Reforming Old Age Security: A Good Start But Incomplete
Fraser Institute, October 2013
41 Pages Posted: 6 Oct 2013
Date Written: October 1, 2013
In 2012, the federal government implemented changes to Old Age Security (OAS), one of three key income programs for seniors. While the main reform — an increase in the age of eligibility — is a positive first step in reforming programs for seniors in the face of historic demographic change, it is only a first step.
The most prominent reform announced in the 2012 Budget concerning OAS is an increase in the age of eligibility to receive full OAS benefits. The announced changes will not affect anyone born before March 1958. Specifically, the age of eligibility will be increased to 67 years of age from its current level of 65 years of age starting in 2023, with the change fully implemented by January 2029.
It is worth noting the modest nature of the two year increase in the age of eligibility. Consider that every year that life expectancy increases, the total benefits paid under senior programs also increase but without any specific action on the part of the government. In other words, these benefit increases occur automatically as a function of increases in life expectancy. If, however, the government had indexed the age of eligibility to life expectancy in say 1966, when the CPP was introduced, the age of eligibility for OAS today would be 74 years of age.
While the federal government should be applauded for its willingness to tackle a sensitive and controversial issue, the changes made to OAS are a first step in what needs to be a much larger process.
Keywords: Government Spending
Suggested Citation: Suggested Citation