Right Approach? OAS Increase for 75+ Seniors

Last month’s poll in Knowledge Bureau Report asked  “Do you think that seniors over the age of 75 should continue to get the 10% increase in their Old Age Security benefits which began in July of 2022?”  Overwhelmingly the answer was yes:  89% for it; 11% against.  The comments that accompanied the vote were eye-opening.

Terence spoke for the No side and made an important point:  The cost of OAS pay-as-you-go pension is borne mostly by a shrinking proportion of workers in Canada. I would rather see GIS boosted instead of OAS.

Sheryl spoke for her mom:  YES.  My mom is 88 years old and has little to no money, and expenses are high.

Pat told a bit of her story:  I voted yes and you may say I am prejudiced because I am over 75. BUT, due to life interfering we were unable to save during our younger years and while we could live on our pensions we would not have a life, which is why I am still working.

Karen embellished on some hard luck:  I turn 70 next month. I lost all my savings to a leaky condo and the bank demanded a payout of my mortgage which I could not do, so my condo was auctioned off in court for much less than the mortgage so I had to pay the balance to CMHC immediately and could not get a loan so had to put balance of $34,000 on 2 Visas. It took 4 years to pay off balance. Now I am paying all that interest. All my food and bills go on a visa. I am now back up to $30,000 Debt and will be working for the rest of my life. Every penny I get on my OAS is so needed. I need that increase now and to my dying day.  Every pensioner should get this increase.

Holly speaks to recent cost of living changes:  Current price increases are devastating to seniors, especially to those who depend on OAS and CPP. Any increase is necessary.

Vince makes a good point about the impact of the OAS raise on other benefits.  Yes I think they should, provided it does not impact their provincial supplements. I would hate to see someone receive pennies only to lose dollars in additional health benefits and government programs.

Klause agrees there is more to this than meets the eye.   This is quite a complex situation.  I wish the 10% increase could be decided and/or applied for by the pensioners themselves since it potentially can create a clawback of further pension income and/or bring the taxpayer into a higher tax bracket. However,  yet due to the increase in cost of almost everything it is most likely appreciated by most.  I also think the 10% should apply to all OAS recipients based on taxable income like the GIC.

Susanne also believes the clawback should reconsidered, as should taxation of seniors in general.   I believe the 10 % increase should be there.  I also believe that after a life of working that there should be no clawback for seniors whatsoever.  Most seniors have slowed down.  There are many working still but their abilities to manage, keep up and maintain a humane lifestyle has been severely impacted.  The younger or middle aged population also struggles to keep up with the day to day, the care of growing children, tuitions and also care of their elderly.  Many just cannot manage all of it. 

I think that seniors should not have to work past 60 or 65 and that the government should be making sure they can maintain their homes (all aspects of government).  Seniors who own 1 home should no longer have to pay property tax, they should not have to pay tax on anything, they should have increases so that not only can they finally enjoy life but also so that they can help to contribute to the care of their families.  Taxation of a senior who struggles to get services and file taxes is ridiculous as is the clawback.  At retirement all seniors should be allowed financial freedom, a time to enjoy their life, the ability to stay in their homes which they worked for.

Patrick, echoes the sentiment.  Seeing as I’m 80 years old, I think after paying taxes after all these years, my wife and I should get this benefit.  Compared to the amount paid to families for child benefit payments, it is not enough, and the amount should be increased. 

Cindy, also comments on government’s approach helping seniors:  Absolutely yes and agree with others that it should be at age 65 as seniors need all the help they can get moving forward into the golden years. The cost of living is just too high and the government does not help the seniors enough (ever)

Virginia makes observes:   We were denied the opportunity to increase our pension by delaying its start to age 70, because this measure had not been initiated yet when we turned 65.  Yet some of us have had the entire pension clawed back during those years from age 65 to 70, so those people are in the same boat as the people who were able to elect the delay.  This is an attempt to rectify this unfairness without actually going back to see which of us were historically affected.

Ina speaks to the perils of living on a fixed income.  Yes, seniors are requiring more support as the cost of food, shelter and clothing gone up. Living in Canada we are paying higher taxes, (but  the) majority of seniors do not have the excessive cash flow upon retirement. . .and (are) facing high cost of health issues. They need to have funds to manage (their) standard of living.

Last words go to Derek who is undecided but bullish on thoughtful discussion about these issues:   I enjoy Knowledge Bureau putting together these monthly polls and seeing the commentary.  It would be nice to be able to get these thoughts and debates as part of the bigger public debate. 

I’m not sure how I feel about this.  Frankly, every tweak added further complicates the taxation system. Could those over 75 collecting make use of an increase?  Generally yes.  As others have noted though, how or why is a given age the cutoff? 

When pensions were first introduced in Prussia in the 19th century (if I recall correctly), the idea was to look after elders in the nation for the remainder of their life.  That’s positive, but at the time, average life expectancy was 63.  Somehow, in about 150 years in western society, we’ve maintained the beginning of benefits at 65 while about 20 years has been added to average life expectancy, due primarily to better sanitation, water supplies, and infection control (penicillin was a big part of that).  A previous federal government put in place an increase in age for OAS and they were voted out of office and that change repealed.  Aside from the fact we generally seem to be guided by self-interest, I wonder why we seem unable to hold rational debate about these significant topics. 

It’s amusing that employees tend to be fixated on being able to retire by age 65, while many business owners and professionals, particularly those who chose a profession wisely and enjoy it, expect and even plan to continue working so long as they are able.  Perhaps there is a lesson there….

Sincere thanks to everyone of the hundreds of people who took part in this poll.  Our September poll is:

In your view is the maximum FHSA* (maximum $40,000) a better home savings plan than the RRSP Home Buyer’s Plan (maximum $35,000)?

*Tax-Free First Home Savings Account