Old age security reform

punked · January 28, 2012

The Liberals already brought in the OAS clawback in the 1990's. Or was it Mulroney who started it in the very late 80's? Can't remember.

What I do remember is that pension splitting came in in 2007 and it has drastically reduced the number of seniors subject to clawback.

You don't think that hasn't and won't have an effect on the pot of money used to shovel out OAS to everyone?

I would love to see some numbers come out of some economists' office - I bet dropping pension splitting alone would pay for the $11 billion per year number that I came up with above based on waldo's information.

\

Another manufactured crisis by the Conservatives.

Shady · January 28, 2012

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

Exactly. I find it humorous that people are trying to argue against math. 4 workers for every OAS recpient now, vs 2 workers for every OAS recipient in the future. Not only that, people are continuing to live longer. The program wasn't designed for people to live 30 years on. I don't understand why something so simple and logical like raising the OAS age to one or two years more, since life expectancy has increased more than 20 years is such a big deal. You're right, if we can't do something like this, which is so small, than we really are screwed.

cybercoma · January 28, 2012

From the posts up in here, I'm not so sure some of you even know what the difference is between OAS and CPP. It seems like people don't know why we have the OAS program.

capricorn · January 28, 2012

I don't understand why something so simple and logical like raising the OAS age to one or two years more, since life expectancy has increased more than 20 years is such a big deal.

Up until 1965, eligibility for the OAS was age 70. It was gradually reduced to age 65 over the following five years. The Liberals (Pearson minority/Trudeau majority) were in government during that entire period. It was the beginning of the age of excesses.

waldo · January 28, 2012

Up until 1965, eligibility for the OAS was age 70. It was gradually reduced to age 65 over the following five years. The Liberals (Pearson minority/Trudeau majority) were in government during that entire period. It was the beginning of the age of excesses.

excesses? Seems the apologists are out in fine form...

hey now, I understand France is also raising it's retirement eligibility age... from 60 to 62! Oh my... such excess!!!

cybercoma · January 28, 2012

People should probably read this to get up to speed on the programs:

http://www.thecanadianencyclopedia.com/articles/oldage-pension

cybercoma · January 28, 2012

This is the part that pertains most to the current debate:

In the 1997 Budget, the [Liberal] government announced that it would introduce income testing, which would result in increased benefits to seniors who qualified and would claw back benefits for those who exceeded the annual income level. This met with considerable opposition from the business community who deal with private pension plans. They argued that the proposed plan would penalize those who contributed to private pensions. Again the proposed changes were not implemented. Currently OAS/GIS support continues for seniors.

CPCFTW · January 28, 2012

This is the part that pertains most to the current debate:

Makes sense. Why squirrel away for retirement when the government will do it for you?

cybercoma · January 28, 2012

Makes sense. Why squirrel away for retirement when the government will do it for you?

Because the government doesn't "do it for you." The government, at least the Liberals, were trying to ensure that the elderly didn't live in poverty, while private pension plans would provide some sort of equivalency between retirement income and working income. Why should the government pay benefits to someone that has an annual retirement income well above the poverty level? Once again, it just goes to show that those that have are the ones with the entitlements, contrary to conservative ideology.

Shady · January 28, 2012

hey now, I understand France is also raising it's retirement eligibility age... from 60 to 62! Oh my... such excess!!!

Yep, pretty much.

France’s credit rating downgraded
G&M

Scotty · January 28, 2012

I just checked on CTV and CBC polls and CTV's had 1305 voting 434- 33% yes, 870- 67% NO, CBC- 1600- 290-18.1 yes 1250-78% NO and 62-3.87% not sure. So far the polls say NO and I wonder if Harper will think twice about this or will he see the same thing happen when he shut down Parliament.

I would have said no too, until I saw the numbers...

Now I don't see how it's avoidable.

Scotty · January 28, 2012

I think planning for our future is great. Which is why I always thought it irresponsible to blow a budget surplus because we are "over taxed" before a recession and spent the cushion even before we need it. Planning for our future hasn't always been a strong suit.

I agree. I would have preferred we pay off our existing debt first, and even then, with no debt, if the economy was in okay shape I'd have continued the taxes at that level to build up a nice little nest egg which could be used in bad times.

Scotty · 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. .

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

If they only start clawing back at $68,000 I think we're being far too generous. I'd lower that cut-off to $50,000 just to start.

Scotty · January 28, 2012

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.

I don't know about municipal or provincial employees, but I question how generous federal public service pension are given that some of what they would otherwise get is clawed back in accordance to what they get from CPP. Do any other pension plans do that?

Scotty · January 28, 2012

I agree that such amounts do not count as unsustainable.

However, .73% of our 2011 GDP is equal to almost $11 billion per year.

That's nothing to sneeze at.

Perhaps not, but the earlier statement was that it was currently at $38 billion. So who's telling the truth?

msj · January 28, 2012

Perhaps not, but the earlier statement was that it was currently at $38 billion. So who's telling the truth?

Excuse me, I should have been clearer.

I'm talking about an additional cost of $11 billion per year on top of the existing cost.

Thought this was self-evident from my posting but I should know better.

Scotty · January 29, 2012

Because the government doesn't "do it for you." The government, at least the Liberals, were trying to ensure that the elderly didn't live in poverty, while private pension plans would provide some sort of equivalency between retirement income and working income. Why should the government pay benefits to someone that has an annual retirement income well above the poverty level? Once again, it just goes to show that those that have are the ones with the entitlements, contrary to conservative ideology.

I don't know. It seems to me that OAS is not designed for poverty. That's the GIS. It also seems to me that the threshold for claw-back is far too high. At the same time, it does indeed reward those who saved nothing at the expensive of those who sacrificed in order to save for retirement. You can call it whatever you want, but there's no denying that.

Scotty · January 29, 2012

Excuse me, I should have been clearer.

I'm talking about an additional cost of $11 billion per year on top of the existing cost.

Thought this was self-evident from my posting but I should know better.

That still doesn't work. The statement was it would rise from $38 billion currently to $108 billion in 2030. So maybe I'm not a math genius, but I can see that 11+31 does not equal 108, even without a calculator.

msj · January 29, 2012

That still doesn't work. The statement was it would rise from $38 billion currently to $108 billion in 2030. So maybe I'm not a math genius, but I can see that 11+31 does not equal 108, even without a calculator.

That's because we are considering two different opinions.

The one I'm talking about refers to waldo's post at #83 which deals with the numbers as a % of GDP and is, therefore, in today's dollars. So, using that crude method we come up with a guess of about $47 billion per year (the existing cost of $36 + the guess of $11).

The $108 billion is coming from the PMO and is likely in 2030 dollars.

Do a PV calculation at 3% inflation and that $108 turns into about $64 billion in today's dollars.

Given that the point of waldo's post @ #83 is that OAS isn't as bad as Harper says it is it should be clear to anyone paying attention that the discrepancy here comes from Harper doing up whatever math he can to show OAS as being unsustainable versus and economist who has run some other math that shows it as sustainable.

Since we don't know the details or actuary reports both are relying on we can only guess as to which one is more accurate.

My guess is the numbers will end up coming up somewhere in the middle and likely favours the guy waldo quotes at #83 as usually the politicians get it wrong because they are exaggerating to push their agenda.

waldo · January 29, 2012

Yep, pretty much.

in your banal, simplistic best, you've targeted France's S&P downgrade in isolation of the recent collective credit rating downgrades S&P made; i.e., the so-called, 'night of the downgrades', where S&P reduced the rating for 9 Eurozone countries. In the case of France, from AAA to AA+. Hey Shady, France now has the same rate as your wannabe home, the USofA! Not so bad then, hey?

in the face of the very clear and precise S&P statement associated with the 9 Eurozone countries being downgraded, it might be fun to see you try to reconcile that S&P credit rating downgrade with France's social network.

by the by, my eyesight is pretty good - no need for you to continually ramp up the bolded font size of your linked references.

waldo · January 29, 2012

My guess is the numbers will end up coming up somewhere in the middle and likely favours the guy waldo quotes at #83 as usually the politicians get it wrong because they are exaggerating to push their agenda.

well... an actual real economist from UBC... or Harper who plays one on teevee!

William Ashley · January 29, 2012

Doing a 2 year inrease out of no where is just foul.

I proposed a graduated system where every year the age is increased by something like 3 months Over the next 16 years it would equate to a 4 year inrease.

I also proposed that OAS be funded from a senior tax where the highest proportion comes from family members closest to the senior for individuals earning over the $30,000 "comfort" threshhold after hardship considerations.

payment would cycle out by nearest family. Everyone who is directly related 1 link away pays 1 cent then everyone 2 links pays 1 cent (and it goes back to link 1 with 1 cent) then 1 2 and 3 removed 1 cent then 1234 then 12345 then 123456 and so on until the person has an above poverty line income provision. While wealthy people who die have an inheritence tax go right into the system if their next of kin are not in hardship equivolent to any outstanding debt (paid to the public debt they did not pay in life based on how much per capita debt they aquired over their life) - and a few other things.

People shoulnd't be passing on their loot to their kids if they havn't paid their fair share in life.

An across the board system downpayment at whatever the corporate rate is (I also would decrease the corporate income tax rate by 1% per year and eliminate personal income taxes) but this inheritence tax (equivolent to the wealth transfer tax would be set at the corporate rate for that year. So it would eventually be eliminated. But anyone moving money out of the country would be hit with the surchage for wealth transfer or asset value transfer equal to the corporate rate aside from a small personal exemption of $10,000/year. Individual estates would be potentially exempt if direct family members were living below the poverty line (after hardship considerations) and the funds would be put in trust for "poverty releif of direct family members for life) -but applied against the debt for non resolved bond payouts and investments with a proven and high probably rate of return. (bear in mind "asset valuation on exhange would be nontaxed so people could still buy, but they had to have assets incoming of an equal value set by the government on "general goods value on Demand value (domestic valuation)

While the death tax would be phased out with the corporate income tax, the "senior tax" would exist along side the inreasing retuirement age of 1/4 of a year per year increase - and this set as the goal of "life expenctancy increase.

It is expected that biomedical science will provide dramatically increased life expectancies over the next decade to 2 decades.

Bear in mind the poverty works and seniors works programs would also be created - the scheme would still provide above poverty line income with people expected to work 40 hours until 45, then have their work output "suplimented with one free hour per week for every year after 45. So at 65 they would only be expected to work for 20 hours per week with 20 "free hours" until 85

40 years from now (if it isn't completely redundant) with a gaurenteed basic above poverty line pension.

Individuals would be "transfered to "volunteer activities" They could also opt to work more hours and still receive the bonus.

It works out to about $1666/year starting at 45 with it being.

So year 1 everyone 45+ gets a $1666 to apply to retirement savings and long term investments

year 2 everyone 45 gets $1666 to apply to retirement everyone 46+ gets $3333 to apply to retirement investments or long RRSP's

year 3 everyone 45 $1666 46 $3333 47 $5000 and so on.

The investments must be in second bank approved investment funds they administer.

Anyone who falls under the poverty line could tap the savings.

The funds would also have an interest rate equal to the inflation rate. there is a little more to it but that is the basic function.

If the poverty tax meanwhile funds the "payouts" and anyone under the poverty line who is younger.. to tap the funds though you must be part of the federal works program.

Everyone is "taxed from the top down to fund the poverty tax" if they make over the $30,000 comfort survival income after hardship considerations. Everyone pays 0.01% on every dollar over $30,000 until it is paid but it increases.

So everyone making $30,100 would pay 1 cent. everyone making $30,200 would pay 2 cents and so on. So for every $10000 you would pay $1 If it went to the highest earner it goes back to the bottom of everyone at 30,100 and so on until the amount is aquired in the poverty tax.

This tax would also remove a lot of stress potential from the provinces who would no longer need to pay social insurance costs to those part of the federal works program.

This fund would also pay for peoples retirements. thus further reducing future familial burdens.

and most of all it would eliminate poverty of the willing workers and seniors.

It would also hopefully reduce healthcare costs by reducing workstresses and provide a regrowth of family values by giving people more family time. Such as grandparents time with their grandkids and middle aged parents times with their teens those most formative years of social responsibility and restraint.

Edited January 29, 2012 by William Ashley

msj · January 29, 2012

well... an actual real economist from UBC... or Harper who plays one on teevee!

Harper lost his economist credentials when he cut the GST rate.

A stupid move compared to cutting income tax rates and I will always despise him and Flaherty for it.

CPCFTW · January 29, 2012

Harper lost his economist credentials when he cut the GST rate.

A stupid move compared to cutting income tax rates and I will always despise him and Flaherty for it.

Cutting GST was a political move, not an economic one. It was a populist move to get into power.

And the economics of it aren't so bad when you consider the lower prices and sales taxes to our south.

While consumption taxes are good economically in theory, cutting sales taxes in Canada may reduce cross border shopping and keep more Canadian consumption dollars within Canadian borders.

cybercoma · January 29, 2012

it does indeed reward those who saved nothing

I'm not sure why you would consider it a "reward". It's not a ton of money. It's really only meant in conjunction with GIS to keep the elderly from living on the streets.