Old Age Security system needs strengthening: report

November 25, 2009

OTTAWA—Canada’s Old Age Security system needs improvement in order to help ensure the economic security and dignity of Canadians in retirement, says a new report released today by the Canadian Centre for Policy Alternatives (CCPA).

The report, by pension expert and CCPA Research Associate Monica Townson, reviews OAS and its associated programs of the Guaranteed Income Supplement (GIS) and the Allowance and discusses measures that could be taken to strengthen this part of Canada’s pension system.

“Old Age Security is an important source of income for today’s seniors—particularly for women,” says Townson. “However, maximum combined benefits from OAS and GIS fall below the poverty line for single individuals.”

The report notes that failures in the third tier of the pension system (private arrangements such as workplace pensions and RRSPs) may place greater stresses on the OAS system in the future and makes the following recommendations for reform:

  • increase GIS for single individuals;
  • index OAS/GIS to wages instead of to prices;
  • modify the residency requirements for OAS to make it easier for immigrants to qualify for benefits; and
  • remove discriminatory provisions from the Allowance program.

In order to offset the cost of reforming the OAS system, the government should consider reducing taxpayer subsidies to RRSPs and workplace pensions that benefit a minority of Canadians.

“The net cost in lost tax revenues of tax subsidies to registered pension plans and RRSPs in 2010 is estimated to be $28.9 billion—greater than the total cost of OAS benefits, which are estimated at $27.6 billion for the 2009-10 fiscal year.”

This is the second in a series of reports on pension reform released by the CCPA. The first report, What Can We Do About Pensions?, provides an overview of the issue and is available on the CCPA website.


A Stronger Foundation: Pension Reform and Old Age Security is available on the CCPA website at http://policyalternatives.ca

For more information contact Kerri-Anne Finn, CCPA Senior Communications Officer, at 613-563-1341 x306.