Old Age Security Report
August 28, 2017
The old age security program: should it be revised in order to keep it sustainable? OAS is funded through annual tax revenues whereas CPP is paid through payroll deductions.
The chief actuary’s report forecasts spending to hit about $247 billion by 2060 — five times what it is slated to be this year — due to an impending retirement wave of baby boomer workers and people living longer.
Our previous Conservative government raised the age of eligibility for OAS to 67 from 65 to save on costs by encouraging people to work longer. The Liberals reversed the decision in their first budget, saying the Tories had made the change without any data to support it.
A February presentation to a group of deputy ministers said “younger generations may be required to pay higher taxes” to cover a shortfall between tax revenues and OAS spending if the retirement age remains at 65, Canadians live longer and there aren’t enough new workers to replace the ones who are going to retire.
The actuarial report suggests that spending as a percentage of the overall economy would rise by 2030 and fall through to 2060 as economic growth and resulting tax revenues offset rising costs.
Costs to the program are also expected to be offset by an expansion to CPP that the chief actuary estimates will mean $3 billion less in spending on the Guaranteed Income Supplement in 2060 and reduce overall spending on OAS benefits, which are scaled back above $75,000 in annual income.
The report can be found at: http://www.osfi-bsif.gc.ca/Eng/Docs/oas14.pdf.