Pension plan: No changes till 2020

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Sean Kilpatrick / The Canadian Press Finance Minister Jim Flaherty responds to a question in the House of Commons earlier this month. Changes to old age security won�t come until 2020 or 2025, Flaherty said at an unrelated news conference in Oshawa, Ont., on Friday. (CP)

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OTTAWA -- Finance Minister Jim Flaherty has promised Canadians 57 and older won't be harmed by planned cutbacks to the country's public pension system, revealing the change won't happen before 2020.

Moreover, he indicated Friday the reforms might not even occur until 2025, which would mean Canadians as young as 52 also would be untouched by the changes.

The development occurred Friday, as the political storm over pensions continued to swirl in the House of Commons and Flaherty was hundreds of kilometres away at an unrelated announcement for a port authority in Oshawa, Ont.

At a news conference, Flaherty was asked if the government plans to introduce measures in his forthcoming budget to rein in the future costs of the old age security (OAS) system.

"The timing of what we do will involve more than one budget," said Flaherty, who is expected to unveil his much-anticipated fiscal blueprint in March.

"We will announce some steps forward, but we certainly need to plan ahead and this is not for tomorrow morning. This is for 2020, 2025, so that people who are middle-aged and younger today... can be assured that they will have these social programs properly funded, fiscally responsible, that they'll be there for them in the future."

The issue was catapulted to the top of the country's political agenda when Prime Minister Stephen Harper announced in a recent speech in Davos, Switzerland, that the future costs of the pension system would be scaled back to keep it affordable.

Since then, the government has offered few details, beyond Harper confirming in an interview with Postmedia News that the government is considering increasing the eligibility age for OAS, which provides benefits to people once they turn 65.

"We cannot ignore the fact that we have an aging population in Canada and we want to ensure sustainability over the long term of our important social programs," Flaherty told reporters.

Both he and Harper have pledged repeatedly that the cutbacks won't affect today's seniors or those approaching retirement -- but it wasn't until Friday that some detail was provided about when the cuts will begin to be phased in.

It is widely believed the age for OAS eligibility will be increased gradually to 67. This would accomplish two of the Conservative government's goals: to keep more people in the declining workforce and to reduce the cost of OAS because there would be fewer beneficiaries.

Opposition parties say Harper has created a "manufactured crisis" about the sustainability of pensions.

The government says the cost of the OAS, without reforms, will soar to $108 billion in 2030 from $36.5 billion in 2010. Critics say when viewed as a ratio of Canada's GDP, the increase in pension costs won't be so stark. A report this week by parliamentary budget officer Kevin Page said the OAS system is fiscally sustainable in the long term.

Critics complain Harper specifically promised in the 2006 election that first brought him to power that he would not touch seniors' pensions. They add he did not raise the issue in last year's election and insist he does not have a mandate on pension reform -- particularly to make changes that wouldn't take effect until so far into the future.

In the Commons Friday, NDP MP Philip Toone reminded the Tories when they were in opposition they accused the Liberal government of having a secret plan to raise the age of OAS eligibility.

"They have become everything they used to oppose," said Toone, focusing his fire on Government House Leader Peter Van Loan.

"In the name of all things holy and decent, I ask the member to give seniors and families an answer. What is going to happen to OAS?"

Van Loan offered no details, but insisted cuts are necessary to ensure the government can pay for the system.

"Thanks to our government, old age security will be there today, tomorrow and decades to come," said Van Loan.

Liberal MP Scott Brison said forcing seniors to wait two years longer for benefits will hurt low-income Canadians and offload more costs onto provincial welfare programs.

-- Postmedia News

Republished from the Winnipeg Free Press print edition February 11, 2012 A19