The topic of pensions has again been on the minds of many citizens and in particular seniors within the riding of Okanagan Coquihalla this past week and has also been actively covered in many Canadian media reports.
I would like to clarify to seniors who current receive the OAS benefit that there will be no changes to the benefits you currently receive. Likewise to the citizens who are very close to reaching retirement age I would also like to confirm that no change would occur without substantial notice and an accompanying adjustment period to ensure that sufficient time is provided to adjust and plan appropriately for your retirement. Our government remains committed to the retirement security of Canadians. However ,we must also be proactive to ensure that we have retirement security that Canadian taxpayers can afford that seniors can depend on.
Going forward over the next two decades we know that the amount of Canadian citizens over the age of 65 will basically double from roughly 4.7 million seniors today to over 9.3 million by 2030. We also know that today seniors are living longer and healthier lives than ever before, a fact that Canadians can all take pride in.
However, we must also recognize that more seniors collecting OAS benefits with fewer workers to fund those same benefits will create a very serious situation if ignored. In terms of numbers the total annual payout for OAS benefits is expected to rise from the current amount of $36 billion a year today to $108 billion by 2030.
Today there is a ratio of basically four working taxpayers helping to fund OAS benefits to retired seniors. By 2030 this ratio will be cut in half down to two working taxpayers attempting to fund OAS benefits. This is an unsustainable situation and is the reason why a new balance must be found in order to secure the future of this important program. Understandably any proposed changes to OAS are a cause for concern to all Canadians. However we cannot ignore the changes to the demographics of our society and run the risk that countries such as Greece are currently encountering with an inability to meet financial obligations. Over the past six years our government has introduced increases to the GIS, pension income splitting, increase age credit and the tax free saving account (TFSA).
As a result of these changes a single senior can now earn $19,000 per year ($38,000 as a couple) before paying any federal income taxes.
We have also lowered the GST rate to ensure there is less tax on your after tax spending. The majority of these initiatives were opposed by the opposition. I expect further proposed changes will potentially also be opposed. While there may be disagreement and debate on how best to secure the long term future for retired Canadians, I am hopeful that we can all agree on the need to be proactive today.
Dan Albas is the Member of Parliament for Okanagan- Coquihalla and can be contacted at dan.albas@parl.gc.ca