OAS prevents poverty: study

Research prepared for the federal government shows that the old-age benefits cited by Stephen Harper as perhaps unsustainable are a key factor keeping seniors out of poverty.

OTTAWA — Research prepared for the federal government shows that the old-age benefits cited by Stephen Harper as perhaps unsustainable are a key factor keeping seniors out of poverty.

The technical, 80-page paper shows that without Old Age Security or the Guaranteed Income Supplement, more than a third of women and more than a quarter of men in their 60s would fall below the poverty line.

“The OAS programs have a significant influence on in the incidence of low income,” the report’s author, Richard Shillington, wrote.

By region, the benefits are most important in the Maritimes and the North, while seniors in Alberta are not as dependent on public pension benefits to make ends meet.

Women are generally far more dependent on OAS and GIS than men. Single seniors are vulnerable.

The paper, titled Evaluation of the Old Age Security Program, was written by social policy researcher Shillington in 2009, on a contract with the Ottawa-based econometrics firm Informetrica Ltd. It was prepared for the Human Resources Department.

The research was obtained by the Canadian Labour Congress through an access-to-information request.

“The OAS/GIS makes a huge contribution to the reduction of poverty in old age,” said Andrew Jackson, the labour congress’s chief economist.

Prime Minister Harper announced last week that the public pension system is on an unsustainable fiscal track and needs a serious overhaul.

He has not released specifics, but officials and cabinet ministers have let it be known they are eyeing the OAS, since its costs — when combined with the GIS — are expected to rise to $108 billion in 2030 from $41 billion this year.

There are several ways to cut costs, but the likely leading option is to gradually raise the age when seniors can begin collecting the benefits to 67 from today’s 65.

The presumption, said Jackson, is that people will simply work for an extra couple of years. But he says that’s not an option for many vulnerable people.

“Raising the age of eligibility for OAS/GIS from 65 to 67 would likely result in a very significant increase in poverty for persons aged 65 to 67, unless they were able to find an alternative source of income,” he said.

“That is possible for some, but many older workers in their 60s are in ill health or are engaged in providing care for others.”

OAS and its cousin, GIS, are intricately entwined. About 98 per cent of Canadians are eligible to receive OAS when they turn 65. In order to get the GIS top-up for low-income seniors, they first need to qualify for OAS.

So raising the eligibility age of OAS would imply a corresponding increase in the age to receive GIS, unless legislation were passed to change the rules.

The research paper shows that OAS and GIS improve the average senior’s standard of living by about $7,000 a year.

The benefits are central to the average person’s well-being. Generally, OAS makes up 26 per cent of seniors’ incomes. For people who receive GIS as well, that percentage rises to 36 per cent, the research shows.

And for seniors of “modest” incomes, OAS and GIS provide about 70 per cent of their incomes, the paper said.

The benefits become more and more important as seniors age, especially women.

But even for those in their 60s, the benefits are often the difference between making ends meet or not, the paper shows in numerous tables.

The data shows that for women between 65 and 69 years old, 35.4 per cent would fall below the low-income measure — one of the main ways Statistics Canada measures poverty. But with the benefits from OAS and its related top-ups, the incidence of low income is 14 per cent.

For men between 65 and 69 years old, 26.8 per cent would fall below the low-income measure without OAS and GIS benefits. But with the benefits, their poverty rate is 11.4 per cent, the paper shows.

While Shillington wrote the paper three years ago, he said the conclusions remain completely relevant. Numbers may change slightly, but the study looks at large quantities of income tax data over many years and major shifts are slow to happen.

“The differences would not be relevant for policy decisions,” he said.

Officials for Human Resources Minister Diane Finley did not immediately respond to requests for comment.

Both Shillington and Jackson are concerned that if the government says seniors can’t collect OAS and GIS until they are 67, many people won’t be able to keep working.

Their needs may drive up provincial welfare costs, or they may simply be left without a social safety net, since welfare is often denied to people who own homes, said Shillington.

“Certainly the provinces would have to expand welfare,” he said.

Despite the Conservatives’ insistence that OAS and GIS are not sustainable in the long run, government documents and many economists say that even though costs are rising, the government can afford them if it wants to.

But if the government chooses to cut OAS costs, it doesn’t have to raise the eligibility age, Shillington said. It could claw back more of the money from high-income individuals, or apply the claw-back to family income instead of individual income.

Just Posted

An incredible closing ceremony capped off the 2019 Canada Winter Games. (File photo by SUSAN JUDGE/2019 Canada Winter Games)
2019 Canada Winter Games Legacy Fund Society hands out $655,000

35 not-for-profit groups across Alberta to get money

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
Alberta’s health-care system under ‘significant stress,’ says AHS president

The head of Alberta Health Services says hospital staff are treating more… Continue reading

The Red Deer Rebels have acquired goaltender Connor Ungar from the Brandon Wheat Kings, the team announced Monday. (File photo by Advocate staff)
Red Deer Rebels acquire goaltender Connor Ungar, forward Liam Keeler in separate trades

The Red Deer Rebels have acquired goaltender Connor Ungar from the Brandon… Continue reading

Alexander Michael Talbot, 29, was found guilty of operating a vehicle while prohibited, flight from police and vehicle theft in Red Deer provincial court recently. (Advocate file photo)
Man charged following police chases in central Alberta last summer is sentenced

Alexander Michael Talbot sentenced to 22 months in prison

COVID-19 test kit. (Black Press Media file photo)
Red Deer businesses can order COVID testing kits from chamber

Kits are being provided through a partnership with the Alberta government

Red Deer musician Curtis Phagoo is glad the Alberta government is investing $2 million to help the province’s live music industry, but he would have liked the criteria to be expanded, so the money could be used as relief to cover revenue shortfalls. (Contributed photo by Cory Michaud)
Red Deer musicians welcome $2M in grants to help live music, but would have preferred relief program

The money is for future projects and can’t be used for retroactive expenses

Conservative Leader Erin O'Toole holds a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Liberals silent on nature of Fortin probe or who will replace him on vaccine campaign

OTTAWA — The Liberal government is scrambling to reassure Canadians that the… Continue reading

A woman attends a vigil in front of the hospital where Joyce Echaquan died in Joliette, Que., on Tuesday, Sept. 29, 2020. THE CANADIAN PRESS/Paul Chiasson
Hospital staff testify today at Quebec coroner’s inquiry into death of Joyce Echaquan

TROIS-RIVIÈRES, Que. — Medical staff from a Quebec hospital where Joyce Echaquan… Continue reading

Natural Resources Minister Seamus O’Regan responds to a question during Question Period in the House of Commons in Ottawa on February 17, 2020. THE CANADIAN PRESS/Adrian Wyld
Ottawa looking for 2,000 new energy auditors to get home retrofit program going

OTTAWA — The federal government is looking to train 2,000 more people… Continue reading

A person waits outside a COVID-19 testing clinic in Montreal, Sunday, May 9, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Ontario opens shots to 18+, Quebec opens drive-thru, as COVID vaccine efforts expand

Quebec is opening a drive-thru vaccine clinic at its busiest airport and… Continue reading

Calgary Flames players celebrate the team's overtime win against the Vancouver Canucks during an NHL hockey game in Vancouver, B.C., Sunday, May 16, 2021. THE CANADIAN PRESS/Darryl Dyck
Lindholm OT winner gives Flames 6-5 win over Canucks despite blowing four-goal lead

VANCOUVER — In a game with little to play for besides pride,… Continue reading

In this photo taken on May 13, 2021, Russia's performer, Manizha, smiles during an interview after rehearsing at the Eurovision Song Contest at Ahoy arena in Rotterdam, Netherlands. For many, the stage and global television audience of millions is a chance to express messages of inclusion, strength and positivity. Manizha has a message of strength for women in her song whose lyrics include the lines: "Every Russian Woman. Needs to know. You're strong enough to bounce against the wall." (AP Photo/Peter Dejong)
Eurovision Song Contest returns despite coronavirus pandemic

ROTTERDAM, Netherlands (AP) — Pounding beats? Check. Uplifting lyrics? Check. Huge, backlit… Continue reading

Serena Williams of the United States returns the ball to Italy's Lisa Pigato during their match at the Emilia Romagna Open tennis tournament, in Parma, Monday, May 17, 2021. Serena Williams earned her first victory in more than three months by beating 17-year-old qualifier Lisa Pigato 6-3, 6-2 in the first round of the Emilia-Romagna Open. Williams accepted a wild-card invitation for the Parma tournament after losing her opening match at the Italian Open last week. (AP Photo/Marco Vasini)
Serena Williams posts 1st victory in more than 3 months

PARMA, Italy (AP) — Serena Williams earned her first victory in more… Continue reading

In this Oct. 21, 2014 file photo, people pass an AT&T store in New York's Times Square. AT&T will combine its media operations that include CNN HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV. The deal announced Monday, May 17, 2021, would create a separate media company as households increasingly abandon cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube. (AP Photo/Richard Drew, File)
AT&T, Discovery join media brands as cord-cutting encroaches

NEW YORK (AP) — AT&T will combine its massive media operations that… Continue reading

Most Read