D Smith: Old Age Security changes affecting future seniors
The Old Age Security pension is a monthly benefit available to most Canadians 65 years of age or over.
However, the 2012 federal budget included provisions for changes to future OAS income for seniors.
The changes do not affect anyone who is 54 or older as of March 31, 2012, while those born on or after Feb 1, 1962 will be eligible for OAS at age 67.
Those born between April 1, 1958, and Jan. 31, 1962, will be eligible between ages 65 and 67.
The eligibility age for OAS and Guaranteed Income Supplement (GIS) will start in April 2023, and will be fully implemented by January 2029.
In line with the increase in the OAS/GIS eligibility age, the ages at which the allowance and the allowance for the survivor are provided will also gradually increase from age 60 to 64 (under current rules) to age 62 o 66 starting in April 2023.
This change does not affect anyone who is 49 years of age or older as of March 31, 2012.
Many Canadians in the future will continue to work to age 67 if they financially need to; or supplement income with personal savings or other company pensions prior to age 67.
Many 65-year-olds are fit to work, and many want to continue working.
The past December saw the federal government eliminate the mandatory retirement age, which in most cases was based on age 65.
The average amount of OAS paid monthly now to Canadians over the age of 65 is $510.21, an amount indexed quarterly.
The maximum annual OAS pension is currently $6,481. The maximum annual GIS benefit is $8,788 for single seniors and $11,654 for couples.
For those wishing to work longer, the government will allow for the voluntary deferral of the OAS pension, for up to five years, starting on July 1, 2013.
This gives individuals the option to defer receiving their OAS pension to a later time to subsequently receive a higher, adjusted pension.
This increase is 0.6 per cent for each month of deferred pension.
The government has confirmed the Canada Pension Plan is financially sustainable for at least the next 75 years at the current contribution rate of 9.9 per cent of pensionable earnings. No changes to premiums are proposed at this time.
You can access information on monthly government programs at the website www.servicecanada.gc.ca.
Canadians are living longer and healthier lives.
In 1970, life expectancy was age 69 for men and age 76 for women.
Today, it is 79 for men and 83 for women.
We are living about seven years longer than we did when the OAS pension was introduced in 1952.
Canadians are living longer and hopefully may enjoy working longer with the increased age for OAS and GIS eligibility.
The OAS is the single, largest federal government program.
The changes announced in Economic Action Plan 2012 are necessary to ensure the OAS program remains on a sustainable path, according to the federal government.
The proposed changes to the age of eligibility for the OAS program will not affect anyone who is currently receiving benefits.
This column on the recent changes to the OAS is provided for general consumer information.