Oct 16, 2017 @ 22:47
Census results are proving what many Canadians already understood, poverty rates among seniors have been climbing in Canada and fewer people are prepared to retire. With those statistics readily available one has to wonder why the government would pursue a penny-pinching exercise that punished a select group of seniors, but that is exactly what happened last January when Service Canada’s policy for Couples Living Apart for Reasons Beyond their Control changed. The move affected couples who lived apart for reasons such as the need for long-term care and forced them to qualify for benefits based on their joint income. The fallout was immediate and MP’s constituency offices became the front line for a battle that never should have been waged.
The reasoning offered by the government was that they were trying to limit high-income senior couples from receiving income-tested benefits. But it wasn’t high-income couples who sought assistance at my offices. Instead, the new policy threatened to push couples who had been able to get by, prior to the policy change, over the brink. As we worked through each case it became clear that some couples were being forced to consider drastic measure – even legal separation – so they could afford to live. Clearly the new policy was delivering outcomes that hadn’t been anticipated.
The good news is that pressure from MP offices had an effect and the government relented. As a result, the policy has reverted to the means test that was used prior to the changes. A memo to Service Canada indicated that the change will be retroactive to January 2017 so no seniors will be caught up in the short-lived mistake, but that just scratches the surface when it comes to impoverished seniors.
Seniors groups and think tanks have been warning for years that poverty rates for seniors have been climbing. A report from the Broadbent Institute in February confirmed as much and painted a grim picture of the trend in Canada. It showed how more seniors will rely on the Guaranteed Income Supplement, Canada Pension Plan and Old Age Security programs over the next ten years claiming that half of all those who will retire have accrued no pension benefits to help them get by.
The report goes on to suggest that Canada could beef up mandatory retirement savings through the CPP, which offers a defined benefit and indexed pension at a reasonable cost. It points out that retirement saving incentives such as Registered Retirement Savings Plans and Tax-Free Saving Accounts are not helping more Canadians retire in comfort, but suggests that the CPP could. To do that we will have to increase the mandatory savings rate of 9.9%, which is among the lowest in the OECD.
Another solution would be to index the OAS and GIS to keep pace with wages instead of prices in a manner similar to CPP maximum benefits which are indexed to average earnings. In addition to that Canada should increase the GIS. This would help about one-third of seniors and is something the Liberals promised in the election. The Broadbent Institute says that If they make good on their 10 percent increase on GIS for single seniors it will be a start, but by increasing the GIS by 10 percent for all seniors we would lift nearly 150,000 people out of poverty. That would allow more Canadians to retire with dignity.
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