The Budget justifies raising the age of eligibility for OAS and GIS on the grounds that the long-term fiscal sustainability of the program is being undermined by rising life expectancy.
No estimates of savings are provided. They will be very modest.
Given that average life expectancy at age 65 is 20 years, raising the eligibility age by two years could only save a maximum of 10% of projected spending on future retirees if implemented immediately.
However, the government proposes to phase in the increased eligibility age between 2023 and 2029 which will hugely reduce any savings relative to current projections.
According to the latest OAS Actuarial Report, OAS/GIS expenditures will rise from 2.43% of GDP today, to a peak of 3.16% in 2030, immediately after the full impact of the raised eligibility age kicks in in 2029.
OAS/GIS expenditures will already have hit 2.91% of GDP in 2023 when the phased in increase begins.
Put another way, the increased eligibility age will not impact most baby boomers. The impact will be on later age cohorts.
I fail entirely to see how the goal of inter-generational fairness is served by undermining retirement income security for those aged under 54 today.
Indeed, in the name of fairness, people of my generation should be arguing that those who follow us get OAS at the same age as us.
Re increasing life expectancy, the fact that longevity at age 65 varies significantly by social class is ignored. The reality is that low income seniors, those most impacted by the change, have not shared the average increase in life expectancy which is highlighted in the Budget.
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