OAS changes must be made

Writer provides historic background to government pensions

I am writing in response to the letter of Roger Westlake captioned “No Age Raise” for OAS, that appeared recently in The Morning Star. I disagree completely with his rationale and position.

First, some history for those who may not remember – OAS was introduced in the mid 60’s to assist low income seniors with their retirement years. CCP and RSP plans had just been introduced, and workers generally had to rely on company pension plans to carry them into retirement. Many did not have such plans on which to fall back, so OAS was introduced.

It is an actuarial fact that men in the 1960’s (at this time in our history, women were not a real factor in considering provisions for retirement) worked until age 65, and died, on average, by age 67. These government sponsored plans (CPP and OAS) were never designed, or expected, to fund people living into their 80’s, or longer.

CPP underwent a much needed overhaul in the 1990’s, with contributions raised significantly, to ensure that it would remain sound for all of the Canadians now living 20 – 30 years after the official retirement age of 65. OAS, in particular, was intended to assist low income seniors to get by, but assumed a much shorter lifespan. Later, the Guaranteed Income Supplement was added to the array of taxpayer-funded support for seniors, and it also suffers from the same challenge.

Unlike CPP, OAS/GIS is directly supported by the taxpayer. By 2030, the plan, as currently structured, will be unsustainable. Changes must be made. Not only do I completely agree with increasing the OAS eligibility limit to age 67 (and maybe age 68!), the level at which the payment is “clawed back” through the tax system must also be significantly reduced, from the current level of approximately $68,000 in taxable income per individual, to say $48,000.

The income tax “clawback” should ensure that no individual retired senior receives tax-funded support if they earn more than $54,000 in taxable income per year. Remember – this taxpayer-supported plan is intended to assist low income seniors with their retirement years, and people earning $54,000 in taxable income per year from other sources simply do not meet the test of “low income.”

By increasing the age to qualify, and significantly reducing the “clawback” level, the program may be there for those who truly need it, for as long as they need it.

As for the statement that elected MP’s and senators seem to get “special treatment,” so we also should be somehow be “entitled,” that’s just an argument without merit.

If you don’t like what our elected officials receive, that’s an entirely different question, and has nothing to do with the OAS review. No one should be “entitled” to receive tax support (OAS), which will have to be funded by our children and a significantly reduced workforce by 2030, without any regard for the consequences that are both serious and looming.

I hope that Canadians, in general, have not fallen to that level of selfishness. A reasonable review of OAS is needed, and is probably overdue. I will be phoning my MP to encourage him to fully support these changes.

We owe it to our kids, and ourselves.

Dave Murison, Vernon