PM Justin Trudeau's Canada

[goreckm]

I am curious why we need to provide 65.5% of income in retirement. There should be no obligation on taxpayer to provide more than sustenance. And $80k/yr ain't sustenance. What have these people been doing all their lives with the money that was rolling in? Why isn't there an expectation that they cash out their large homes and use some of the absolutely spectacular capital gains (paid for by young people) to fund their retirement?



100%.

I don't think OAS is necessary at more than 2x the poverty line. This basically amounts to robbery of younger generations.

If I had been more aware of this policy in 2019, I definitely wouldn't have voted red. They created a structural deficit to buy votes and literally screwed the country over for every other priority. All to benefit the richest cohort in the country. And they claim to be progressive. Unbelievable.

Unfortunately this will have the effect of pulling the rug out from the current younger generations. Unlike the boomers, millenials are less likely to own a house. If they buy a house, it's later in life and will have to spend more of their working years paying interest instead of saving. The future is yet to be seen, but I don't forsee similar housing gains for new buyers like for old. They are much less likely to have a pension program, so won't have anything to fall back on when they are no longer able to work. I know families with an income of 200k which are pretty frugal but still living paycheck to paycheck due to the cost of housing/food, they certainly are not saving much for retirement. We should be striving for dignity during retirement. The elimination of these programs will further increase the social upheaval we're seeing now, and that's never a good thing.

 

[kEiThZ]

Unfortunately this will have the effect of pulling the rug out from the current younger generations. Unlike the boomers, millenials are less likely to own a house. If they buy a house, it's later in life and will have to spend more of their working years paying interest instead of saving. The future is yet to be seen, but I don't forsee similar housing gains for new buyers like for old. They are much less likely to have a pension program, so won't have anything to fall back on when they are no longer able to work. I know families with an income of 200k which are pretty frugal but still living paycheck to paycheck due to the cost of housing/food, they certainly are not saving much for retirement. We should be striving for dignity during retirement. The elimination of these programs will further increase the social upheaval we're seeing now, and that's never a good thing.

Arguing to persevere payments today to avoid pain for other generations later doesn't make sense. Millennials and Zoomers have a crap future either way. Either we cut spending on Boomers now to have some fiscal room left for everybody else later. Or we have even harsher cuts later just as Millennials retire. What do you think will happen to OAS if we have a 90s style warning from Wall St about our bonds rolling over? This is exactly why so many young people are suspicious that these programs won't be around when their turn comes.

 

[kEiThZ]

I'll say what nobody is willing to say out loud. Canadians are past caring about the climate when the situation in the country is poor (as they perceive it).

New Ontario polls finds majority think affordability more important than climate action | Globalnews.ca

A new poll found that nearly half of Ontarians polled would scrap the price on carbon price, with a majority saying affordability is more important than climate action.

globalnews.ca

 

[kEiThZ]

Apparently, you will now have to pay your foreign landlord's taxes if they cheat.

Foreign landlord fails to pay taxes, CRA goes after tenant

A Montreal tenant was audited and ordered to pay the tax he had failed to withhold on the monthly rent to his non-resident landlord

www.theglobeandmail.com

Liberals: "But why do young people and the working class hate us so much?"

 

[kEiThZ]

Or tax transfers of generational wealth to fund the OAS. As to rolling back OAS - I have no issue with doing it in principle, but I think the key here is doing it gradually - in monthly increments by age.

AoD

Personally I think (if possible) we need wholesale reform. The current system is pretty ridiculous when you think about it. People who qualify for GIS don't get nearly enough. Meanwhile for somebody with a pension and/or income generating portfolio making more than say $60k/yr, OAS amounts to basically entertainment money. They don't need it to actually live on. Yet the program is insanely expensive and killing the future of the country.

I'd argue that we need to basically kill OAS and turn into a rather generous basic income for seniors with a substantial clawback. Say LICO for the guaranteed income and full phaseout at double the LICO. We could probably apply similar principles for other income supplement programs too (like CCB).

 

[Northern Light]

Personally I think (if possible) we need wholesale reform. The current system is pretty ridiculous when you think about it. People who qualify for GIS don't get nearly enough. Meanwhile for somebody with a pension and/or income generating portfolio making more than say $60k/yr, OAS amounts to basically entertainment money. They don't need it to actually live on. Yet the program is insanely expensive and killing the future of the country.

I'd argue that we need to basically kill OAS and turn into a rather generous basic income for seniors with a substantial clawback. Say LICO for the guaranteed income and full phaseout at double the LICO. We could probably apply similar principles for other income supplement programs too (like CCB).

I decided to look at this further (ie. get more data) to see how we might model things out.

The first thing I did was collect the current OAS payout structure:

From: https://boomerandecho.com/oas-payments-how-much-will-you-receive-from-old-age-security/

Wealth Simple provides a really good explainer of the OAS clawback.

OAS Clawback Explained | Wealthsimple

The government gives you a helping hand when you get old, as long as you don’t make, what it considers, too much money. Here’s exactly how the OAS clawback works.

www.wealthsimple.com

****

I also looked up the OAS deferral program which allows you to push your receiving age back to 70, which is what I advocate being the default option

Where the parliamentary library gave me a number of 40% increased benefit (a few years back) the current number is 36%

So if we pushed the OAS entry age to 70, for everyone, we would increase the payment to $970.14 per month

I'm not sure if I have enough data to play with moving the clawback number, but I'll see if I can't manage it, if I can't, I will see if I can more help from the P.L. again.

****

A couple of items from a recent Globe column by Rob Carrick on the subject of OAS:

OAS consumes 15.5% of Federal Revenues

Here, a comparison of the median income of those affected by the current OAS clawback vs the median income of Seniors as a whole in Canada:

A deep dive on the OAS clawback: How many people are affected, and how much does it cost them?

The number of people paying the OAS recovery tax is rising as Canada’s population ages, but the clawback is an issue strictly for the financially secure

www.theglobeandmail.com

 

[kEiThZ]

Wealth Simple provides a really good explainer of the OAS clawback.

I also looked up the OAS deferral program which allows you to push your receiving age back to 70, which is what I advocate being the default option

Where the parliamentary library gave me a number of 40% increased benefit (a few years back) the current number is 36%

So if we pushed the OAS entry age to 70, for everyone, we would increase the payment to $970.14 per month

In my mind there are two questions here:

1) When do people need to start getting income support?

2) What level of support should that get?

#1 is difficult. I tend to think it's hard to say 60 or 65 or 70. A bricklayer isn't as likely to keep working till 70 as a business analyst. That bricklayer probably has a shorter life expectancy and less savings too. So one could argue they should get it at 60. I'm not sure what a fair threshold is. But there is CPP. So I am guessing our view is that OAS is just to avoid poverty in really old age. So maybe 70 is okay. But I tend to think support will be needed much earlier based on one's health and income.

Which leads to #2. Is the goal of OAS to avoid poverty? If so, why are we paying somebody making $80k full OAS? And why are we providing support that is below LICO? So I would argue support should be at least to LICO and diminish rapidly from there. I think twice LICO is fair to go to zero support. Nobody is living in poverty at that point.

Under this proposal I would get zero dollars. So this wouldn't benefit somebody like me. But I would be happy to see it boost incomes for poorer seniors and of course, save the growing black hole that is OAS in the federal budget, that Gen Squeeze pointed out.

 

[jje1000]

 

[kEiThZ]

OAS consumes 15.5% of Federal Revenues

This doesn't seem like much until you remember we are talking about $400B in revenue and a $450B budget. That's over $60B in spending. It's double the defence budget (a core federal responsibility). It's more than Health Transfers to provinces. It's more than the deficit. And more importantly, it's growing faster than any other line item, including the deficit. It will basically subsume everything else if not brought under control.

I'm not going to say the LPC was wrong to drop OAS qualification age to 65. Some people clearly need it. But the current program is wholly unsustainable and basically turning the federal budget into a transfer scheme to the old and wealthy. Using the taxes of mostly struggling young people to pay off the cohort with the most assets and lowest rate of poverty is fundamentally unfair and indefensible. This has to be reformed.

 

[Richard White]

This doesn't seem like much until you remember we are talking about $400B in revenue and a $450B budget. That's over $60B in spending. It's double the defence budget (a core federal responsibility). It's more than Health Transfers to provinces. It's more than the deficit. And more importantly, it's growing faster than any other line item, including the deficit. It will basically subsume everything else if not brought under control.

I'm not going to say the LPC was wrong to drop OAS qualification age to 65. Some people clearly need it. But the current program is wholly unsustainable and basically turning the federal budget into a transfer scheme to the old and wealthy. Using the taxes of mostly struggling young people to pay off the cohort with the most assets and lowest rate of poverty is fundamentally unfair and indefensible. This has to be reformed.

This is why OAS, GIS and CPP need to be converted to a UBI inclusive of a minimum income level for qualifying.

 

[kEiThZ]

This is why OAS, GIS and CPP need to be converted to a UBI inclusive of a minimum income level for qualifying.

OAS + GIS. I think they need to be transformed into some kind of basic income guarantee that keeps seniors out of poverty. Giving OAS to seniors making more than the median wage is patently absurd. Meanwhile GIS is actually rather meagre.

CPP is based on contribution. I wouldn't include it. I do think CPP premiums need to be increased so that the average working person should get a CPP that puts them above the poverty line and so they don't need GIS. My mother worked for 26 years in Canada as a bank clerk, making well above minimum wage and still qualifies for a little bit of GIS. That shouldn't have happened at all.

The maximum CPP you can get is $17500/yr I believe. That max is below the rural Low Income Cut Off, let alone the large city LICO. CPP clearly needs to be reformed to at least ensure more working people get above LICO for where they live to reduce GIS liabilities.

 

[Northern Light]

This doesn't seem like much until you remember we are talking about $400B in revenue and a $450B budget. That's over $60B in spending.

It seems like lots of money.

I'm not going to say the LPC was wrong to drop OAS qualification age to 65.

They were wrong. The problem w/the scheme to raise the age was that:

1) They didn't raise the age of CPP or the Senior Age and Pension Credits at the same time, so the exercise seemed punitive rather than thoughtful.

2) They didn't reinvest any of the savings in any program for seniors, low income or otherwise, or for any other income transfer or important project. So, again, it same off as pain with no gain.

Raise the age, reivinvest the savings, clearly tie to the two in the public consciousness.

Reset the age for all retirement related programs to more accurately reflect today's life expectancy.

When CPP was created (1966) the average age of death was 72,. So you were expected to die within 7 years of getting a pension. Today that number is 82, so the pension has to last 17 years instead of 7.

Meanwhile, the average age at which people pay in to the program, full-time has increased, as the majority of workers in 1966, began paying in at ~age 16, when dropped out of High School, or at 18, if they finished HS.

Today the majority of the population is doing at least 2 years of post-secondary, delaying full-time pay-in to age 20 or beyond.

Some people clearly need it.

A three-part issue.

1) Reforming the Age for all retirement related programs.

2) Reforing OAS to target better target retirees at or below the middle income level; using at least 50% of savings from a greater clawback to better support low-income retirees.

3) Addressing those who cannot work in their mid 60s or earlier, adversely affected by a bump in retirement age; by funding the Federal Disability Benefit they passed into law last year, but have yet to enact.

The latter item could be medium and long term funded by the additional income and sales tax revenues generated by delaying the retirement age, as well, if you reinvest in a higher CPP benefit w/the age savings, fewer seniors will require OAS/GIS providing financial support for a more generous program for those who do.

Because those savings would be immediate, some other budget cut or tax hike would likely be needed in the short term.

 

[kEiThZ]

They didn't raise the age of CPP

When CPP was created (1966) the average age of death was 72,. So you were expected to die within 7 years of getting a pension. Today that number is 82, so the pension has to last 17 years instead of 7.

Meanwhile, the average age at which people pay in to the program, full-time has increased, as the majority of workers in 1966, began paying in at ~age 16, when dropped out of High School, or at 18, if they finished HS.

Today the majority of the population is doing at least 2 years of post-secondary, delaying full-time pay-in to age 20 or beyond.

CPP isn't the problem. It's at least run on an actuarially sound basis and collects enough to fund itself. Whether that payout is adequate is another question.

The problem is OAS, which is a liability, funded from general revenue, and which is paid out with far too little discrimination on need. And is now well beyond whatever original purpose it had.

The next government will have to make cuts similar to the Chretien era in the 90s. And I sincerely hope they start with OAS reform. We'll see whether they start here or suck up to seniors like this government did.

 

[kEiThZ]

By the way, the government clearly recognizes they have an image issue with younger generations. They are starting to talk about "generational fairness" too. Unfortunately, their policies don't match that language.

Fairness for every generation

One of the biggest pressures on young people right now is housing. This is particularly true for renters – where it feels like the deck is stacked against them. They are facing skyrocketing rents, renovictions, unfair competition, and a lack of housing options. While we’ve taken bold action to...

www.pm.gc.ca

 

[kEiThZ]

I've never had any issues with the Canadian healthcare system, either here in the GTA or when I lived in Fredericton, NB.

You're an upper middle class person who hasn't moved in decades. You should talk to new immigrants or military families who can't even find a family physician.

Some of this is, of course, the fault of the provincial governments who have underfunded public healthcare. But some of this is also the fault of this government's perpetual ADD where they create new social programs before fixing current programs. No wonder the provinces are simply stating to balk at new federal funding (which create new liabilities for them).