Instead of raising the retirement age and distressing seniors with low-income the government should have prevented wealthier Canadians from receiving Old Age Security; not only would this have been fairer but would have saved hundreds of millions of dollars more.
It makes sense that Canadians who are 65 and older and who make over a million dollars don't receive an Old Age Security Pension; they certainly don't need it. But what doesn't make sense is that under the current reforms made by this Conservative government, a 67 year old senior who will make $100,000 will still receive OAS while a 65 year old senior who makes $30,000 will receive nothing.
Old Age Security today allows seniors to receive $540 a month as long as their income does not exceed $69,562; any income over that amount and their OAS is reduced proportionately. Once a senior's income reaches $110,123 however they receive no OAS payments.
If one was to take the position that the OAS system was financially unstable prior to the Conservative reform it seems highly questionable to raise the retirement age from 65 to 67. That increase in the age of eligibility only harms low-income seniors by adding two more years till they receive the much needed pension. It would be far more prudent and equitable to reduce the cut-off income to receive OAS for those wealthier seniors who clearly do not need it.
Instead of saving money by raising the eligibility age from 65 to 67 and only distressing elderly low-income earners, the federal government should have reduced the income level in which Old Age Security is cut-off.
By raising the eligibility age the government only saved an estimated $3.5 billion but that comes at the cost of extending the time that seniors in poverty will have to endure until they receive their Old Age Security Pension. In contrast if the federal government had limited OAS to those who only make less than $50,000 a year, low-income seniors would not be affected and the government would have saved well over $4 billion (See picture above or click here, see PDF page 15).
Lowering the cut-off income for Old Age Security would not only have been better for those seniors who are in desperate need, but it would have saved far more money. Hopefully between now and 2023 we'll have a government that will care about at least one of those two things.