Budget to reveal firm OAS plans: sources

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OTTAWA -- The federal government is poised to issue a firm policy direction on old age security in the upcoming budget, centred around raising the age when retirees can start to collect.

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Hey there, time traveller!
This article was published 17/02/2012 (3935 days ago), so information in it may no longer be current.

OTTAWA — The federal government is poised to issue a firm policy direction on old age security in the upcoming budget, centred around raising the age when retirees can start to collect.

Several government sources now say the budget will lay out a path forward, rather than launch a national conversation or policy paper on proposed changes despite considerable discomfort within the Conservative caucus on OAS changes.

“We have to take action right now to make sure that there are OAS funds there for seniors, not just for today’s seniors, but for the seniors of the future,” Human Resources Minister Diane Finley said Wednesday during question period.

“If we don’t take action now, there may not even be an OAS system for the future.”

The leading option is to increase the age of eligibility to 67 from 65 — an option Prime Minister Stephen Harper has publicly confirmed is under consideration.

The plan is to phase in the changes slowly and begin the process in a few years. One leading possibility — as uttered vaguely by Finance Minister Jim Flaherty last week and then retracted — is to start phasing in the increase in age in 2020 and make the change over five years.

Under that scenario, anyone now aged 57 or older would not be affected.

The OAS changes will likely be packaged together with cuts to public service pension packages, sources said.

But another option touted repeatedly by many experts is to change the clawback provisions so richer recipients have to start paying back the benefit at lower levels of income.

That option is on the back burner, at least for now, government sources say.

Bureaucrats from several departments have been working on reform options for months, but officials insist final decisions have yet to be made.

Conservative MPs expressed concerns about the move at this week’s caucus meeting, but generally left the meeting thinking the big decisions were already made, sources said.

But OAS changes are so politically explosive and financially complex even firm decisions on a general policy direction can still be subject to an infinite number of tweaks and variations after the fact.

— The Canadian Press

The FYI on OAS

OTTAWA — Here are some facts about old age security:

Who gets it: 98 per cent of Canadians aged 65 or older, regardless of whether they are retired and regardless of their pre-retirement income.

Amount: Maximum monthly benefits are $540.12 and average benefits are slightly more than $500.

Clawbacks: OAS is considered taxable income. It is also clawed back for people earning more than $69,562 a year. Anyone making more than $112,772 has to pay it all back.

Importance: For people aged 65 to 69, OAS makes up 13 per cent of their income, on average.

Poverty: About a third of OAS recipients also get the Guaranteed Income Supplement top-up, targeted at low-income seniors. GIS is income-tested.

Maximum: The maximum benefit for someone collecting OAS and GIS is $1,240 per month.

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