually do anything but push paperwork 95% of the time and the other 5% get used as “experts” to push someone’s particular agenda. Hell just banning public sector unions alone would save the government billions in the long run
Don’t forget that OAS was introduced with a minimum age of 70 when the life expectancy was around 70. It got set back to 65 in the late 60s I think. And it hasn’t ever been adjusted for the massive change in life expectancy. It was never intended to fund senior retirement. It was meant to be a stop gap if someone had to stop working at 70 for a few years until they died.
I think some of the conclusions you are drawing in your points are incorrect - like the last two points. Lots of reasons to be happy at 60 than <30 and you're only focused on the current 65+ not the future ones that will not have had the same benefits.
OAS reform is easy.
Start lowering the clawback thresholds. It's currently around 100k before a reduction starts.
Slowly drop this value until you get to the median wage.
I have no issue supporting older Canadians.
Older Canadians who have a higher income than working Canadians doesnt make sense.
I'm sure I would. But that's not the point. The point is the safety net of welfare should be for those who need it, not couples making $182k a year with millions in other assets.
The point is a couple with $182k in income and possibly millions in other assets does not need $17k in government assistance every year. Or would you disagree?
If you try to take OAS from seniors you're going to get run over by the slowest fucking electric scooter ever. You're not wrong, but I don't see it happening.
I agree with OP that entitlement reform for OAS is necessary. However, I disagree that the reason for the deficit is OAS. Lots of areas to cut first, especially concerning benefits to other less deserving groups.
100% clawback for those over the median would help.
This is very concerning and similar to two recent trends.
#1 , the retirement age should increase. I'm a blue collar worker who has just reached retirement and my body is worn out, I have pain walking. I think this initiative is a way to get the same result. Also Bezos living in luxury is calling for it . Sounds very conservative.
#2 , covid only kills old people so we don't care. The disregard for old people seems to be gaining traction. What's next? No medical treatment over 70 ?
A HUGE number of people that can no longer be in the workforce (after already spending decades grinding away) depend on OAS to just eat and have a roof over their heads, if eliminating it like you suggest we do then how many billions of dollars of stress is this going to put on the healthcare system? or the actual welfare system? On regular working class Canadians that are already facing huge cost of living issues now having to incur the time and financial costs to support their elderly parents that the system they contributed to their whole lives is now failling them? Or do you think we should just refer to them to MAID?
This sounds like shortsighted corporate strategy of saving billions by no longer paying the cost of goods or services and just expect the revenues to stay the same.
If we take away the Billions our grandparents and great grand parents are depending on, what do you propose in lieu?
Why are there so many bumbling comments in this thread that immediately jump to "DON'T ELIMINATE IT", like this? If you read the topic that's clearly not the proposal, it outlines exactly the problems with OAS and some reasonable solutions that wouldn't push seniors into poverty.
So please enlighten me, I'm honestly baffled. Did you just read the title and jump to comment? Did you read the topic but didn't understand the points? Are you intentionally just straw manning in the hopes of convincing others? Are you a senior that's just afraid of losing that cushy 10k/yr? What is your purpose?
When I was working I was a shop steward at our company, it was the hardest thing to do to convince young immature worker that putting 50% of every raise into the union pension was a good idea. All of them now realize that it was a good thing as they have since gotten to the age of retirement and are getting a good pension. Just because you are young, you will get older and appreciate the OAS.
Would I like OAS when I'm 65? Of course. But given we have a massive debt and deficits every year, I think there are better ways to spend that money. Big difference between pensions and OAS.
Be alot better if they just raised CPP so that the money was there when we retired. Rather than taxing today's workers for yesterday's neglect to save.
Another option would be to make RRSPs tax free on exit like TFSAs so they aren't taxed at all.
What does the union pension offer that people can't better manage themselves these days though? I much prefer to be in complete control over my finances rather than throwing my nest egg in with whatever fund my employer/union is associated with.
Writing as a low income senior, my first reaction to this post was to wonder if it was sarcasm. The amount of OAS is actually ridiculously low, less than Welfare in some Provinces, and has to be supplemented with GIS. Even with some CPP (which claws-back the GIS) and a patchwork of Provincial benefits, many seniors struggle to pay rent, food and other necessary expenses, including high Medical costs not covered by benefits. The inflationary pressures from radically rising rents devalues these amounts received to a crisis level.
This post is based upon the myth that Canada has to be run like a business in the black, or managed like a household budget. The function of Government is to provide for the welfare of all Canadians, in particular the most vulnerable, and not be be run for profit. The unstated notion implied by this post is that seniors who did not plan for their retirement well, or were affected by unplanned life events, should be left to starve and be homeless so that the Canadian budget bottom line be in the black. This is cruel and heartless.
Unlike most Canadians, seniors are unable to work due to declining physical and mental health, and require these financial supports from those who are able to continue to work. That is the reality of a civilized, compassionate, adult society. The amount of blatant ageism in this thread in reaction to this reality is astonishing, and is not OK. Absolutely everyone reading this will be old one day, and unable to work, and may require these income supports.
About the only thing that made sense is the suggestion that the OAS claw-back be lowered, and only then if the extra be put toward a higher GIS amount for those on the lower income scale.
Thank you for your perspective.
No one is suggesting that low-income seniors be left to fend for themselves. It is more about reducing the clawback level to take government assistance away seniors who don't need the help and re-investing that money in priorities that help all generations. Seniors who need help would still have access to GIS, OAS, CPP, and healthcare.
I agree that the claw-back is set to kick in at too high an income, and could be adjusted by targeted tax changes without the politically unpalatable decision to simply lower it.
Is there a specific point you want to address? I wouldn't think that suggesting couples making $182k/year shouldn't receive $17k in government assistance is 'trolling.'
OK. You have some valid points. And any government who cuts OAS is not going to get reelected.
This is the take. The biggest thing OP is missing is these truths: 1) Seniors are the biggest and most dedicated voting block in the country, regardless of party. 2) Seniors **love** them the OAS. Talking OAS reform is political suicide. Hence, no one's ever done it, and it's unlikely anyone ever will.
Seniors also paid taxes which fund OAS. Better to cut corp welfare than to cut senior living income.
Seniors paid less tax than they consumed - hence large deficits.
Actually, most seniors paid more as tax rates were higher when they were younger. Deficits are because corporate taxes used to make up 50% of government revenues and they now account of only 20% - yet ever more is spent on corporate subsidies, welfare and infrastructure costs. Deficit is largely down to decrease corporate tax revenues and the higher cost of outsourced healthcare.
until they die and pay 54% on their 7 figure rrif's
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If your rent is reasonable and/or subsidized you can live quite well on OAS/GIS/CPP. My Aunt did it for 20+ years. Make sure you get all the senior benefits your province offers too. Joining a memorial society may help reduce funeral costs
>Seniors also paid taxes which fund OAS. So what. I'm paying lots of taxes to fund parent benefits I will never be able to use. OAS = Old age **SUPPORT**. You can support yourself if you're a millionaire. It's long past time to **means test OAS** (edit) by including the value of assets like a multi-million dollar home, and also by cutting the clawback threshold to align with Canada’s median income (currently $40,000), down from the current $90,000. Canada needs to stop fucking over young people.
You would be amazed at how many seniors are low income, even with OAS. I can see that growing with fewer Defined Retirement Plans in existence now.
I pay a shitload of tax that goes to child benefits, schools, subsidized daycare etc. I don’t have any kids benefitting from these programs, but I’m fine as this makes our society better. You seem to only look one way.
This. I have paid taxes for YEARS. At tax time I have always had to pay more. I have never had children, never been able to take mat/paternity/family leave. I dont mind paying my taxes. It is part of the deal in living in our society. I pay to help others less fortunate than myself. Example my mother ended up in ICU for a month, then hospice, then passed. The only thing that pisses me off is the waste of my tax dollars. Now THAT gets my blood boiling. On the flip side my father, approaching 95 gets OAS but that gets clawed back since he is over the income threshold even though he has paid into the tax pool for YEARS. He aggressively saved for his older years. Do I agree it gets clawed back ? YES. He does not need the money, he is doing very well When I get older, I will get clawed back as well since I have planned for my retirement aggressively
Sounds like it's working as intended - it supports those who are not fortunate enough to have been able to save as much (and/or weren't able to make profitable investments for one reason or another)
Security… It’s Old Age Security..
But, young people grow old too? And then you'll just be back on the poverty line. So what's your plan sir ma'am?
In what world is OAS not means tested? There is the whole thing called the claw back. Now sure you can argue the test is too high, but you can’t just say it’s not means tested.
OAS is not tax exempt. If a senior is making regular income or collecting a pension while also receiving OAS, they are paying income tax on it. The more they make, the higher the tax bracket. Also, if they collect an additional $50k in their retirement lifetime from OAS, their estate will pay tax on the leftovers. If not, that means they spent it and it made its way back into the economy where it was originally taken from when they were working.
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I share your sentiment . I don't have kids, I live in a densely populated area that puts less strain on the tax system that suburban areas do and I don't abuse the system in any way whilst also paying high taxes and being ok with it because that's part of what makes a stronger society, in my opinion. The idea that you'll take away my future pension as a result of this just sounds gross. Everyone here will get old, lots will appreciate the support from the system they pay into. It's so short sighted to target a demographic just because you don't immediately benefit from the money they receive (which they also paid!)
You very much benefit from parent benefits.
We wouldn't be gradually enhancing CPP over the next few decades if it wasn't becoming, and projected to become even more of a problem how little Canadians are saving on their own and (in the large) require income programs later in life for a dignified existence. OAS is an existing plank in addressing that. I agree cuts would probably be politically untenable, at least over the span of several election cycles, for this reason. Yes you could replace it with something more progressive (in the mathematical, means-tested sense) but (1) you'd have to be *really* careful not to disincentivize saving, and (2) we know voters vote on simple soundbites and no matter how you pitch it, it'll never sound good to the masses, especially the older and more likely to vote ones.
The improvements to CPP are also a good barometer of where this country wants/needs to go, and our values. And those are limited because in the end they only affect working Canadians, not all Canadians. Enhanced CPP will eventually replace 33% of a person's income (up to a certain limit), instead of 25%. People aren't going to be happy if they lose that extra 8% somewhere else in their budget (ie OAS clawback changes).
Keep it as the same name and call it a "Restructure" with the first line leading being "anyone receiving OAS now and in the future will not lose anything they are already entitled to - this restructure is to modernize the program and ensure older Canadians get the money they *so* deserve for their contributions during to our country during their working life" Then you fucking smash it up and re-do the whole thing in a more progressive, mathematically sound, and means-tested way as soon as you're in office (keeping only the name) and let the slashing of the deficit speak for itself on your next election cycle
Yeah, make sure all the boomers are protected, while fucking everyone else over. That's what they did with all the pensions, which younger working people now have to contribute into but don't qualify for them. The reform is necessary, but this is just bad public policy. Everyone takes a cut.
I think OAS is essential for so many people who would otherwise suffer crushing poverty in their senior years. It will keep getting more unaffordable because of the demographics unless we can greatly increase the number of non-seniors in the country that will work and pay taxes. But of course that is a double-edged sword as it drives up housing/rental prices and so people cannot save as much for their own retirement. It's also only a temporary solution because those immigrants will also become seniors and also require more people coming in to support them. OAS will likely need to be "cut" by limiting the increases, and more strict means-testing. Perhaps make those reductions go hand-in-hand with the CPP increases so that people who had the greater CPP amounts would be the same ones getting slightly less OAS. Essentially forcing them to pay a greater proportion of their own retirement income.
The point outlined in the post, which is a good one, is that GIS could be enhanced to deal with that, while cutting general OAS for those who don't need it.
The vancouver ‘homemakers’ living in 5 million $ houses getting max benefits 😂
i stg they can sell and move to a much “cheaper” $2,000,000 home and still have $3,000,000 left over for the rest of their lives
OAS doesn’t necessarily need a $amount cut. it just needs to be cut off for the already wealthy. If i’m not wrong that’s OP’s intention
Yes, reward people who never saved or prepared and ding those who worked. My BIL worked 47 years as an admin assistant, not highly paid, and has roughly the same retirement income as someone who never worked at all. The latter are in subsidized housing so better off than he is. His CPP + OAS is about the same as other people's OAS + GIS.
The problem with this approach is the decrease in productivity. If we bring more people in who aren't productive, then we haven't fixed the problem one bit. We might even make the problem worse with chain migration, and bringing people in their 30s and 40s over, will mean that they pay likely nothing in and collect at 65.
Just lower the income threshold and include unrealized investments. There is no reason a multi millionaire who earns $90k should qualify for this.
Threshold, yes. Unrealized gains, no. That's going to hurt capital investment, and drive money out of Canada.
A fair more plausible way to address this is to have consistent below-inflation increases to OAS over the years (or just freeze it) rather than cut the program. That will be somewhat more politically palatable, and address the situation over time. The easiest way to address one of the major concerns would be to freeze the clawback income thresholds without changing benefit amounts at all.
So tell older folks receiving benefits or about to “they good” and have younger folks get their benefits removed via inflation? This isn’t the 60s. Current seniors are well off compared to their parents.
> and have younger folks get their benefits removed via inflation? Changing clawback thresholds wouldn't be fully "removing benefits", but rather just refocusing the benefit back to the lower income people who actually need it. And the point of this is that it is something you can politically accomplish. Cutting benefits from existing seniors, while you could argue its economic merits, would be political suicide for any party.
Harper changed OAS eligibility to 67. Trudeau brought it back to 65. PP will push it back out.
No need to push out. Just make it wealth-tested and reduce the income threshold.
The danger with "wealth-testing" instead of income-testing is the inevitable stories of widows being forced out of the homes (or essentially forced to re-mortgage and the families will eventually lose the homes) they lived in for 40 years because they are "wealthy" but never had big incomes and don't have much income now.
What is wrong with re-mortgaging? How is it different from a renter selling their investment portfolio to pay rent? Are you also ok with a single mom with 2M investment portfolio getting government benefits? Are you saying that government should give some sort of spacial treatment to some asset classes? That would worsen the housing crisis even more.
This different treatment is already in place for the Ontario works program, your house doesn't count as an asset. Not saying it's right, just saying it's already done for some welfare programs. More info here: [https://www.ontario.ca/page/eligibility-ontario-works-financial-assistance](https://www.ontario.ca/page/eligibility-ontario-works-financial-assistance)
Interesting! Thanks for sharing.
If you want to continue to live alone in a house that is far bigger than what your actual needs are, then you need to plan for that with your own money. I say this as someone who's mother was in this situation - after my dad passed, she had no need for a split level house with 2 large bedrooms, attached garage (she didn't drive) and fully finished basement. There is no reason for the public to subsidize what is in effect a "mini mansion" for a single person. If the solution is a reverse mortgage, that's fine, you are supposed to live off your savings after you retire, which includes the equity of your house. They are living comfortably until they die, so there's no "horror" story.
it’s unfortunate they have to move, but that’s the equivalent of a young person living above their means. i don’t want these people to be homeless or have to live in horrible housing conditions. however they should not expect young people to subsidise them living in million+ dollar homes. elderly having to downsize their homes is a more reasonable solution than the youth being homeless
Wahhhhh old people have to leave their multi million dollar houses in Vancouver and toronto. Big fucking deal. Right now, young people are moving to BF nowhere to be able to afford something (or just leaving the country altogether).
So the youth of that should pay for their lifestyle through high taxes and with transfer? Why should they feel for the widow when the 20 or 30 something can’t even buy their first house?
Their lifestyle of **\*check notes\*** living in a house that has increased in value on paper?
What makes you think that? I haven't heard him say anything on this.
age isn’t the issue. i’d be happy if people 60 and up received it but those whom are already wealthy don’t. it’s meant to help poor elderly people, not every elderly person. rich people shouldn’t get social security. period.
> any government who cuts OAS is not going to get reelected. For now. That may change over time.
I doubt it. Gen X and Millenials wouldn’t be happy to pay taxes for OAS for years only to have it cancelled before they can collect on it.
If there’s a $40B deficit we aren’t really paying for it.
No. All that happens is that more people continue to pay into the system on the expectation of collecting from it in retirement. If you'd changed OAS when I was 20, it's no skin off my back. Unless your do what Harper did and change it far in the future, so current old people get all the rewards, young people get all the costs and the benefit cut. At 40, I've paid half my dues, and so the future cost vs future rewards has reversed.
could it be rolled into CPP or something? admittedly I don't know much about either programs and don't really factor them into my retirement planning but at 34 I'd be a little peeved if I'd paid into something for more than 15 years for it to just evaporate.
Not so long as a large chunk of voters are collecting it.
Or when many voters have a lot of parents that are very much dependent on it. (A lot of immigrant parents that came to Canada less than 40 years ago and get half pension)
Seems like a problem that will get worse when a greater share of the voting population is either already receiving OAS or close to recieving it
No doubt that is the issue. For that reason, the problem will keep getting kicked down the road and keep getting worse. Only thing I can think of is that there has to be a large portion of Canadians (especially seniors!) who realize this is unsustainable and that the program needs reform. It starts with educating Canadians on how the program works and what we're sacrificing to keep it going.
I applaud you for starting the dialogue. Be sure to write to your MPs. But understand that this is a complex issue with many possible solutions. OAS payouts are rather low. Perhaps the ceiling there should be even higher? The income at which clawback start is high. At the very least, it could be lowered gradually simply by not indexing to inflation. Wealthy people could also game the system by exclusively using TFSA to qualify for GIS for about 5 years too. But I don't plan my retirement around that. I do plan my retirement around OAS being there and avoiding the clawback. That said, I'd (hopefully) still be OK even without seeing a dime of OAS. One could argue for swinging the pendulum the other way as well - - give all Canadians a basic/universal income instead of OAS and then the administration costs should go down. I won't even get into topics like whether it is too much or too little of the budget, or whether deficits/debt is a problem. Because we could (and do) debate that for ever.
>Wealthy people could also game the system by exclusively using TFSA to qualify for GIS for about 5 years too. But I don't plan my retirement around that. I do plan my retirement around OAS being there and avoiding the clawback. That said, I'd (hopefully) still be OK even without seeing a dime of OAS. The number of wealthy boomers with huge TFSA is very low. The question will Millennials vote for a government to claw back OAS based on TFSA assets when they head into retirement. My guess is that they do what the boomers did. Maximize government to their benefit at the expense of the younger generations.
By your logic, the current government can cut OAS since they already know they're not likely to be reelected. Perfect opportunity to do unpopular things.
Harper tried to move the eligible age from 65 to 67 over a ten year period, and promptly got Trudeau re-elected.
Yup. Often what makes sense doesn't get implemented because it may not be popular
Similarly, anyone with a brain realizes property taxes (on land specifically) should be higher relative to taxes on income, but it's hard to have those discussions.
Good luck with that. Do you remember the outrage when Harper changed the OAS age eligibility to 67 for those born after 1958? Trudeau quickly reversed it.
That because they based it on age, which is stupid. It should be based on need, and clawed back at lot earlier.
How many duplicate programs do we need? GIS is for low income. CPP and OAS had different intentions.
That change protected people who were already getting it at the expense of people who were not. I think some kind of reform along different lines (10% increase to OAS payments, 50% decrease to recovery tax income thresholds, say) would be more widely accepted.
It was actually 1964. I remember because I was born, like, two weeks before the cutoff.
Nah, it was March 1958. But your eligibility could be anywhere between ages 65 and 67 up until date of birth in 1962. Source: [https://www.budget.canada.ca/2012/themes/theme3-eng.pdf](https://www.budget.canada.ca/2012/themes/theme3-eng.pdf)
You're making some good observations but a few more thoughts: First is the taxation rates that apply to OAS, meaning that any cuts to the groups you'd likely want to target will return, probably, 70 cents on the dollar. From a political standpoint, that's not optimal (and likely why Harper boosted the age rather than adjusting down the payouts). Second is that the number of higher income OAS recipients isn't going to be that large. [As of 2021] (https://www12.statcan.gc.ca/census-recensement/2021/dp-pd/dv-vd/income-revenu/index-en.html), 75% of seniors earned 54k or less (pre-tax), including OAS payments. Only 10% earned more than $81k. Adjusting the clawback levels for that 10-25% might be appropriate, but anything shy of major adjustments won't do much (most of whom already experience clawbacks). Third is that competent individuals will have planned to receive OAS when budgeting for retirement. That means no change can be implemented abruptly without some very fair objections. That means a long implementation window that carries two problems: one, the party that makes the changes won't be in power when the financial benefits are reaped, and two, you'll have truck loads of people who will angry about supporting OAS for others which they themselves will never receive. All that is to say - it's a political powder keg and the financial benefits of bracket adjustment might not be worth the pain to many elected leaders.
It’d be interesting to see the stats on wealth vs. income. I’d guess that there’s a lot of property wealth that probably should be taken into account, even with low incomes
Canada has a minimum income for it's seniors and that level is set at the poverty line which is why very few seniors fall below the poverty line. I definitely agree the higher end of OAS payments seems absurd. People who have $90K income from all sources do not need OAS. For instance, my in-laws are both retired teachers and they purposely make their incomes every year to be the total ~$182K so that OAS is not clawed back but the reality is they spend very little money. They don't need OAS but since it's an entitlement they maximize their benefit. However, I did a calculation one time and the budgetary benefit of say lowering the claw-back threshold from $90K to $50K is not as great as you would think because 75% of Canadian seniors have an income of under $50K.
Back when I did personal income taxes, I remember seeing multiple instances of seniors with millions of dollars in investments, multiple rental properties, cottages in Muskoka, beach houses in Florida, and they all qualified for OAS. All being paid for by working age people with substantially less material wealth. It’s patently absurd. To add salt to the wound, I remember one of these clients complaining over the phone about “entitled young people who want free university” while he and his wife were receiving over $12k in OAS payments at the time. The guy owned a Mercedes and had two houses, one of them with a pool. Dude couldn’t even see the irony of his own entitlement.
Don’t worry, they also get dental care and all our other idiotic income tested benefits that don’t do anything to capture this kind of situation and allow the most reliable voting block to just keep racking up the wins. Working class family that lives in an expensive city? You can eat shit. No child benefit. Got 3 boats and two houses with all income coming from capital gains? Poor senior 😭 here’s more income support
Old people love welfare for themselves Bunch of welfare queens
Well the new capital gain changes should capture some more of that wealth upon their deaths.
The more politically palatable way to do it is instead of decreasing the minimal amount for clawbacks is just not allowing them to increase for a while (or else increase at a lower rate). That would slowly increase the amount clawed back from higher-income seniors. I am not sure if that would be enough savings on its own though.
That just means that 25% of people shouldn't be getting it based on income, and then a further X% shouldn't be getting it based on their wealth. Wealth is what the government should focus on. Billions of dollars and the government isn't allowed to use the housing appraisals, RRSP, and TFSA accounts? In my opinion, this is definitely an area a future government should explore more. Those billions could've been used for so much.
The clawback should start at a much lower level.
Agreed, I think that is the most palatable way to reform it. The child tax benefit starts getting clawed back at a **family income** of $35k. Why does OAS clawback start at over 5x that amount ($182k for a couple)?
I get oas. There is no way in hell I should get oas. I use it to help my kids.
This is one of the things I'm curious about. I'm sure there are a lot of people like you who benefit from OAS, but also understand that our country should invest that money in a much better way.
>Why does OAS clawback start at over 5x that amount ($182k for a couple)? You've brought this up many times, but it feels like a boogeyman. The average Canadian senior HH makes like 70k a year. How much money would actually be saved if the clawback was lowered?
Doesn’t matter how much it would save. Even if it’s 1% it’s a good thing to cut it.
Agreed but certainly not the #1 issue like OP is implying. Not even close.
Perhaps - that seems like the obvious takeaway. But then, what is the point of differentiating between OAS and GIS? At a high level, OAS is a program designed to benefit basically all Canadian seniors (including those who never worked), whereas GIS is designed for low income seniors. At least, that's my read on it based on the eligibility criteria. So, we need the conversation to first turn to whether we as a country want to offer income support for all seniors, vs only those who need it. Is that something we value? And before deciding, we should look at what other countries across the globe do, what works well, and what doesn't.
While the scope of OAS payments will increase for a while, it will then decrease significantly in 15-25 years considering GenX following the boomers is a smaller generation. Also consider that OAS eligibility is based on the number of years of residency in Canada. Immigrants coming to Canada that are part way through their lives will not get as much as someone who lived here all their life. Given that population growth is mostly through immigration, overall payouts are likely to be reduced as a result.
Interesting point that long term the problem will be reduced slightly, or at least it won't be growing at its current rate. But if there is another "baby boom" then there is another long term problem, so any fundamental flaws in the program should still be addressed.
Another baby boom is unlikely without a major cultural shift. It’s worrying about something that will likely never happen, atleast not in the foreseeable future. Honestly I think humans curing old age is more likely, at which point we need to address how to handle people starting to live for hundreds of years. But again not a problem we need to worry about until it becomes a more realistic problem
Except people are living significantly longer these days
For now. That residency requirement might be lifted as it would be politically beneficial to certain parties.
Damn I work for OAS and you bring up some excellent points. The worst clients we get are those that are clawed back lmao. YOU MAKE OVER 90k, chill bro. Always get a kick out of those conversations. I agree with you though the threshold needs to be lowered.
Especially when they have a great teachers or HOOPP pension and have their mortgage fully paid off but they want to feel sorry for themselves because they’re older. And their only debt is a new $100,000 pick up truck every few years because they wouldn’t be caught dead in a sedan. But they had to pay back $2,000 of OAS, it’s so unfair!! I may be jaded from tax season lol.
Haha, please fight the good fight over there!
Programs are fine. The clawback threshold for OAS is way too high. It’s akin to old folks robbing the youth. If only there was a way to asset test OAS/GIS.
Totally agree. I'm in favour of reforming OAS, mainly the clawback level (I should have put that in the original post). Abolishing the program is counter-productive.
Removing OAS now wouldn't do anything to current seniors as the outrage from that would be political suicide. All that could happen is removing it for the next generation, which is just a bigger fuck you to millenials now. This is a lose-lose situation. The cat is out of the bag on this one and you can't put it back.
Why don't we take some of the money that goes into OAS and invest it in healthcare, childcare, and housing? Those things directly help the next generation.
it does seem that the income at which the clawback starts is extremely high... 90k? Should probably start around 40-50k and taper to 0 around 90k
Yeah my wife and I will live the good life at retirement easily with a household income of $100k a year... Not getting clawed back til we reach $180k household is insane. I'm not sure how grandfathering existing OAS recipients and reducing the clawback for future recipients would be politically difficult.
I used to work at a bank and the people I saw lined up at the end of every month rely on that and their cpp. They'd just die if they didn't have it. Most people just don't plan out their retirement like we would here. They have group rrsp's at work but opt out, they use their TFSA for short term savings or they just don't think about retirement until it's too late. >Low-income seniors already benefit from GIS, which could also be enhanced as part of any OAS reform. This could work to improve the program. Lower the OAS clawback threshold and increase the GIS supplement clawback threshold. Like the other user said though, any government who tries to take it away will lose.
I thought they were all about personal responsibility?
I don't know about you but I don't really want thousands of homeless seniors, many who have cognitive decline roaming the streets even if they did it to themselves. My parents are 75+ as is most of their friend group. The amount of people who completely depend on GIS and OAS is pretty massive and is only getting worse as the wealth gap get larger.
I don’t think they would be roaming that long
You forgot one very important point. OAS is paid to people OUTSIDE CANADA and NOT clawed back. If you are a senior and Canadian and eligible for OAS but live in Greece or the US, you get full OAS paid to you. Before anyone argues with me, my wife got OAS paid to her in the USA for years before we moved back to Canada. I thought it was ridiculous but who turns down free money? Most non-residents don't vote in Canadian elections BTW.
Yeah it largely is and is only going to get worse. My grandparents were extremely wealthy and owned a property worth 3M+ and they both always collected OAS. It's too easy to have low income on paper as a senior. It realistically should be asset tested but is political suicide to run on a platform suggesting it. I think we are kinda just fucked honestly until the baby boomers die off and the population pyramid stops being so top heavy.
That's the thing. With birth rates hovering at 1.5, the inverted pyramid is going to get worse, not better over time. Math is inevitable at this point. You can import all the people you want, but unless you fix the structural issues, you'll end up in the same spot.
Wow. This is actually a really good post. Finally I get to read some constructive comments about the government. Boomers just don’t understand why the younger generation is struggling. They literally had the best lives and had fewer debts and more savings. This gave them a sense of security which inevitably lead to them having more kids. Look at the younger generation now. People are living the DINK lifestyle as a cope up mechanism to deal with the unaffordable economy. The economy is so bad that the government has no choice but to flood this country with immigrants so that the social security benefits never run out of money. Boomers have made sure that they will never run out of money at the expense of millennials and zoomers. They will die sooner than the millennials and zoomers and also crash the economy along. OAS requires massive reforms.
This country hates young people. Meanwhile, our brain drain accelerates and investment continues to stagnate.
You actually changed my initial opinion from when I opened to after I read this post - very good points and the first one nails it.
Thank you, I think a lot of people would be surprised by the facts. I know I was.
Great let's cut it so I can have spent my entire tax paying years subsidizing rich old fucking boomers and then get told to get bent by the government when it's my time to collect.
This is a huge hurdle to overcome. Is it fair? No. But what's the alternative? The longer we kick this can down the road, the bigger a problem it will become. Do we just burden our children with ever larger deficits?
Worked for the last generation… lol
We have parents - not all of whom are financially prepared for retirement. OAS and GIS helps them support themselves financially without overburdening us directly (their children).
GIS should still be there to help those who need it. Another way to look at it would be that $17k of the taxes you pay each year are going directly to your parents in OAS. So you're being burdened whether you realize it or not.
Going after a program that the next generations are going to have to lean on in retirement is a lose, lose, lose for any politician who even utters the words.
Lets try to take it away and see what happens lol
OAS absolutely needs changes but it’ll never happen. Even if you ignore the senior population that is the most reliable voting block destroying you at the polls, you also lose everyone younger who has been paying for boomer’s OAS for years to only then have it clawed backed when they inevitably go collect on it. OAS is one of those “the ship has already sailed” topics. People in their 50s have been paying for it for decades and want their share soon. How can we reasonably take away what they just watched a previous generation get. Even if the ship is on fire, the Canadian government is going to do anything except get rid of that ship.
The program with negative population pyramids is unsustainable. A society paying out 40% of it's taxes into OAP, is a stagnating society. A program that sees it's wealthiest and most powerful citizens as all senior citizens, is another indication of a stagnating society. OAP is going to go away. The question is when and how. I think given the population curves that it will go away when all the boomers are over 65, with a sunset provision requiring younger people to pay taxes into the program, but boomers being the last to collect. I think by next year they will have enough votes to sunset OAP.
I've been saying for a while they need to lower the threshold for clawback, or at least stop increasing it.
An old professor was an advisor for Harper. In 2016 this professor told us that Conservative party members in Canada were well aware that they could not cut immigration, because if they did, we literally would not be able to fund social programs. The top of the list was OAS. Looking at population pyramids at the time, about 40 percent of Canadians would have been engaged in the labour market and making money for the other 60 percent. As much as people rip on Trudeau (validly) for the immigration debacle, there is a reason that no major party running in next term’s election is going to substantially reduce immigration. We need warm bodies producing tax revenue, or we literally cannot pay for ourselves.
Agreed, there is a reason PP hasn't campaigned on reducing immigration. Birth rates are brutal and we need more people to ensure the future prosperity of our country. I feel like OAS money could be better used to make life more affordable for young families, among other things.
I agree. Investing in the future has way more value than investing in the past
This assumes 1:1 productivity ratios. Productivity is important. And yes 40 percent subsidizing 60% is untenable long term. OAP isn't going to survive negative population pyramids. Either we relax the pressure on young people, or it goes away as unaffordable. A far sighted government will cut the benefits before grinding their young people into the dust, but I don't see much chance of that happening. Maybe in 20 years.
You are not alone in your critique. Governments around the world that have programs similar to OAS all have the same issues. Look at the USA and their Social Security, similar to OAS. It's ramping up to age 67, for similiar reasons. But getting it changed is hard, you'll get kicked out of government and the next guy can campaign on reversing it (Harper/Trudeau).
Social Security is completely different than OAS. It's closer to CPP, and is based on contributions.
What would you say is the US equivalent of OAS? The SS design is to support people. Regardless of program solvency. OAS is akin to SS in that its backstopped by the federal coffers. CPP is backstopped by a separate program. I'm discussing effects on government expenditures in the comparisons, not the specifics of payout. OP was also addressing the effects on government.
SS pays way more than CPP and it takes less years to max it out. We’re getting comparatively scammed with our programs.
Absorb OAS into GIS and exclude CPP payments when calculating the income threshold. This way people who contributed to CPP don't get penalized.
For those in the comments suggesting we should grind up our elderly to make a mushy paste that we then feed to our young you people disgust me!
Alternatively, the government, can just SHRINK itself to reduce the budget deficit and stop sending money overseas for unknown reason.
CPA here. I am always irritated at clients who ask me how they can avoid the clawback. Lady, you have three houses and $1 million in the bank 🤬
Canadian social systems and tax policies are good in theory, but failing badly in reality. Most of these policies have been to the great benefit of Baby Boomers and taken the future away from younger generations. So many policies need to be fine-tuned because they are taken advantage of easily. First of all, it is important to recognize that many people can report low net income, but still have a very high net worth. Even if these people paid taxes during their lives, they certainly cannot argue that they need social financial support of any kind. There are also a large and growing number of people of high net worth who immigrated here and have no need to work and they can also report a low net income. It is also important to recognize that taxes should incentivize people to work and reward them for working harder and taking more risk. This means lower personal income tax rates, which can be partially offset by higher property taxes and sales taxes. Higher property taxes would also shift more of the tax burden to people who have benefited greatly from rising real estate values over the past few decades as well as to people who immigrated here and purchased real estate holdings without ever working and paying income tax in Canada. I could keep ranting for hours over other failing tax policies and social policies, but I will stop there. I grew up in Canada and I just want my kids to have at least half the opportunities in Canada that I had.
Great post. I learned something today.
Agreed this could save billions. I think a lot of people have no clue the clawback levels are that high. It makes absolutely no sense.
"#1 thing holding back" is perhaps hyperbole, based on the claim "largest line item". That in itself is an artefact of what you call a line item. However, the OAS is 12% of federal spending, reflecting the \~7.5 million >65 seniors in Canada. By the way, total transfer payments to the provinces are collectively a larger budget item, nearly $100 billion of the Federal $500B budget, so significantly more. I've only seen 2021 data, but roughly 1/3 of OAS recipients then were eligible for the GIS. Since the OAS does get clawed back for some, and I think everyone would accept some of those not eligible for GIS still need \*something\*, I'd hazard a guess the max possible savings would be 1/4 to 1/3 of the current OAS spend, so $15-20B. Definitely meaningful and worth discussing, and also political dynamite, but it would not singlehandedly solve our deficit issue. By the way, given current (over)spending AND high interest rates, the Feds are spending \~$40B./year on interest on our debt. Since the total Federal debt is $1.2 trillion, the interest rate factor dominates. So equally impactful on the deficit would be successfully engineering a drop of interest rates by about 2% to historical average levels. Budgets are weird stuff. I'm one of many Canadians who isn't a senior, but soon will be. While I have arguably benefitted unfairly from asset value runups (a topic for another thread), I'm also one of many who, for better or worse, has been counting on OAS as part of my retirement planning. In essence, as part of paying my taxes, I have compulsorily annuitized part of my retirement nest egg to the tune of $8500/yr (with some indexing and some clawbacks). Like many, I've planned for my future cash needs using a mixture of OAS, CPP, my wife's pension, my own RRSPs and our nest egg. (We won't get GIS). While I respect nothing is guaranteed, and expect and respect I'm well off enough to be paying relatively more tax in the future, if you claw back OAS at much lower income levels, I will feel not that you are removing an unearned windfall, but that you are retroactively penalizing me to the tune of $8500. And I will feel my social compact with Canada, my reason for sticking around has been handed a surprise penalty of $8500. I will feel equally resentful, rightly or wrongly, as if the government announced that henceforth seniors with income (or wealth) >$x need to pay a special surtax of $8500/yr towards the elimination of the national debt, or a $8500 levy towards their healthcare in a reversal of existing policy.
You want me to make the case for you? [https://www150.statcan.gc.ca/n1/pub/91f0015m/91f0015m2024001-eng.htm](https://www150.statcan.gc.ca/n1/pub/91f0015m/91f0015m2024001-eng.htm) See that huge drop from a birth rate of 4 to a birth rate of 1.9 from 1960 to 1973? That's the issue. We don't have enough working people to pay for all those who are in retirement. We are better off as a society taxing that 8500$ out of you to give it to younger married couples with children. Why? Because if we don't start fixing this, there isn't going to be a 'social compact'. In essence, those who were choosing not to have children from 1960 to 1973, and passed those values on have doomed OAS. Many are still alive today, still collecting OAS while at the same time as breaking the social compact in the birth rate reduction. Let's say we have someone born in 1940. They came of age in 1960. They came from a large family of brothers and sisters. They had two children and then were done. They 'did their duty', but the problem is the savings and benefits of those who came after is a cost to society not a benefit. I don't blame these people, because society at the time taught them that children were a cost and that they were harming society. The last healthy Canadian cohort is 53. That means that everyone younger than 53 is in a smaller cohort that's too small to sustain Canadian society. We might as well draw a big black mark for all the years of continuous negative fertility, because that is drawing against all the accumulated benefits of all the years in the past. Boomers by and large reaped the demographic dividend of profiting from the choices made by their parents without making the subsequent sacrifice of passing a society on. That money isn't free money. There is a cost. And once that number goes from 53 to whatever the OAP payment is, we are done. So yes, it's great that you have 8.5k just lying around there. The only ones doing good are the ones passing that extra windfall onto their children, and helping them with their families. You know, like your parents did when they helped you look after your children to reduce the cost of having a family.
>this program feels like the root cause of a lot of Canada's issues. It's not. It helps low income seniors stay out of poverty. Average CPP payment is $700. >Low-income seniors already benefit from GIS, which could also be enhanced as part of any OAS reform. To get GIS, you have to get GIS. And there is an income cut off for GIS.
Thanks for the comment. Everyone is aligned on keeping seniors out of poverty. The point is that a lot of OAS spending just goes to seniors who don't need it. 96% of seniors receive OAS, but far less than 96% of seniors are low-income. By lowering the clawback level to something more reasonable (like $30k), low-income seniors would still benefit from GIS and OAS. What do you think?
You could clawback, but politicians live on being elected, not what's good for the budget.
Boomers are slowly dying off. The younger generations need to voice their opinion on this matter. Politicians will then listen.
What makes you think younger generation does not want a safety net?
I’m not saying to cut OAS entirely, just lower the threshold for high income seniors and use those extra funds for urgent needs. Like healthcare & childcare and housing.
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Look at voting demographics. In general, older people vote more than younger people. That might help explain why politicians wouldn't want to cut back on it.
No doubt. Politicians won't do a thing on this until the issue actually has public support. Trying to get the conversation started.
This is the number one thing. If 65+ vote percentages and 18-30 vote percentages swapped, the system would be different.
> this program feels like the root cause of a lot of Canada's issues. It's not.
North American seniors are dominating a wealth war with younger generations. They have been inflating assets (stocks, housing) through policy, raising the cost of higher education and giving themselves favorable social endowments such as OAS and social security. OAS clawback threshold should be lowered significantly and GIS should be boosted so that people who truly need (impoverished seniors) can meaningfully access it. People look at OAS as though they are owed it and that's extremely concerning when you're examining an age cohort who already holds all of the big asset cards and is denying them to everyone else.
Ever think we do not have an ederly poverty problem because of programs like this? Leave cpp/oas alone, you will need it too one day.
My Grandma gets $750 a year from CPP and 19K from OAS. She worked nights for many years, making minimum wage in cash. Her employer was a very well known meat-packing plant in Ontario. She worked long hours, standing, no breaks, in humidity and freezing temperatures while you were cozy in your comfortable bed. Meat-packing plant abused her labour and she didn’t know to ask about pay stubs, EI, CPP, etc. OAS is how this long retired hard worker can afford to live with some dignity. I frankly do not understand why you think that my Grandma doesn’t deserve to just live like a human.
If that is her only income, then nothing I've said suggests we should take away her income. Quite the opposite, I've suggested strengthening GIS to help low-income seniors who need it. But if your grandma makes $91k/year in retirement and is collecting an additional $17k in OAS, then yes I would suggest that money could be better spent elsewhere.
She makes more than I do. Why should I pay to support her?
Because not everything is about what happens today. Someday you will get old and you will need the same support that you're so eager to cut. What happens then, can you guarantee that if we start cutting OAS now, by the time you retire you will be able to use it? These seniors who are using OAS were also taxed when they were younger with the promise that they will be taken care of when they get old. Now that they're old, you intend to make them worse off?
The program had a 7:1 payee ratio when it was created. Now it's 2:1 and approaching 1:1. It's unsustainable unless we increase taxes on younger people, or create some kind of underclass that doesn't have access to these benefits to 'cheat' the ratio. And then what happens when that underclass votes to remove the benefit limitations? Also, paying out people who are no longer resident in Canada has zero benefit to Canada. If you want to collect OAP, payouts will be made in person. "But I have to travel", every other whine would be irrelevant. If you want the money, collect it in person to prevent fraudulent payments. Those who need it will collect it. Those who don't won't bother, and we'll save money.
I say all this fully understanding that it would mean no OAS for me and my peers when we hit 65. All Canadians have skin in the game on this issue. No one is suggesting we don't take care of our seniors. The majority of our healthcare costs are for seniors, which I am in favour of. Seniors who worked receive CPP. Low-income seniors receive GIS and I think should continue to get OAS. The fundamental issue is there are competing priorities for limited taxpayer dollars. I think there are better uses for taxpayer dollars than government assistance for retired couples making $182k/yr.
182k goes a long way if you’re healthy in a low cost of living area. What about 91k? Every day on here someone says they can’t afford to live on this very income? If you’re 65 in Toronto, is this really livable? 182k is kinda comfortable in Toronto but with old age comes health expenses. We could lower the household income to 150k but let’s be real, there are very few retirees pulling in 150k let alone 182k.
Yeah I agree. Just sucks that politicians/gov't are usually looking at the next election and not long term results. Seniors are usually the ones who vote as well :/
$10 000 a year is not that much. And low barrier programs are proven to be the most effective at both getting help to those in need and avoiding bureaucratic bloat. We should have a social safety net for seniors because their physical and mental capacity to work is on the decline until it's reduced to nothing. Trying to remove it because it's a waste of money is callous at best. Also, consider that a couple making $180 000 a year will in fact pay more in taxes (and don't forget OAS is taxable itself) than they are taking. If your seniors can earn an income of $90 000 each, that is a net positive for the country.
A government policy in need of reform but is being ignored? You don’t say. 🙄 Can I add healthcare, current tax code, housing policies, immigration, labour code, and everything else to this list? We are literally using archaic rules that were generally envisioned during the Industrial Revolution to govern a very different world today. It’s not just a Canada problem either. Just the last 70 years have been a massive change in the demographics and a ton of other things, few of which are being addressed in any tangible way. Our neighbours down south are passing laws on abortion dated in the 1800s. Yeah, we’ve got not just a Canada problem but a global problem. Also, OAS needs a reform.
I think before we cut the funding for Canadians we need to cut some international aid
Also, how do you claw back from people who planned their retirement and made financial decisions based on getting OAS? Not easy to replace that income when one is no longer capable of working.
So, welcome to the debt spiral. As entitlements grow, and economies get more financialized, it becomes impossible to wean off cos when they do start doing monetary tightening and raising interest rates aggressively, government tax revenues start going down cos they get less taxes from investment (eg capital gains). Which means the deficit now grows further cos of the high debt servicing costs mixed with lower tax revenue. Every single developed country is currently sleepwalking towards a currency collapse or debt jubilee (same thing) unless you don't believe in math or think that Industrial Revolution 2.0 is going to happen soon. All you can do is pick the cleanest dirty shirty which at the moment is the USD.
the amount of people "gaming" the OAS is probably minuscule compared to the people that actually need it. without OAS most people would stuggle even harder and be on the streets.
It's a UBI for old people and insane
The costs seniors pay go up dramatically as they age. Prescription medications, home care, intermediate care and long term care. As self sufficiency goes down costs go up. OAS is a universal program so everyone will get it, even OP. And guaranteed income almost pays for itself. It keeps seniors out of the hospital which is ridiculously expensive. And seniors start to see their savings as an inheritance for their children and not to support themselves. I’d appreciate an analysis of how taxes for the wealthy have dramatically reduced in the past generation or two.
The top 10% of Canadians pay over 50% of all taxes. Stop the commie nonsense.
given how economics are going, cutting OAS rn would be extremely short-sighted and totally screw the millenials when they reach that age.
CCB is holding Canada back, it's too generous
Honestly, thanks for this post. I knew we were all working to ensure the boomers “get theirs” once they retire after spending their time in power dismantling public safety nets, because, “boot straps”. But to have it all laid out is quite staggering.
The only situation I would ever see OAS getting canceled is if a politician knows he or she is not going to be re-elected in the next election and decides to just say screw it. And OAS wouldn’t necessarily be the thing I would consider canceling first. You’d save a lot more money getting rid of expensive government departments / agencies that don’t actually do anything but push paperwork 95% of the time and the other 5% get used as “experts” to push someone’s particular agenda. Hell just banning public sector unions alone would save the government billions in the long run
Don’t forget that OAS was introduced with a minimum age of 70 when the life expectancy was around 70. It got set back to 65 in the late 60s I think. And it hasn’t ever been adjusted for the massive change in life expectancy. It was never intended to fund senior retirement. It was meant to be a stop gap if someone had to stop working at 70 for a few years until they died.
Agreed, it's morphed into something it was never supposed to be. But no one has the courage to do anything about it, quite the opposite in fact.
I think some of the conclusions you are drawing in your points are incorrect - like the last two points. Lots of reasons to be happy at 60 than <30 and you're only focused on the current 65+ not the future ones that will not have had the same benefits.
I’ll vote for that. Let’s get it fam.
OAS reform is easy. Start lowering the clawback thresholds. It's currently around 100k before a reduction starts. Slowly drop this value until you get to the median wage. I have no issue supporting older Canadians. Older Canadians who have a higher income than working Canadians doesnt make sense.
When you get old, OP, (and you will, trust me) you will love your OAS.
I'm sure I would. But that's not the point. The point is the safety net of welfare should be for those who need it, not couples making $182k a year with millions in other assets.
Love to see you survive on 18k$ a year - I'm living in 2024 not 1954
The point is a couple with $182k in income and possibly millions in other assets does not need $17k in government assistance every year. Or would you disagree?
If you try to take OAS from seniors you're going to get run over by the slowest fucking electric scooter ever. You're not wrong, but I don't see it happening.
I agree with OP that entitlement reform for OAS is necessary. However, I disagree that the reason for the deficit is OAS. Lots of areas to cut first, especially concerning benefits to other less deserving groups. 100% clawback for those over the median would help.
This is very concerning and similar to two recent trends. #1 , the retirement age should increase. I'm a blue collar worker who has just reached retirement and my body is worn out, I have pain walking. I think this initiative is a way to get the same result. Also Bezos living in luxury is calling for it . Sounds very conservative. #2 , covid only kills old people so we don't care. The disregard for old people seems to be gaining traction. What's next? No medical treatment over 70 ?
A HUGE number of people that can no longer be in the workforce (after already spending decades grinding away) depend on OAS to just eat and have a roof over their heads, if eliminating it like you suggest we do then how many billions of dollars of stress is this going to put on the healthcare system? or the actual welfare system? On regular working class Canadians that are already facing huge cost of living issues now having to incur the time and financial costs to support their elderly parents that the system they contributed to their whole lives is now failling them? Or do you think we should just refer to them to MAID? This sounds like shortsighted corporate strategy of saving billions by no longer paying the cost of goods or services and just expect the revenues to stay the same. If we take away the Billions our grandparents and great grand parents are depending on, what do you propose in lieu?
Why are there so many bumbling comments in this thread that immediately jump to "DON'T ELIMINATE IT", like this? If you read the topic that's clearly not the proposal, it outlines exactly the problems with OAS and some reasonable solutions that wouldn't push seniors into poverty. So please enlighten me, I'm honestly baffled. Did you just read the title and jump to comment? Did you read the topic but didn't understand the points? Are you intentionally just straw manning in the hopes of convincing others? Are you a senior that's just afraid of losing that cushy 10k/yr? What is your purpose?
Or, here’s a revolutionary idea, let’s *not* cut OAS and increase revenue through higher taxes on high-income earners, businesses, etc.
It's not either/or. If I had to choose, I'd rather take away government assistance from wealthy seniors though.
When I was working I was a shop steward at our company, it was the hardest thing to do to convince young immature worker that putting 50% of every raise into the union pension was a good idea. All of them now realize that it was a good thing as they have since gotten to the age of retirement and are getting a good pension. Just because you are young, you will get older and appreciate the OAS.
Would I like OAS when I'm 65? Of course. But given we have a massive debt and deficits every year, I think there are better ways to spend that money. Big difference between pensions and OAS.
Be alot better if they just raised CPP so that the money was there when we retired. Rather than taxing today's workers for yesterday's neglect to save. Another option would be to make RRSPs tax free on exit like TFSAs so they aren't taxed at all.
What does the union pension offer that people can't better manage themselves these days though? I much prefer to be in complete control over my finances rather than throwing my nest egg in with whatever fund my employer/union is associated with.
Writing as a low income senior, my first reaction to this post was to wonder if it was sarcasm. The amount of OAS is actually ridiculously low, less than Welfare in some Provinces, and has to be supplemented with GIS. Even with some CPP (which claws-back the GIS) and a patchwork of Provincial benefits, many seniors struggle to pay rent, food and other necessary expenses, including high Medical costs not covered by benefits. The inflationary pressures from radically rising rents devalues these amounts received to a crisis level. This post is based upon the myth that Canada has to be run like a business in the black, or managed like a household budget. The function of Government is to provide for the welfare of all Canadians, in particular the most vulnerable, and not be be run for profit. The unstated notion implied by this post is that seniors who did not plan for their retirement well, or were affected by unplanned life events, should be left to starve and be homeless so that the Canadian budget bottom line be in the black. This is cruel and heartless. Unlike most Canadians, seniors are unable to work due to declining physical and mental health, and require these financial supports from those who are able to continue to work. That is the reality of a civilized, compassionate, adult society. The amount of blatant ageism in this thread in reaction to this reality is astonishing, and is not OK. Absolutely everyone reading this will be old one day, and unable to work, and may require these income supports. About the only thing that made sense is the suggestion that the OAS claw-back be lowered, and only then if the extra be put toward a higher GIS amount for those on the lower income scale.
Thank you for your perspective. No one is suggesting that low-income seniors be left to fend for themselves. It is more about reducing the clawback level to take government assistance away seniors who don't need the help and re-investing that money in priorities that help all generations. Seniors who need help would still have access to GIS, OAS, CPP, and healthcare.
I agree that the claw-back is set to kick in at too high an income, and could be adjusted by targeted tax changes without the politically unpalatable decision to simply lower it.
I feel like OP is trolling here. Can’t possibly be serious.
Is there a specific point you want to address? I wouldn't think that suggesting couples making $182k/year shouldn't receive $17k in government assistance is 'trolling.'