Canada should consider raising the age of eligibility for public pension benefits in order to persuade more seniors to keep working, argues a new report by the C.D. Howe Institute.

It notes with increased life expectancy and the working-age population remaining relatively stable, the growing demand for financial support in retirement could strain social security programs. “We know that because of low fertility rates, rising life expectancy and the aging of the baby boom, Canada’s old-age dependency ratio is rising,” according to Robert L. Brown and Shantel Aris, who co-authored the report. “This will strain the sustainability of our social security systems and health care.”

Read: Pension sector challenged as number of workers retiring hits 5,000 a week

In fact, other countries, including Britain, Finland, Norway, Poland and Sweden, have already changed their age of eligibility for social security benefits, said the authors.

Inspired by work Britain has done on the issue, Brown and Aris applied actuarial and demographic logic to the Canadian context to see if a rise in the age of eligibility would guarantee a constant proportion of one’s adult life spent in retirement. “For Canadian demographics, that constant proportion is 34 percent,” said Brown.

Read: Employers challenged by trend towards delayed retirement

Using the constant proportion of 34 per cent, the authors said the first change in the age of eligibility — from 65 to 66 years old — should be phased in between 2023 and 2025. The new number would be effective until 2048 when the age of eligibility should shift to age 67 over two years, according to the report.

Brown and Aris said reviewing the age of eligibility is important if Canada wants to increase the probability and credibility of a sustainable social security system, enhance intergenerational equity, lower the overall costs of social security and nudge workers to stay in the labour force for a little longer.

But the report notes that increasing the age of eligibility might come with an issue as wealthier Canadians live longer. However, its authors argued this can be addressed by changing the claw-back formulae currently used in the old age security and guaranteed income supplement programs.

Read: How are different countries tackling decumulation?

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Larry Kazdan:

We know that whenever big banks or corporations get into trouble, the federal government can always bail them out because it owns the Bank of Canada, and is the issuer of Canadian currency. Yes, the government can spend too much causing inflation, or spend too little (leaving over a million unemployed as is the case today), but what the Feds can never do is run out of Canadian money.

There are two ways to deal with an aging population.

The responsible path is to use our fiscal capacity and resources to the full today, putting young people to work so that they can make the false teeth, hearing aids and prostheses older people will use, and can offer the medical and physiotherapy services that seniors will need. The irresponsible path is to cut job opportunities and education today through policies of austerity, to fail to build the future medical and health infrastructure, and by pleading penury, to begrudge our seniors a comfortable life by cutting back small privileges and by forcing them to wait longer for their old age pensions.

What slice of the economic pie do our senior citizens deserve? A slice can always be made bigger or smaller through political decision; it has nothing to do with the red herring of what the federal government can afford.

Tuesday, April 18 at 12:20 am | Reply


I think the Howe institute and many others should keep there nose out of public pensions Canadians like things the way they are.thats why they voted for care costs a fortune too.but is something that we need and like.why is it the people that would like this changed r usually close to 65 or r well off.there r a lot of things that need to be changed and pensions r not one of them.if we had a referendum I bet it would be 80 percent in favour of keeping things status guo.remmember pension changes r not good for governments when they want to get relected.Finally leave our pensions alone

Tuesday, April 18 at 12:53 pm | Reply

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