In the mind of economist Peter Tsigaris, Canada is a “caring society.”
However, having heard Prime Minister Stephen Harper musing about changes to the age when retirees can access Old Age Security (OAS), the Thompson Rivers University associate professor is wondering about that view.
“Now, it’s, ‘Oh no, let them work more,’” Tsigaris said, noting Canada spends less of its gross domestic product on funding pensions than many other countries.
“We have one of the lowest, 2.3 per cent of GDP. By 2030, that ratio should go to just three per cent of GDP. We’re talking about a half per cent increase in the next 30 years.”
The year 2030 is when it is expected the bulk of the baby-boomer generation will have retired.
Tsigaris said any change that would require people to continue to work to 67 before accessing OAS would be just “shifting costs,” particularly for the segment of retirees who are poor or close to the poverty line already, or who have additional expenses due to disabilities.
“I don’t think they’re [government] going to have any savings. When you do the analysis, the costs of doing this outweigh the benefit.”
Kamloops-Thompson Cariboo Conservative MP Cathy McLeod takes issue with Tsigaris focusing on the percentage of gross domestic product – the value of all goods and services produced in a country – noting that 2.4 per cent is actually $46 billion and the anticipated three per cent in 2030 would be $108 billion.
That last figure, however, would be an extrapolation based on estimates of what the GDP could be in 28 years.
McLeod said that amount “is not insignificant and would put pressure on health-care costs,” for example.
She cautioned people to wait until her government releases its plans, noting representatives are getting input from many sources.
When asked if those plans could expand beyond OAS to other pension sources, McLeod declined to answer.
“It is best to wait for the future specifics of the plan. We are getting lots of feedback and it’s important we tackle these looming issues.”
Latif Ehsan, who is also a member of TRU’s economics department and who specializes in retirement issues, said he does not believe the pension system is in crisis now, noting it’s possible Harper is looking at a long-term “that will save money. Maybe he’s just looking at the future.”
Ehsan said the change on which Harper speculated “won’t affect rich people and those with other [revenue] sources, but will affect the poorer people.
“And, not all of them are healthy,” Ehsan said. “Many people can’t work past 65.”
As for the idea older people working longer take away job opportunities for younger people, Ehsan said the Canadian labour force is in not that bad of shape.
“But, maybe it [the government] is thinking in 20 or 30 years there could be a problem.”
Tsigaris, however, sees an economy that is growing, which means there should be more tax revenue to support pension programs.
Harper himself spoke positively about the Canadian economy on Jan. 26 at the World Economic Forum in Switzerland, when he said:
“As you know, Canada has economically outperformed most industrialized countries during these recent difficult years for the global economy.
“Forbes magazine ranks Canada as the best place on the planet for businesses to grow and create jobs. The OECD and the IMF predict our economy will again be among the leaders of the industrialized world over the next two years. And, one more cherished accolade, of course, is that, for the fourth year in a row, this body, the World Economic Forum, says our banks are the soundest in the world.”
McLeod, however, said it’s important for her government to “look long term and have a discussion on aging demographics.”
When it was pointed out to her the bulk of electoral support for her Conservative party tends to come from the demographic that might be most affected by changes to the pension system, McLeod did not answer, but again said people should wait for the specifics.
– Kamloops This Week