Strengthening the Foundations of Canada’s Pension System: A Review of the Old Age Security Program

The Old Age Security (OAS) program, which is the cornerstone of Canada’s pension system, is fundamentally sound.  However, some changes need to be made to the program to improve its fairness and to strengthen the income security of Canadian seniors.  This study examines five aspects of the OAS program and makes recommendations on each:

 

• The OAS clawback and persons living outside Canada.  The application of the high-income clawback to OAS pensioners living outside Canada is wildly inconsistent.  High-income pensioners who would not be entitled to any OAS pension if they were living in Canada can nonetheless qualify for a full pension if they live in some countries, including the United States, but not in others.

 

• The clawback and couples.  The clawback affects senior couples with the same total income in very different ways, depending on how much of the income each spouse or partner receives.  The splitting of pension income qualifies some wealthy seniors to the basic OAS pension even though they were previously not eligible.

 

• The Guaranteed Income Supplement and immigrants to Canada.  Immigrants to Canada may be entitled to no GIS at all, or only to partial GIS, during their first 10 years in Canada.

 

• The Allowance and single persons aged 60-64.  ‘Near seniors’ aged 60-64 who are the spouse or partner of an OAS pensioner or who are widowed are eligible for the Allowance (previously known as the Spouse’s Allowance).  But near-seniors with the same income who have never married, or who are divorced or separated are not eligible for the Allowance.

 

• Work incentives.  A Senate Committee has proposed introducing work incentives into the OAS program, for example by exempting a part of a senior’s employment earnings (if any) when determining entitlement to the GIS.

ISBN – 1-55382-264-1