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Response from the Ministry Office

RESPONSE FROM THE MINISTER’S OFFICE
The following is a response to a letter sent to the federal Ministry for Seniors:

On behalf of the Honourable Seamus O’Regan Jr., Minister of Labour and Seniors, I am responding to your email, which was forwarded by the office of the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance,  on February 14, 2024. You wrote about support for seniors.

Canada’s public pensions, namely the Old Age Security (OAS) program and the Canada Pension Plan (CPP) assist in providing income security to seniors. OAS benefits are intended to provide partial income security for seniors in recognition of the contributions that they have made to Canadian society and the economy. The benefits under the OAS program include the basic pension, which is paid to all persons aged 65 or over who meet the residence requirements, the Guaranteed Income Supplement (GIS) for low-income seniors, and the Allowances for low-income Canadians aged 60 to 64 who are the spouses or common-law partners of GIS recipients, or who are widows or widowers. 

OAS pensioners who receive little or no income, other than the OAS pension, are eligible for additional assistance through the GIS. The GIS is income tested to ensure that this additional assistance is provided to those seniors most in need.

The CPP is a social insurance program funded by the contributions of employees, employers and self-employed persons, and by the revenue earned on CPP investments. It covers virtually all employed and self-employed persons in Canada, excluding Quebec, which operates its own comprehensive plan, the Québec Pension Plan (QPP). The intent of the CPP is to provide contributors and their families with basic income replacement upon the retirement, disability or death of a wage earner. 

Generally speaking, the more a person earns and contributes to the CPP over his or her working years, the higher the future pension will be. In other words, the retirement pension is based on how much and how long a person contributes to the Plan, as well as the age at which he or she chooses to begin receiving the pension. 

OAS and CPP benefits are not intended to meet all the retirement income needs of seniors. They provide a base upon which individuals can add income from other sources, such as employer-sponsored pension plans, personal registered retirement savings plans, tax-free savings accounts, as well as other personal savings and investments, to address their particular financial circumstances.

The Government of Canada recognizes the many challenges faced by seniors due to the cost of living. That is why, to ensure that they retain their value over time and to protect the purchasing power of beneficiaries, OAS and CPP benefits are adjusted in accordance with changes in the Consumer Price Index (CPI). The CPI measures the price of a collection of foundational goods and services, such as food, shelter, gas and clothing, commonly purchased by Canadian households. The collection includes approximately 600 items and is the most accurate reflection of the national cost of living.

OAS benefits are adjusted four times per year, in January, April, July and October. Quarterly indexation allows for rapid adjustments of OAS benefit amounts following cost of living increases. In January 2024, the maximum OAS pension for seniors aged 65 to 74 increased by $5.66, from $707.68 to $713.34. This represents an increase of 0.8% from the October to December 2023 benefit amounts. Because the OAS pension is indexed quarterly, benefit increases may look small, depending on the rate of inflation over the previous quarter. However, when the change in the inflation rate is taken into consideration over the course of a year, the increase is actually larger. For instance, OAS benefits have increased by 3.75% over the past year (from January 2023 to January 2024).

CPP benefits, on the other hand, are adjusted annually each January based on estimates of inflation for one year. CPP benefits in pay were increased by 4.4% in January 2024 from their 2023 levels, based on the difference between the CPI from November 2021 to October 2022, and the CPI from November 2022 to October 2023.

Moreover, the Old Age Security Act and the Canada Pension Plan each contain a guarantee ensuring that benefits can never be reduced, even in the event of a decline in the CPI. Should the average cost of living decrease, OAS benefit amounts stay at the same level as during the previous three-month period and CPP benefit amounts stay at the same level as during the previous year.

Should you wish to read a more detailed explanation of how indexation is calculated, I invite you to visit https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/payments.html

The Government has undertaken significant action to improve the well‑being of seniors and continues to seek ways to address their needs. Since 2016, the federal government has:

– Restored the age of eligibility for the OAS pension and GIS back to age 65 from 67, providing financial security to those aged 65 and 66 and preventing about 100,000 future seniors from falling into poverty;
– Increased the OAS pension by 10% for seniors aged 75 and over as of July 2022, which has provided additional benefits of over $800 to full pensioners in the first year; 
– Provided $6 billion over 10 years to provinces and territories for the delivery of home care services for seniors who want to continue to live at home;
– Allocated $13 billion over five years to implement the Canadian Dental Care Plan, which will help ease financial barriers to accessing oral health care for up to an estimated nine million Canadian residents, starting with applications for seniors aged 87 years and above in December 2023, and from January to May 2024 for seniors of other age groups;
– Provided a one-time payment in 2022-23 that doubled the GST credit, which put an average of $225 more in the pockets of seniors; and
– Put hundreds of dollars back in the pockets of seniors who need it most through the July 5, 2023, grocery rebate.

Wish to write your own letter or email?

Contact Seamus O’Reagan

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9 Comments

  • Hazel Sprecher

    I think these pensions should be higher. We worked our whole life and paid into these and all we hear is we are not entitled to any more.WHY?? Some of us never had the oppertunity to save a lot for retirement because of raising families and low income. The MP’s should have to live on our income for 2-3 months and see if they could make ends meet!!!

    • Entitled!

      Hard work isn’t a blank cheque for anyone else, stop being spoiled. If you spent everything you made, you have already enjoyed all that your work had to offer. Young people don’t get to spend their whole paychecks and then claim that means they were entitled to more! The government kept up its end of the bargain, and even that bargain will require young people subsidizing what you failed to pay, for both healthcare and for welfare programs (which are NOT pensions) like OAS/GIS.

    • Carole Fawcett

      Yes, I agree with you Hazel – it is ridiculous to expect Seniors to live on such a low income. I hope you are able to join us when we protest on September 21st. We will have a list of all the towns who will be taking part.

  • Sherry Hilchey

    I retired. 2021. My budget was figured out, to the penny. I started to notice the incredible increase in traveling, food, utilities, heat, gas. So traveling plans curtailed. Run around to save on food, shop at 5 different stores. That is what is shocking to me, my money needs to be stretched, very thin. Had car repairs recently, almost choked on the bill. 50% increase in car repairs, easily.

    The government is also over taxing us. Simple. Everywhere. Now let’s add on carbon tax. just stop. The average Joe just wants a roof, food, safety, health services. Stop draining us, yiur people. Audit your own departments before taking more.

    • Carole Fawcett

      Hello Entitled – I think it is you who is behaving in an entitled manner. Many seniors did try to save for retirement, but life happens. Things we don’t plan for. (health, divorce, etc.) In fact, when divorced occurs the women’s finances usually plummet, while the man’s rises. Not everyone could afford the cost of higher education. Your comments are more than heartless. Hopefully if you have seniors in your family, they are comfortable financially. We are asking on behalf of seniors who live below the poverty level ($25,500). Trust me, they didn’t ‘plan’ to live in poverty. Find some compassion Entitled. I hope you never have to face financial challenge in a serious way in your life.

    • Carole Fawcett

      Hi Sherry, I am sorry to hear of your struggles. Yes, it is impacting a lot of seniors – and yes, even those who planned for their retirement. We can only hope that the Feds pay attention to our petition and raise our pensions so that those of us who live below the poverty line, can be brought up to that level.

  • John Hummel

    Dear Politicians,

    Old Age Security and Guaranteed Income Supplement Pensions (OAS/GIS) Claw Backs 🙁

    I am a low income retired senior.

    I just got a Notice from ‘Service Canada’ that says they are going to reduce my OAS/GIS pensions by $51.55/month ($618.60/Year).
    Why? Because my total income from Canada Pension Plan (CPP) (my sole source of income!) for the year 2023 was $3,860.00.
    So now, my total total yearly income from CPP, OAS and GIS is reduced to $22,979.12

    The minimum wage in B.C. is $17.40/Hour. For a youth working 40 hrs/week for 50 Weeks/Year on Minimum Wage, that amounts to a yearly income of: $34,800./Year

    That is $11,820.88/Year less than what low income Seniors are trying to get by on in these inflationary times.

    Heck, my Seniors Pensions wouldn’t even cover the cost of a one bedroom apartment in Vancouver these days. Even with the SAFER Grants!
    Rental Report: https://rentals.ca/national-rent-report

    Here is a Report from the B.C. Government’s Seniors Advocate which spells out some of what low income Seniors are having to deal with: https://www.seniorstincup.org/wp/2024/04/20/office-of-the-seniors-advocate-british-columbia-2022-study/

    Here are several suggestions for the B.C. and Federal Governments:
    1) Get together and figure out a way to increase low income Seniors Pensions to the Minimum Wage level: $11,820.88/year more than they are at present. Otherwise, Canada will be facing a situation of ‘Tent City’ Elders.
    2) The B.C. Government should lower the bar so that many more seniors can receive the B.C. Seniors Supplement and substantially increase the amount of the BC Seniors Supplement. That program is an utter joke at the moment! ☹
    3) Quit these crazy ‘Claw Backs’ from OAS and GIS when low income seniors are barely getting by as it is
    4) For those low income Seniors who are fortunate enough to own part or all of their house: if they rent rooms out (helping to solve the housing crises): Canada Revenue Agency (CRA) should categorise the resulting income as ‘employment income’ rather than as ‘investment income’ as CRA presently does. That way, a senior could earn $10,000. Extra per year rather than having much of that money clawed back from their OAS and GIS.
    5) B.C.’s Property Tax Deferral Program should be much more Widely Advertised! I am 66 years old now. If I had known about that Program at age 55, I would likely have $30,000. In the bank right now and not be so worried now.
    Just a few Thoughts for my Governments’.
    Sincerely,
    John Hummel,
    Nelson, B.C.

  • Carole Fawcett

    John, I completely agree with you on all the points you make. Where do you live – could you be an organizer for us and encourage more seniors to demonstrate at our next protest on September 21. Thanks for your input.

  • Carole-Anne Fawcett

    John, I completely agree with you on all the points you make. Where do you live – could you be an organizer for us and encourage more seniors to demonstrate at our next protest on September 21. Thanks for your input.

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