Aging population poses new challenges

Group on cusp of retirement grew 5 times faster than overall population: StatsCan
By Louise Egan
||Last Updated: 05/30/2012

OTTAWA (Reuters) — Canada's population is aging fast and the number of people over 65 hit a new record in 2011, official statistics showed on Tuesday, a trend that will steepen in coming years as baby boomers retire.

Canada's overall population remains younger than that of some of its biggest trading partners. But the growing number of elderly is still expected to put enormous pressure on the government to cover soaring health-care and pension costs.

Census figures show Canadians aged 65 or older represented 14.8 per cent of the population in 2011, up from 13.7 percent five years earlier, for a total of nearly five million.

Yet Canada's population remains among the youngest in the G8 industrialized nations because the bulk of people in the post-war baby boom — those born between 1946 and 1965 — are still working, Statistics Canada said.

"In 2011, only the United States and Russia had a lower proportion of seniors than Canada... The baby boom in Canada was larger than in many other G8 countries and most baby boomers have not yet reached age 65."

Seniors accounted for 23.4 per cent of the population in Japan — the world's oldest population; 16.5 per cent in the United Kingdom; 13 per cent in the United States and 12.9 per cent in Russia.

But the demographics in Canada are at a turning point. Statscan projects that by 2016, the country will have more seniors than children for the first time in its history.

The age group on the cusp of retirement — 60 to 64 — grew 29.1 per cent between 2006 and 2011, nearly five times faster than the overall population growth of 5.9 per cent.

"This suggests that population aging will accelerate in Canada in the coming years," the agency said.

That means fewer taxpayers to pay for social programs that include a comprehensive state-funded medical system.

Even though Canada's population has been aging, it has had a stable workforce for the past 30 years, at about 68 per cent of the population. That is also about to change, said Rod Beaujot, a sociologist at Western University in London, Ontario.

"The portion of the population 15 and over who are employed will start to decline now so that there'll be more people in retirement ages," he said.

Controversial policy moves

Beaujot said the Conservative government should not have cut taxes, as it did in the past six years, because it could have put aside that revenue to pay for baby boomer health care.

"Instead, we've reduced our taxes and thus we've increased recently our debt load, so we're not well-placed to fund the health costs of the elderly except by taxing the young people more," he said.

Government efforts to cope with the aging population have already sparked controversy. Ottawa unilaterally imposed new limits on the amount of money the federal government will give provincial governments to finance health care, a provincial responsibility.

From 2016, it will limit the growth in transfer payments to the level of nominal growth in gross domestic project, currently seen at 4.5 per cent, down from a fixed six per cent annual increase through to 2016.

Angry provincial leaders said Ottawa has simply dumped the problem on them, making it impossible to cope with the inevitable surge in health-care costs as Canadians age.

The government also aims to raise the eligibility age to 67 from 65 for Old Age Security, a key pillar of the pension program aimed at lower-income seniors. It said the changes are needed to make the program affordable in the long term, but opposition legislators slammed it as an attack on the most vulnerable seniors.

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