The Bloc Québécois passed a motion on Wednesday to increase the Old Age Security pension for seniors aged 65 to 74. The Trudeau government has already increased this benefit by 10% for those aged 75 and over in July 2022. According to the Bloc, a pension differentiated by age creates “two classes of seniors”; it would therefore be an issue of equity. But what is it really?
Often, in this type of debate, “we confuse equality and fairness,” explains Pierre-Carl Michaud, professor at HEC Montréal and scientific director of the Institute on Retirement and Savings. “Some people need help more than others, it’s normal that we give them a little more support than others,” according to him. “From the age of 75, we see in the data that people have more and more needs in terms of autonomy support. »
The average income of Canadians aged 65 and over was $48,400 in 2022, according to Statistics Canada. However, the distribution of income changes over time: as individuals age, their income decreases. Thus, on average, those aged 75 to 84 earned $5,300 less than seniors aged 65 to 74. The gap was $7,900 between the latter and those aged 85 and over.
There is also a question of intergenerational equity, according to the expert: “It is a pension which is often paid by debt, which will eventually be paid by the younger generations. » And although life expectancy is increasing, the retirement age often remains at 65, which also puts pressure on public finances.
At more than $69 billion in 2023, “the old age pension is the largest item of expenditure for the federal government, and it is growing very strongly due to population growth,” adds Mr. Michaud.
Old age and poverty
“If it is the poverty rate that concerns us […]in general, it is the Guaranteed Income Supplement that we look at more than the old age pension. » Although an increase in Old Age Security benefits the most disadvantaged, many people who would receive it do not need it, explains Pierre-Carl Michaud, not making these amounts available for other government priorities.
The Old Age Security pension can amount to a maximum of $727.67 per month for those aged 65 to 74, and $800.44 for those aged 75 and over. It is paid to almost all seniors – those with a high income, on the other hand, must repay part, or even all, of it.
With the proposed increase, a retired person who earns $65,000 per year would be entitled to the 10% increase even if their income is far higher than the median retirement income for seniors, explains Mr. Michaud. In 2022, the median income of Canadians aged 65 and over was $30,200, Statistics Canada calculates.
“A dangerous way to proceed”
In Canada, the retirement income system is built around three pillars, according to a May 2024 report from the Library of Parliament:
- the Old Age Security pension, which is established based on age and years of residence in the country. Certain targeted aid is added to the pension, such as the Guaranteed Income Supplement (GIS), which is intended for low-income residents;
- public plans linked to workers’ income, namely the Canada Pension Plan and the Quebec Pension Plan (RRQ);
- workplace pension plans and private savings, particularly through registered retirement savings plans and tax-free savings accounts.
The Bloc Québécois made the adoption of its Bill C-319 on the Old Age Security pension a condition for ensuring the Liberals’ continued power. Bloc leader Yves-François Blanchet clarified that the Trudeau government has until the week of October 14 to give the royal recommendation to his bill, which would allow it to be adopted by October 29, the deadline of the bill. ultimatum he issued to the Trudeau government.
Using motions and bills studied in a hurry “is a very dangerous way to proceed with changes that have enormous repercussions,” says Mr. Michaud. “There would be an interesting discussion to be had about support for seniors in relation to Old Age Security, but that is not how it should take place, not with a knife at the throat. »
Such a discussion should also look at all sources of retirement income, including the SRG and the QPP, as well as the indexation of pensions, according to him.