Canadian Prime Minister Stephen Harper recently spoke at the World Economic Forum in Davos, Switzerland where he highlighted his nation's economic achievements. One significant part of his speech, though, was his signal to change the pension system.
According to a published report in Canadian Public Policy by McMaster University economists, the eligible age for the Canada Pension Plan should be raised to 70 in order to reduce the costs for future generations.
There has been talk of this in most countries that operate such a system. They have also been faced with similar suggestions of raising the age eligibility to avoid insolvency in the future. South of the border, the United States’ social security and Medicare systems are facing insolvency in the next decade.
Speaking at the World Economic Forum in Davos, Switzerland Thursday, Canadian Prime Minister Stephen Harper hinted at the possibility of changing the nation’s social security system. Although much of his speech dealt with Canada’s economic success among the G7 nations, the Conservative leader stated that the country’s aging population “poses a threat” to the country’s social programs and services.
“If not addressed promptly this has the capacity to undermine Canada’s economic position, and for that matter, that of all western nations, well beyond the current economic crises,” said Harper. “We have already taken steps to limit the growth of our health-care spending. We must do the same for our retirement income system. For those elements of the system that are not funded, we will make the changes necessary to ensure sustainability for the next generation.”
The prime minister did not provide details as to what exactly will be changed in the current system. Some say that it appears to the federal government will raise the eligibility age from 65 to 67. Harper noted that in the next several months, “major transformations” will be introduced.
Analysts expect the changes to be revealed in the federal budget, which will be unveiled in March. Government figures suggest that the number of seniors aged 65 and older will double to 9.3 million by 2030. This means the cost of the Old Age Security plan will soar to $108 billion per year in 2030 from $36 billion.
In his remarks, prime minister also alluded to revisions in the government’s policies toward immigration, science and trade.
CARP, a national, non-partisan, non-profit organization committed to a “New Vision of Aging for Canada,” explained in a recent article that any changes to the system’s eligibility age would initiate a major impact to Canadian baby boomers.
The organization stated that if OAS benefits would be pushed back by two years for individuals who are about to retire, this means they would be forced to work an additional two years. “Or it would mean they would have to struggle through two years on an extremely limited income.”
“It’s understandable why the federal government would consider such a change. Other countries are facing a similar reality of unsustainable pension systems,” the group wrote. “But the Conservatives will have a battle on their hands if they attempt to change the OAS eligibility age. Canadian seniors won’t take such an affront quietly.”