Bad News for Baby Boomers
Beginning in 2011, the baby boomers, that huge generation of people born after World War II, started turning 65. And by 2029, when that generation has all turned 65, they will constitute the largest population of seniors in Canada in history, making up 25% of the population. In earlier times it has been noticed that the boomers were a demographic bulge that remodelled society as it passed through. This will be no less true when they become seniors. As with all things, this bulge will create some opportunities and difficulties.
One primary concern is the issue of pensions. You can hardly pick up a newspaper these days without an article on pensions. If handled incorrectly, which I fear is happening, the outcome will be a bulge in poverty amongst this group of seniors.
This growing tide of seniors has the governments in a panic, worried about the cost of supporting this growing population. They wouldn’t need to be worried if they had not given corporations huge tax breaks, but that is another story. Previously, I have written about the need to increase CPP. The revision to CPP was rejected by both the federal Harper government and the Stelmach Alberta government, though all the other provinces were on board for the change. Instead a voluntary workplace self directed plan was introduced. This plan is no better than an RRSP which has many problems, not the least of which is this really only works for the rich, since most working people can’t afford to contribute or contribute very little. Failure to update CPP is mistake number one. CPP is both financially sound and has very low administration costs at 1.1% compared to 5% or more for most RRSPs.
Mistake number two is the changes and/or lack of changes made to OAS. The Harper government has moved the age at which you can collect OAS upward to age 67, beginning for those born in 1958. This in and of itself isn’t a bad thing because we are living longer, and working a few extra years for a population of digital age white collar workers is manageable. I am almost 68 and I am still happily working doing something I love. Had they also increased OAS at the same time so that when people started collecting, they would in fact have a higher basic pension, I think the delay would have been acceptable. So, mistake number two was made which was really a missed opportunity to raise the basic universal pension while changing the age of eligibility.
This ebbing tide of seniors has the governments in a panic, worried about the cost of supporting this growing population. They wouldn’t need to be worried if they had not given corporations huge tax breaks, but that is another story.
For non-white collar workers and the working poor, increasing the eligibility age for OAS is a disaster in a number of ways. People who work in the rough and tumble jobs of construction, agriculture, service industries, and many more physically hard jobs, or those who work at low paying jobs can’t work as long because their bodies wear out. Unlike white collar and professional jobs, these jobs require physical fitness. For these individuals, whose salaries are often low in any event, raising the age of eligibility means they may need to rely on public assistance programs to bridge until they can collect their pensions or continue to work in ill health and pain. The failure to address this issue is mistake number three and means increased public assistance costs and lives of poverty for many. This is particularly true for women who still only earn 70% of what men earn and so have even less pension eligibility.
Universal Old Age Security was introduced in 1952 and at the time was $480/month. Now because of cost of living increases it is $540.12. That is a meagre increase of $1 per month each year for the past 60 years. A more substantial increase is long overdue.
As I have said before: it would seem the Harper government actually wishes to put seniors into poverty. Every action they are taking on this issue points in that direction.