Feds should allow OAS recipients to delay take-up: C.D. Howe

Choosing richer payments later will contain costs over time in less stressful way
|hrreporter.com|Last Updated: 03/15/2012

Ottawa should move to reform seniors’ benefits in the upcoming budget by letting recipients choose richer payments, later, from the Old Age Security (OAS) and Guaranteed Income Supplement (GIS) programs if they wish, according to a report from the C.D. Howe Institute.

In What to do About Seniors’ Benefits in Canada: The Case for Letting Recipients Take Richer Payments Later William Robson says letting OAS and GIS recipients delay take-up and rewarding those who do could contain program costs over time in a way that is less stressful to recipients than raising the universal eligibility age, and less discouraging to work and saving than intensifying clawbacks.

Modelled on the successful mid-1990s reforms to the Canada and Quebec pension plans, the changes to OAS and GIS would give seniors greater financial flexibility, said Robson, president and CEO of C.D. Howe. Potential recipients could start receiving benefits at age 65, as they do now, or wait and get benefits that were larger by 0.7 per cent per month of delay. They would gain a valuable tool; those with little income subject to clawbacks and/or unable to work would start at 65 as they do now, and those willing and able to wait would forego benefits otherwise available at age 65, but collect more when they do start, he said.

The report models the impact of such reform on payments to each age cohort after it reaches age 65. Because a new cohort turns 65 each year, and the cohorts are getting bigger, the reform could help Ottawa’s bottom line well into the future, alleviating the pressure of aging on government finances and Canada’s economy, said Robson.

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