OTTAWA (Reuters) - Canada's Old Age Security (OAS) pension program is unsustainable and needs to be changed, the Conservative government said yesterday, drawing opposition accusations that it was breaking a campaign promise not to cut seniors' benefits.
Prime Minister Stephen Harper said in a speech last Thursday the country needs to limit the growth of spending on the retirement income system as life expectancy increases. He promised not to hurt current recipients.
Expanding on Harper's comments, Human Resources Minister Diane Finley said in Parliament on Monday the OAS program, a pillar of the pension system funded out of general government revenues, needs changing.
"The Old Age Security system is not sustainable now. We are going to make it that for generations in the future," she said.
OAS payments go to all Canadian seniors, whether they were employees or not, to provide the basic necessities of life. The tax system claws some of the money back from higher-income seniors.
Finley said a separate government pension plan, the Canada Pension Plan (CPP), which is funded by employers and workers, is actuarially sound.
In tackling programs for seniors, the Conservatives are venturing onto sensitive political ground as seniors tend to vote in great numbers. But the government insisted it is acting responsibly.
Liberal leader Bob Rae said Harper had pledged during the 2011 election campaign not to touch transfers to seniors.
"Is the prime minister committed to sustaining seniors? Or is he committed to breaking his election promises and breaking faith with the people of Canada?" Rae demanded.
Harper responded that he would not be cutting transfers to individuals.
"At the same time, everybody understands that there are demographic realities that do threaten the viability of these programs over the longer term. We will ensure that these programs are funded and viable for the future generations that will need them," he said.
The government has not said how it would address the Old Age Security system, but speculation in the last several days has centered on the possibility it will gradually raise the age of eligibility to 67 from 65.
In 1983, the United States decided to raise the age for collecting full Social Security benefits to 67 from 65 by 2022.
The Canadian government forecasts the number of people aged 65 or over will double to 9.3 million by 2030, and the ratio of taxpayers to seniors will decline substantially.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.