Finance Minister Bill Morneau.
The Trudeau government’s hand-picked economic advisory council is recommending the Liberals raise the age of retirement eligibility.
CBC reports, “The council suggests the Liberal government reconsider its move to keep the age of eligibility for Old Age Security (OAS) at 65 years old. The council said the ages of eligibility for OAS and the Canada Pension Plan (CPP) be ‘should be recalibrated and increased to meet the Canadian reality of an aging society and a considerably longer life expectancy’.”
The article highlights, “The previous Conservative government announced [at the World Economic Forum in Davos in January 2012] an intention to move the age of eligibility for OAS to 67 years old [by 2023], but the Liberal government cancelled those plans after taking office.”
The Canadian Press adds, “Raising the eligibility age so that it closes the gap between Canada and industrialized countries with the highest labour participation rate among workers 55 and over could add $56 billion to the gross domestic product, the council’s report said.”
Back in 2012, Harper had argued that the cost of the OAS program would rise from $36 billion a year to $108 billion a year by 2030.
CBC also notes, “In addition to reconsidering the age of eligibility, the panel also suggests allowing for voluntary deferrals of payments from Old Age Security and the Canada Pension Plan [past the age of 70].”
The recommendations come from a 14-member advisory council selected by Finance Minister Bill Morneau in March 2016 to advise him on how to boost long-term economic growth in Canada.
The advisory council is chaired by Dominic Barton who is the London, UK-based Global Managing Director of McKinsey & Company, a global consulting firm that had $8.4 billion in revenue in 2015 and whose clientele includes 80 per cent of the world’s largest corporations. Barton attends the annual World Economic Forum gatherings in Switzerland and is also a Trustee of the influential Washington, DC-based think-tank Brookings Institute (which has been described as both liberal and conservative).
The advisory council also includes the President and Chief Executive Officer of General Electric Canada, the Chief Economist of the World Economic Forum, the President and Chief Executive Officer of Cenovus Energy Inc, and the President and Chief Executive Officer of CPP Investment Board among others.
Along with raising the age of retirement, the advisory council also encouraged the federal government to pursue trade deals with China, Japan and India given the derailment of the Trans-Pacific Partnership, as well as to establish Canada as a global trading hub. BNN notes, “It urged expanding trade by forging closer ties with the United States, Mexico, China, Japan and India as well as through greater investments in trade-related infrastructure, such as ports and highways.”
This despite studies that show that ‘free trade’ deals like the TPP and the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) cost jobs and worsen income inequality.
Late last year, the advisory council also advised the Liberal government to raise the threshold for government reviews of foreign takeovers to $1 billion. The Liberal government adopted that recommendation.
The Trudeau government could implement the recommendation to raise the eligibility age for retirement in its upcoming budget, which will likely be tabled in the House of Commons in March.
Economist Andrew Jackson has previously commented, “Raising the retirement age would cut a basic building block of retirement security, the OAS pension of $540.12 per month which now goes out to 4.9 million Canadians aged over 65. Receiving OAS also makes seniors eligible for the Guaranteed Income Supplement (GIS) top up, which provides one in three seniors with a supplement which ensures they have a minimally adequate income in old age.”
Instead of raising the age of retirement, The Council of Canadians supports the call from the Canadian Labour Congress that CPP retirement pensions should be doubled over a seven-year period and that the GIS of OAS pensions should be increased by 15 per cent so that no senior lives in poverty.
The need for pension reform is serious. Currently, about 62 per cent of working Canadians don’t have a workplace pension, and more than a third of working Canadians have no retirement savings at all. The CPP covers about 93 per cent of workers, but pays a maximum of about $900 a month. The OAS pension amounts to about $540 a month. The Registered Retirement Savings Plan (RRSP) cannot replace a public pension system. The median amount in RRSPs for those taxpayers nearing retirement is about $60,000, which is enough to by an annuity of about $250 a month in retirement.
In the 1990s, then-prime minister Jean Chretien sought to ‘restructure’ Canada’s public pension system. In part they were proposing that OAS and the GIS be folded into a new package called the Seniors’ Benefit. The restructuring would have cut the retirement benefits of individual seniors by thousands of dollars a year and created more poverty among the elderly. The Council of Canadians launched a massive three-year campaign against the restructuring – which included a petition that drew half a million signatures – and stopped Chretien’s plan.