How Much Will YOU Lose from OAS Deferral??

Announcing a bad policy 10 years in advance doesn’t make it a good policy.

So the fact that the Harper government is giving people at least 10 years to prepare for 2 years of life without an important source of income, hardly makes it OK — as so many media commentators have tritely implied.  In fact, in this case it makes the policy even more unfair.

Likewise, the fact that many young Canadians seem to have (wrongly) resigned themselves to the fact that public pensions won’t be there for them when they retire, hardly eases the pain of this unnecessary, destructive measure.  Consider this quote from a Gen X-er (a self-employed marketer … sigh) in today’s Hamilton Spectator:  ““I was pretty sure any government-funded retirement will not exist for my generation.”  That’s a tragic sentiment, both because of its defeatism, and its misplaced lack of confidence in public pensions.  Because the clear reality is that it’s private individual retirement plans that will not be there for him.  Compared to those Ponzi schemes, public pensions are like the Rock of Gibraltor — especially for precarious workers like our self-employed marketer.  If the Conservatives are counting on fatalistic attitudes like that one to allow this policy to sneak through, I hope they’re proven wrong, for two reasons: I want the policy to be defeated, but I want young people today to have more faith and hope in the solidarity and cohesiveness of future society.

Initially, when the OAS/GIS trial balloon was floated by Mr. Harper in Davos, many seemed to think this policy would somehow betray their core constituency among older voters.  In reality, of course, the reverse is true.  It is precisely the older voters who are protected by this move (anyone over 54 right now will not have their OAS/GIS benefits affected at all).  Young people will continue to pay taxes to support those boomers’ pensions, but then will have two years of their own golden age ripped away from them.  The most bitter irony of all is that the cost of OAS/GIS (measured appropriately as a share of GDP) will start to decline in 2030 (according to the most recent actuarial review of the program).  So anyone born after 1965 will have their own access to this important program restricted just as the whole program becomes less expensive!  The Conservative plan thus exacerbates any so-called generational inequity in the current system, rather than ameliorating it.  (I don’t buy that old intergenerational complaint in any event: the equalizing impact of a generous universal pension system far outweighs any niggling concerns about intergenerational transfers.)  This cynical calculation by the Tories was probably intended to short-circuit any repeat of the “Good Bye Charlie Brown” protests that derailed Brian Mulroney’s aborted effort to undermine the public pension system in the 1980s.

Thanks to the appendix tables in that same actuarial review, we can perform an interesting exercise.  Table 5 of the review projects average OAS benefits in each year until 2060.  From that table, anyone who is under 54 right now can calculate how much OAS benefits they would lose, as a result of having up to their first 2 years of benefits eliminated.  The following table reports (in undiscounted dollars) the approximate lost OAS income for people in each age cohort.  (For the first few rows in the table, the loss depends on the month of your birth, so these estimates are an average for the full year.  People who are 54 right now don’t lose anything; but people who turn 54 later this year will lose partial benefits, and the first row is an average of these effects.  For the detailed phase-in schedule see the Service Canada web site.)






























Personally I would lose around $14,000.  That’s bad enough.  But someone who is 20 today would lose over $34,000. 

Another painful irony for those near the bottom of the above table: As those above them start to work longer in life to foot the bill of the OAS cutback, their own chances of finding a job will be reduced at the same time. Making old people keep their jobs longer, in a world where youth unemployment is a recognized crisis, has got to be one of the most counter-productive policy prescriptions ever devised.  Those trumpeting the measure as a way of fostering higher labour force participation and hence faster GDP growth are still living under the misapprehension that employment is determined by the number of available workers; in fact, of course, employment is determined by the number of jobs.

In sum, it is clearly today’s young people who would be the real losers from this move.  So instead of a Good-Bye Charlie Brown repeat, I think we need a more youthful cartoon anaology: perhaps a gang of anime crusaders with enough foresight to be furious that they will be denied access to a system that they themselves paid for.  They will storm the Harperite ramparts to defend a system that is strong, affordable, and fair.  This government is many things, but it is not stupid.  A forceful pushback against this hurried, ill-considered retrenchment of a crucial public program could actually win.


  • Jim –
    “I want young people today to have more faith and hope in the solidarity and cohesiveness of future society.”

    That is a great line and I think it clearly denotes the fundamental difference between the Harperites and progressives.

    Harper seeks to benefit by fragmenting the polity and promoting a war of all against all. The rest of us cannot permit him to achieve his aims.

  • Letter to Editor – Ottawa Citizen


    Canadians are not well served by a federal government that shifts its costs onto the provinces, the environment, the unemployed and our most vulnerable seniors. The Conservative government will balance its budget, but as a consequence, you won’t balance yours.

  • For a bit of optimism: I will lose nothing from this policy, because there will be a non-Conservative, hopefully NDP, government long before 2023 and this policy will be cancelled before it ever takes effect. Really, this Con policy isn’t so much scary as one more example of Conservative hubris, presuming to dictate what policy is going to be happening more than 10 years from now. This is the 2012 budget, for crying out loud–trying to set what’s going to happen in 2023, much less 2029, is meaningless stupidity.

    So certainly the Cons are setting forth their intention to mess us up–telegraphing it boldly. But they’re giving us an awful lot of time to duck the swing and slit them up a treat. Let us do so.

  • Point: You can’t really say you lose if you NEVER will qualify for it in the first place.

    CPP is a pension plan and if you paid into it you get a pension. OAS & GIS are supplemental benefit programs to assist at raising the income level of retiring/retired seniors that are basically poor.
    Here what is sad.
    Most people have not checked with the CRA to see what their pension estimates are. When they do they will be shocked. The CPP at its maximum payout is $1200 a month and that is if you have worked most of your life and you are 65 or in most cases 72. If you try to retire earlier at 60 you will probably get $580 a month.
    That’s right $580 a month. Twenty bucks more than a single welfare recipient in Toronto. Sad but true.

    Now for OAS/GIS.
    A lot of people are really in the dark about OAS/GIS and “who actually” qualifies for it. A LARGE number of people will NEVER qualify for the OAS and don’t even know it. YET. For example a lot of people (ie. a lot of Bell Canada employees) have taken VSP (Voluntary SEPARATION Program) and termination packages in the 1980′ and 1990′s..most of these convert into a LIRA (Locked in account ) and then to a RLIF..which then turns into an annuity. These scenarios translate eventually into the fact that you cannot get or qualify for OAS or any supplemental if you already have another source of guaranteed income. A lot of people don’t know it yet but once they access these packages at age 55.. they will soon find out. And there is going to be a lot of disappointed people who didn’t see this coming. Their former employers didn’t tell them about this and their fiancial advisors didn’t tell them of this either.
    I don’t know who did the financial estimates of future savings in deferring the OAS benefit..for the Finance Minister..but it is laughable and sad. More people in 2023 will be denied the OAS benefit that those who will qualify and get it.

    I think the real reason for this government’s action is that they really see OAS and GIS as “social/welfare” benefits ” and “supplemental welfare income” for old people and want to download it to the cities.

    I am surprised that they don’t see Employment Insurance Payments as “Welfare”‘. Maybe they do? And maybe there ia a future agenda to also download that responsibility to the provinces and cities. Time will tell.

    Hate being the bearer of bad news.

  • myna lee johnstone

    so many seniors have been getting OAS for years when they lived off the fat of the land,have houses paid for when housing was cheap,much cheaper. OAS6 is a drop 66in their bucket since the cut off isn’t until about $70,000.

  • The fact is that the Government of Canada can always pay any obligation denoted in Canadian dollars. They could double the OAP and it would cost the taxpayer nothing at all, nor would it be inflationary so long as our economy is running well below full steam.

    And it is doing that now, and will be so long as those deluded by “neoliberal” economists are in power. And that, alas, includes every Canadian political party, even the one I belong to and favour over the others.

    Where would the money come from you ask? Why from the same place all money has always come from, namely it would be created out of nothing, and at no cost to the taxpayer.

  • Are the values in real or nominal dollars?

  • I believe they are in nominal dollars, just like the Conservative argument that OAS costs will triple. If Harper gets to use nominal dollars, I guess we can play that game too!

  • My family will be in money!

  • Listened to an interesting interview yesterday with a Stats Can person on CBC Radio (The Current). He made an interesting point about the dependency ratio not really being about how many over 65 compared to …, but really about total working hours per capita. If I remember correctly that ratio was only expected to drop by 10% to levels similar to 1990.

    In my mind it is clear: This is about ideology, not economics.

  • I’m with you Ed. We need to make this a discussion about our resources in Canada, not about dollars. I see Canada as resource rich in its people and its land – we should be embarrassed at the accepted levels of unemployment.

  • Quick question, Ed Seedhouse: are you insane? The government can NOT just print unlimited amounts of money at “no cost to the taxpayer.”

  • Re: comment from Bobby. You can purchase an annuity, no problem, and still receive both GIS and OAS, if your income qualifies you for it.

  • If we are going to get this campaign off to a good start, let’s stop calling them “Harperites,” because what they really are is, “harpys.”

    Now, harpy means “snatcher,” in Greek, and I can’t think of anything better to call these cretins. In Greek mythology they are very nasty vicious creatures. See:

    And so, I think this a much more suitable label.

  • The real sad part is that the politicians leading this farce, know that many many people will die at 65 and 66 and never have to pay them a thing. Plus, now meds will be a factor for those citizens that need the income to pay for meds to keep them alive.

    We need to rid ourselves of all Mp’s, Senators and advisors. That should just about pay for the OAS.

    An Mp earns about $160,000 per annum plus bonuses and perks. The perks are insane. 2 vacations a year for their whole family anywhere in the world paid by us. The do not put in a 40 hour work week like most. The usually take fridays off. They do virtually nothing for the public. A $30 per hour manager could effectively do the same job. That would save us over $300 million alone right there.

    Just got back from the USA and they also pay half price compared to us. We sell them oil. WTF!! Our government is sooooo crooked. We are too passive. It this shit happened in any other country there would be a coup or an assassination.

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