No decisions have been made about possible changes to Old Age Security in Canada, says MP James Lunney, and if they do, the changes will come in gradually.
“Of course we are looking at our liability as we move forward, but nobody receiving a pension today has anything to worry about,” he said. “It’s all speculation at this point. No decision has been made, but government is reviewing the sustainability of programs.”
Lunney stressed also that those nearing retirement age have no cause for major concern.
“Any changes will be phased in over time,” he said. “Those close to retirement don’t have to worry either.”
The Canada Pension Plan, he added, is not under any threat, as it is paid for by worker contributions. Old Age Security (OAS) however, comes straight out of government coffers.
“With OAS, we have 4.7 million Canadians in 2010 and it costs us $36.5 billion,” he said. “With our aging demographic, by 2015 it will be $48 billion. If it’s left unchanged, 15 years later, it will be $108 billion a year. What we are concerned about is we don’t know what general revenues will look like then. It’s $280 billion a year now, so managing $36.5 billion out of that is manageable, but when it goes to $48 billion and then $108 billion, we need to manage this.”
Lunney noted a Liberal proposal to drop the number of years that immigrants must be in the workforce before being eligible for OAS would exacerbate the situation.
“The Liberals proposed to drop the number of years a senior coming here at age 60 to qualify for OAS from 10 to three years,” Lunney said. “You can just imagine the liability from that situation.”
Currently, he said, Canada has four workers for every retiree. However, by 2030 that is projected to change to just two.
“The liability needs to be handled responsibly,” Lunney said. “In Europe they didn’t manage their risks and they are in huge trouble. We are determined to make sure the programs people depend on are still there when they need them.
“People are living longer than they did when this was set up. That’s good, but they are drawing on the program longer than they did when it was first envisioned.”