Question Period Note: INCREASING OAS BY 10% FOR SENIORS AGED 75 AND OVER

Why did the Government limit the increase of the Old Age Security (OAS) pension by 10% to seniors aged 75 and over, rather than increasing the OAS pension for all seniors 65 and over?

• The Old Age Security program has been supporting Canada’s seniors for 70 years, and will continue to be there for Canadians in the years to come.

• We recognize that seniors face increased financial vulnerability as they age. As seniors get older, they tend to have lower income, and often face higher health-related expenses because of the onset of illness or disability. This is especially true for those 75 and older.

• This vulnerability is further compounded by a reduced ability to supplement their income with paid work, the risk of outliving personal savings, and the risk of widowhood.

• That is why we have taken action to help make life more affordable for Canadians as they age. In July 2022, the Old Age Security pension was increased by 10% for seniors aged 75 and over.

• As a first step towards implementing this measure, the Government issued a taxable one-time payment of $500 to older seniors in August 2021 to help them meet their immediate needs.

The Old Age Security (OAS) program is a non-contributory, residence-based program financed through general tax revenues. The objective of the OAS program is to provide a minimum level of income to seniors and contribute to their income replacement in retirement. OAS benefits include the OAS pension, which is paid to all individuals aged 65 and older who meet the residence and legal status requirements, the Guaranteed Income Supplement (GIS) for low income seniors, and the Allowances for low-income Canadians aged 60 to 64 who are the spouses/common-law partners of GIS recipients, or who are widows or widowers.

In July 2022, the Government increased the OAS pension by 10% for seniors aged 75 and over. As a first step towards implementing this measure, the Government provided a one-time taxable grant of $500 in August 2021 to OAS pensioners who were aged 75 or over as of June 30, 2022 to address their immediate needs until the permanent 10% increase to their monthly OAS pension was implemented.

Seniors are living longer than ever before, however, with increasing age, they also face greater financial vulnerability. As seniors get older, they tend to have lower income and often face higher health-related expenses because of the onset of illness or disability. This vulnerability is further compounded by a reduced ability to supplement income with paid work, by the risk of outliving savings and the risk of widowhood.

Because older seniors are more likely to have low incomes, they are more likely to be eligible for the GIS. In 2020, 29% of OAS pensioners aged 65-74 received the GIS, compared to 39% of those aged 75 and over.

In 2017, close to half (47%) of seniors aged 75 and over had a disability, compared to one third (32%) of those aged 65-74. Seniors aged 75 and over were also more likely than younger seniors to have a severe disability (27% vs. 15%).

Older seniors are also faced with the risk of outliving their savings and are less able to supplement their income with paid work. In 2018, the proportion of seniors with employment income was substantially lower among those aged 75 and over (15.4%) compared to those aged 65-74 (34.2%). Among those who worked, median employment income was also much lower for the oldest seniors ($720 vs. $10,000).

In 2016, the proportion of seniors who were widowed and had not remarried was more than three times higher among seniors aged 75 and over compared to seniors aged 65-74 (39% vs. 11%). Research shows that the loss of spouse or partner can lead to a significant decline in the standard of living of seniors, particularly among women.

The 17th Actuarial Report Supplementing the Actuarial Report on the Old Age Security program as at December 31, 2018, has been prepared to estimate the impact of increasing the OAS pension for seniors aged 75 years and over, using the same actuarial assumptions and methods as the last triennial report – the 16th Actuarial Report on the OAS program. The 17th Actuarial Report include projected that number of OAS pensioners who will benefit from the increase is 3.2 million in 2022, and is expected to grow to 3.8 million by 2026.

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