No Title
February 02, 2012
McColeman Speaks on Old Age Security
(Ottawa) – As a member of the Standing Committee on Human Resources and Skills Development (HRSDC) which includes Old Age Security (OAS) within its portfolio, Brant MP Phil McColeman has remained centrally involved in recent discussions in Parliament regarding OAS. Today, McColeman weighed in on those discussions, in Question Period, with a question for the Minister of HRSDC.

The following is the text of his Question:

Question (Phil McColeman, Member of Parliament - Brant):

Mr. Speaker, today the NDP has put forward a flawed and deliberately misleading motion on Old Age Security. The fear mongering coming from the NDP and their Liberal friends will not work.

The NDP and Liberals continue to mislead the public on the intentions of our government when it comes to protecting the financial security of seniors now, and for future generations.

My question is for the Minister of Human Resources and Skills Development:

Would she be able explain, yet again to the opposition parties, why this government will make the changes necessary to ensure the sustainability of OAS for the next generation, while not affecting current recipients?

Answer (Honourable Diane Finley, Minister of Human Resources and Skills Development):

Mr. Speaker, let me by crystal clear: any changes that our government makes to the old age security system will not affect today's retirees or Canadians close to retirement.

The reality is we have an aging demographic where now we have 4 workers for every 1 senior we will have 2 workers for every senior in 2030.

This is unsustainable. I would ask that the opposition get their head out of the sand and work with us to ensure that OAS is around for future generations.


Additionally, Mr. McColeman will rise this afternoon to present a speech regarding OAS. The following is the text of what he will say:

“Mr. Speaker,

I am pleased to join in the debate on Old Age Security and Canadian seniors.

Our Government is committed to ensuring the retirement security of all Canadians.

Canada does not live in a glass house. Canada’s demographic state is part of a word-wide phenomenon in the developed world where families are having fewer babies.

We cannot afford to put our head in the sand and hope the challenge of financial sustainability will go away.

As a Globe and Mail editorialist said yesterday, “The challenge of ensuring that the retirement income system and other supports are on a secure footing for the next generations is one that no government can avoid.”

There is no doubt, Mr. Speaker, that Canadians are living longer, healthier lives than in past generations.

The average Canadian can now expect to live to be 81 years old.

By 2025, our life expectancy will probably increase by another two years.

The bottom line is this: Canadians will be relying on retirement income for a longer period of time.

So helping Canadians prepare for and achieve financial security in their later years is an absolute priority for our Government.

Let me outline to Members of this House the basic three-pillar structure of Canada’s retirement-income system.

The first two pillars are the Old Age Security program and the Canada Pension Plan. These public pension plans provide a modest base upon which Canadians can build additional income for retirement.

The third pillar consists of personal savings and RRSPs, as well as employer pension plans. Ideally, this combination helps provide a standard of living similar to pre-retirement levels.

Mr. Speaker, Canadians will receive close to $72 billion from Canada’s public pension system this year.

The first pillar -- the Old Age Security program -- provides a basic level of income to seniors. It recognizes the contribution they have made to Canadian society and the economy. It’s also intended to alleviate poverty.

The Old Age Security (OAS) program is funded from general tax revenues on a “pay-as-you-go basis” — there is no reserve fund.

By 2030, the number of OAS beneficiaries will nearly double, from 4.7 million in 2010 to 9.3 million by 2030. Program costs could rise from $36.5 billion in 2010 to $108 billion in 2030.

Right now, there are four working-age Canadians for every senior; by 2030, this will shrink to two.

Can two working-age Canadians support the pension requirements of one senior? This is the issue,
Mr. Speaker.

Let’s be serious -- can we expect to saddle future generations with that burden? Should we not build in an adjustment period so people can benefit from their retirement benefits later in life?

To be eligible for the basic OAS pension, a senior must have lived in Canada for at least 10 years after the age of 18.

A person who has lived 40 years in Canada since the age of 18 is eligible for a full pension.

Finally, Mr. Speaker, the Guaranteed Income Supplement is an income-tested monthly benefit paid to OAS pensioners with little or no other income.

Along with the OAS pension benefit, the Guaranteed Income Supplement, or GIS, ensures that seniors’ overall income does not fall below a specified threshold.

Under Budget 2011, our Government introduced a new GIS top-up benefit of up to $600 for single seniors and $840 for couples.

This measure is improving the financial security of more than 680,000 seniors across Canada.

The GIS top-up, like all other OAS benefits, is indexed quarterly to reflect increases in the Consumer Price Index.

We have also enabled GIS recipients to earn up to $3,500 without it affecting their benefit amount. This allows seniors to work a bit if they need to supplement their pension benefit.

Mr. Speaker, the numbers speak for themselves.
The rate of poverty among seniors has decreased from 21.4 percent in 1980 to a rate of 5.2 percent in 2009.

Canada has one of the lowest rates of senior poverty among the countries in the Organization for Economic Co-operation and Development.

It’s lower than that of Denmark, France, Germany, the United Kingdom and the United Sates. Poverty among seniors in Canada is lower than poverty among the general population.

The second pillar of the Canadian retirement income system is the Canada Pension Plan, which is a contribution-based, earnings-related social insurance program.

It ensures a measure of protection to a contributor and his or her family against the loss of income due to retirement, disability or death.

There are three kinds of Canada Pension Plan benefits:
• Retirement benefits, which include the retirement pension and the post-retirement benefit;
• Disability benefits, which include benefits for contributors with disabilities and for their dependent children; and, third,
• Survivor benefits – which include the death benefit, the survivor’s pension and the children’s benefit. The death benefit is a lump-sum payment to the person’s estate that may help with the cost of the funeral.

The Canada Pension Plan operates throughout Canada, although Québec has its own similar program called the Québec Pension Plan. The administrators of both plans work closely together to ensure all contributors are protected.

So, outside of Québec, the majority of working people in Canada over the age of 18 pay into the Canada Pension Plan. The employee pays half of the required contribution and the employer pays the other half.

People who are self-employed pay both portions. No tax dollars are involved.

And the amount paid is based on a person’s salary. In the case of the self-employed, it’s based on net income.

Contributions are important because they determine if the worker or their family is eligible for a benefit, and in calculating the amount of that benefit.

Canada also has reciprocal pension agreements with certain other countries, so that if a Canadian has worked in another country, they may receive pensions or benefits from either country. And people can receive their CPP benefits outside of Canada.

All CPP benefits, except for the death benefit, are adjusted in January of each year if there is an increase in the cost of living as measured by the Consumer Price Index.

The CPP is a secure plan. It is internationally regarded as a model for its sound structure, governance and long-term stability.

The 2009 report of the Chief Actuary projected that the CPP will be sustainable for the next 75 years.

This calculation factored in the demographic changes that we are likely to experience in the foreseeable future, such as an increase in life expectancy, the retirement of the baby-boomers retirement, and so on.

Mr. Speaker, we can be proud of what we are doing to ensure the financial security of our senior citizens.

But what is necessary, at this point, is to also reinforce the sustainability of the first pillar of our pension retirement system – namely, the Old Age Security Program.

We owe future Canadians this element of security. That’s why I call on all Canadians and all Members of this House to support measures that will reinforce the financial sustainability of the Old Age Security Program.

Let’s not leave the burden of financing to future generations of Canadians.

Let’s ensure that any changes are done with substantial notice and adjustment so current retirees or those close to retirement are not affected.

Let’s give Canadians time to adjust and plan for their retirement.

But more importantly, let’s not bury our heads in the sand by supporting this motion.

Finally, let’s help shore up the first pillar of Canada’s retirement income system – the Old Age Security Program so that Canadians can build towards a secure future. This is why I cannot support the opposition’s motion.

Thank you, Mr. Speaker.”
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