Old age security reform

Smallc · January 27, 2012

Harper should go out and say that if that is what he believes I think differently.

It doesn't really matter what people think. That's the point. Either we do it, or we're fucked.

fellowtraveller · January 27, 2012

Harper should go out and say that if that is what he believes I think differently.

Any comment on the actual action proposed by Harper, other than generalized whining about when and where he said it?

capricorn · January 27, 2012

OAS is in great shape right now.

Really? OAS does not have a dedicated account. It comes out of general revenue. So we can't say what shape it's in other than to measure the expenditure as a percent of GDP.

Topaz · January 27, 2012

Question to anyone who agrees with their PM....do you think that the future generations there won't be any "poor seniors"? If there are any changes, I don't think it should be by age, it should be by income. If you don't need it, then you don't need it. If any of you have watched the TV program "Til debt do us part" people of ALL ages are in debt and now with unemployment high there will probably be even more poor seniors in 20-30 years and who will need the OAS at 65 not 67! Seems like the govrnment is hoping these people die before they can collect!

capricorn · January 27, 2012

Hats off to previous govts who took measures to make CPP the sustainable model that it is now.

Amen to that. We can be thankful that the government is not directly involved in its operations and that it's administered by an independent body.

capricorn · January 27, 2012

People are stupid and selfish on issues like this. Giving them a chance to vote on it will probably take us down the road to financial ruin.

Adding to this, if it's too much for Canadians to take, the Conservatives will be brought down in the next election. I think by that time Canadians who are opposed will see the bigger picture and understand the advantages to such forward thinking.

punked · January 27, 2012

Any comment on the actual action proposed by Harper, other than generalized whining about when and where he said it?

I think it is a non-starter it is to big a plan not to put to the people to decide. We voted on an OAS platform it won, we voted on Medicare it won, if you want to change them then put it in your platform and lets have an election on it.

fellowtraveller · January 27, 2012

Question to anyone who agrees with their PM....do you think that the future generations there won't be any "poor seniors"? If there are any changes, I don't think it should be by age, it should be by income. If you don't need it, then you don't need it.

OAS is already affected by income, see below for the calculations. But I expect that the other penny will drop, that the limits for elegibility for OAS will also be altered to cut out high income retirees, and that very low income seniors will either get more OAS earlier, or that the rules around the OAS Supplement will be altered to get them more cash. .

The govt did the something similar for the 'baby bonus' long ago, they addressed the inequity of 'one size fits all' for income supplements.

Old Age Security ("OAS") is a social insurance program that provides a basic level of pension income, on application, to anyone age 65 or over who meets residence requirements. The amount of Old Age Security pension must be included in taxable income. OAS is reduced for persons with high income through a recovery provision of the Income Tax Act.
For 2011, the tax recovery applies to persons whose net income exceeds $67,668. For each $1 of income above this limit, the amount of basic Old Age Security pension reduces by $0.15.

Repayment of "clawed-back" OAS is made through deductions at source. If net income is more than $67,668, one-twelfth of the total estimated repayment for the year will be deducted from your monthly OAS payments. The estimated repayment is based on your previous year's tax return.

msj · January 28, 2012

OAS is already affected by income, see below for the calculations. But I expect that the other penny will drop, that the limits for elegibility for OAS will also be altered to cut out high income retirees, and that very low income seniors will either get more OAS earlier, or that the rules around the OAS Supplement will be altered to get them more cash. .

And this is where I point out the hypocrisy and/or stupidity of the Harper government.

They brought in pension splitting for seniors.

As such, the guy with the Air Canada pension of $120,000/ year with the wife making $4,800 per year on CPP (split off from his CPP) saves $9,000 to $10,000 in taxes/OAS claw back per year (an extreme example but one in which does happen - I have more than a few clients who fit into this scenario).

Many seniors have seen their taxes go down significantly and their OAS clawback reduced to nothing thanks to this change (most people save several hundred to a couple thousand dollars per year in taxes).

A few years later, we get "reforms" to make it "sustainable."

Yeah, if they didn't introduce the pension splitting in the first place they likely would only have to fiddle with the ages a bit (as they should) and everything would be fine.

I'm tired of seniors getting all the tax breaks - I say raise the minimum withdrawals from RRIF's, make them pay tax on this income sooner (reduce the age from 71 to 67), eliminate the age amount tax credit at a lower income amount (say $35,000), and eliminate pension splitting except for CPP (which is at source).

WWWTT · January 28, 2012

Its a lot of fun reading some of the comments here on this thread!

Automatically the conservatives take Harpers side stating that CPP can no longer sustain itself,if not now then maybe in 20 years.

I guess Harper has got one freekin kick ass awesome crystal ball to see what Canadas GDP will be in the future say 20 years to know for sure that our GDP will be incapable to compensate for our expenditures including CPP.

Personally if I had a kick ass crystal ball I would guess the numbers for the lotto max,maybe Harpers crystal ball only works for determining the gullability of his voters?

WWWTT

Smallc · January 28, 2012

No one is talking about the CPP.

WWWTT · January 28, 2012

Adding to this, if it's too much for Canadians to take, the Conservatives will be brought down in the next election. I think by that time Canadians who are opposed will see the bigger picture and understand the advantages to such forward thinking.

Wow where was this rational thinking when the conservatives were cutting taxes for the largest corporations?Or when the conservatives announced increased spending in the military?How about the new laws creating financial burdens on our justice system?Increased funding for incarceration?etc,etc,etc?

Now all of a sudden the conservatives are fiscally responsible?

WWWTT

Smallc · January 28, 2012

Wow where was this rational thinking when the conservatives were cutting taxes for the largest corporations?

That companies would invest, and that corporate tax receipts would actually. Even in this climate, IIRC, they have.

Or when the conservatives announced increased spending in the military?

Most of us thought that it was necessary.

How about the new laws creating financial burdens on our justice system?Increased funding for incarceration?etc,etc,etc?

Some of the laws are definitely overkill, but others are aimed at fixing a few key important areas.

WWWTT · January 28, 2012

No one is talking about the CPP.

Oh yes I guess you are right.

Thats a smaller seperate cheque everyone recieves at 65 right?

WWWTT

WWWTT · January 28, 2012

That companies would invest, and that corporate tax receipts would actually. Even in this climate, IIRC, they have.

Same would have happened if the cuts didn't go ahead and as deep!

Only difference now is that the middle class or the consumer now is further burdened and will have less to further invest into the economy.

By the way,consumer always trumps the large corporations!

WWWTT

Smallc · January 28, 2012

Same would have happened if the cuts didn't go ahead and as deep!

Would it have?

Only difference now is that the middle class or the consumer now is further burdened and will have less to further invest into the economy.

Actually, the middle class is paying less tax than 20 years ago now.

WWWTT · January 28, 2012

Would it have?

Actually, the middle class is paying less tax than 20 years ago now.

Can you back up either of your claims with reputable sites?

WWWTT

Smallc · January 28, 2012

Can you back up either of your claims with reputable sites?

WWWTT

The first claim? No, and neither can you. The second, I can, since tax rates have, in the last 20 years, been indexed, lowered, and there has been tax credits introduced up the ring yang (I'm not really in favour of those). There are also figures that show the Canadian economy is now taxed at a rate of 32.2%, down from closer to 35% about 10 years ago.

http://en.wikipedia.org/wiki/Taxation_in_Canada

That wikipedia page has some very nice citations for you.

msj · January 28, 2012

Oh yes I guess you are right.

Thats a smaller seperate cheque everyone recieves at 65 right?

WWWTT

For some the OAS cheque is more than CPP.

For those who have lived in Canada for 35+ years they get about $6,400 per year for merely residing here.

That is different from CPP for which one pays into based on earned income and the size of the pension received is based on how much has been paid in over a certain amount of years.

Now, the GIS (guaranteed income supplement) is linked to OAS and is for low income seniors.

This goes to the poorest seniors and you must be at least 65 in order to collect.

It also gets clawed back at the rate of 50 cents on the dollar. So, if you earn $1,000 of interest income you get $500 less in GIS than you otherwise would have received.

WWWTT · January 28, 2012

The first claim? No, and neither can you. The second, I can, since tax rates have, in the last 20 years, been indexed, lowered, and there has been tax credits introduced up the ring yang (I'm not really in favour of those). There are also figures that show the Canadian economy is now taxed at a rate of 32.2%, down from closer to 35% about 10 years ago

Does that include the Ontario HST and all the different services that are now subject to the provincial portion of the tax?

What about the municipal taxes climbing faster than inflation?And all the other new fees being levied by all levels of government?After all the government has become very creative in creating new fees that are not being labelled with the boogey-man word "Taxes"(development,liscensing,certificates,etc,etc)

Another flaw I found.Our wages/salaries are continuasly rising to keep up with inflation.We are all in higher tax brackets now as compared to 10 years ago.However our standard of living has not changed.In order to correct for inflation,the rate we pay must decrease.

Nice try but I am not brainwashed to always believe in smoke and mirrors!

WWWTT

August1991 · January 28, 2012

OAS is in great shape right now. You are talking as if it is eating up our whole capacity to tax. It isn't even close. As a society we really can do anything we want. Telling me we are broke when we aren't isn't the way to win that argument.

The CPP is in good shape because Martin imposed a 10% payroll tax. Nevertheless, I reckon that the CPPIB will piss the billions away, like the Caisse.

Those are some very sobering numbers. The current entitlements are unsustainable.
Hats off to previous govts who took measures to make CPP the sustainable model that it is now. Canada is in an enviable position compared to Harpers audience in Europe. Most developed countries face the same issues of a rapidly aging population, but most countries also have the serious handicap of funding pensions entirely from revenues, whereas a good chunk of CPP will come from investment.

Huh?

The CPP/RRQ is a regressive payroll tax on the poor.

Its a lot of fun reading some of the comments here on this thread!
Automatically the conservatives take Harpers side stating that CPP can no longer sustain itself,if not now then maybe in 20 years.

I agree that many posters don't know, and so they just take a partisan side.

For some the OAS cheque is more than CPP. For those who have lived in Canada for 35+ years they get about $6,400 per year for merely residing here.
That is different from CPP for which one pays into based on earned income and the size of the pension received is based on how much has been paid in over a certain amount of years.

Now, the GIS (guaranteed income supplement) is linked to OAS and is for low income seniors. This goes to the poorest seniors and you must be at least 65 in order to collect. It also gets clawed back at the rate of 50 cents on the dollar. So, if you earn $1,000 of interest income you get $500 less in GIS than you otherwise would have received.

msj, thanks for this clarification.

Across Canada, we have three State welfare schemes for old people: CPP/RRQ, OAP, GIS.

The question is whether old people will continue to receive this State welfare. More pertinently, the question is whether retired State employees (teachers, nurses, doctors, civil servants) will continue to receive the pensions promised to them.

To compare: In the private sector in the US, many people in 2007 believed that their house was worth alot. Then, they discovered it was not. There are bubbles, and then other bubbles. Private bubbles are one thing, State bubbles another.

I fear that too many Canadians naively trust in the CPP/RRQ, OAP, GIS (and in particular, Canadian civil servant/state employees who trust in a State pension). Like rising house prices, people believe that the State will care for them. What happens when house prices fall, or the State changes pensions rules?

In particular, what happens when the State arbitrarily changes the conditions of its employees, retirees?

----

If I were a civil servant dependant on a State pension, I would fear future changes.

OWS? The State is no longer what it was. The Mob may soon be in control.

Edited January 28, 2012 by August1991

msj · January 28, 2012

Another flaw I found.Our wages/salaries are continuasly rising to keep up with inflation.We are all in higher tax brackets now as compared to 10 years ago.However our standard of living has not changed.In order to correct for inflation,the rate we pay must decrease.

:blink:

The Liberals brought back indexation of the tax brackets over 10 years ago.

Nice try but I am not brainwashed to always believe in smoke and mirrors!

WWWTT

Oh, no, I'm sure we couldn't fool someone like you.

bush_cheney2004 · January 28, 2012

Across Canada, we have three State welfare schemes for old people: CPP/RRQ, OAP, GIS.

To compare:....

What...no "food stamps"? How barbaric!

Canada does not have a food stamp program. When I was young I was always confused by the references to food stamps in MAD magazine.

msj · January 28, 2012

The CPP is in good shape because Martin imposed a 10% payroll tax.

No, he raised the CPP rate from the 5% that the Liberals inherited in 1993 to 9.9% by 2003.

This has made CPP sustainable to at least 2075 based on very conservative investment returns (i.e. the CPPIB only needs to earn about 4% per year to ensure CPP is self-sustaining).

Heaven forbid if people have to pay for something to ensure they receive a benefit in the future.