Department in charge of Old Age Security doesn’t know if payments are enough, auditor finds

Jon Azpiri · CBC News

· Posted: Dec 07, 2024 10:00 AM EST | Last Updated: December 7

A report from Canada’s auditor general says the federal department that delivers Old Age Security (OAS) and other programs to assist seniors “did not have a comprehensive view” of the needs of Canada’s elderly and doesn’t know if the monthly payments are providing seniors with enough financial support. 

The report found Employment and Social Development Canada is collecting data on seniors, but hasn’t actually been analyzing it, and can’t say whether the government programs in place are addressing needs or if any major support gaps exist.

“As the population of seniors in Canada continues to grow, Employment and Social Development Canada needs to strengthen its analysis to ensure that support programs are meeting the evolving needs of seniors,” Auditor General Karen Hogan said in a statement.

Canada’s senior population is projected to climb from 7,021,430 people in 2021 to 14,094,900 people in 2061.

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Benefits for the elderly, including OAS and the Guaranteed Income Supplement for low-income seniors, constitute the largest and fastest-growing part of the federal budget. 

Canada is expected to spend $88 billion on the programs next year. That number will then jump to $158.9 billion in 2040 and to $276.5 billion in 2060, according to the audit.

The Old Age Security pension is a monthly payment available to Canadians aged 65 and older who apply and meet certain requirements. It differs from the Canadian Pension Plan (CPP) in that it doesn’t require that someone has worked in Canada, only that they have lived in the country for at least 10 years.

“It’s pretty stunning to have the auditor general find that Ottawa bureaucrats in Employment and Social Development Canada (ESDC) don’t really have any clear idea whether or not the federal government’s most expensive program is meeting its objectives,” said Paul Kershaw, a professor at the University of British Columbia’s School of Population and Public Health and founder of Generation Squeeze.

“It sounds like the auditor general has found that ESDC has not updated its thinking about what purpose Old Age Security serves since it was created three-quarters of a century ago.”

Federal Minister of Labour and Seniors Steven MacKinnon said in response to the findings that “ESDC will strengthen its analysis on how the OAS program is performing in the context of the different pillars of the Canadian retirement income system.”

MacKinnon noted the report acknowledged that ESDC’s analysis on the Guaranteed Income Supplement (GIS) for low-income seniors influenced recent program changes, including increasing the payment for single seniors in 2016 and enhancing the GIS earnings exemption in 2020. 

The department’s analysis also contributed to the 10 per cent OAS increase for seniors aged 75 and over in 2022, the minister said.

OAS in need of a rethink, says professor

The Bloc Québécois has pushed the Liberal minority government to boost Old Age Security payments.

Bloc Leader Yves-François Blanchet put forward a motion in October demanding that the government move forward with legislation that would hike OAS payouts for seniors between the ages of 65 and 74 by 10 per cent.

Kershaw called the Bloc’s idea “poorly designed.”

He said OAS is in need of a rethink, arguing that it doesn’t provide enough for seniors in need and gives too much to seniors who are already financially secure. 

Seniors have the lowest poverty rates of all age groups in Canada. About 11 per cent of people aged 18 to 64 years of age are classified as “low income,” compared to just six per cent of people aged 65 and over, the data shows.

Kershaw said OAS is one of the reasons for those lower numbers, but notes there are still about a half a million Canadian seniors living in poverty.

He said the government could save at least $7 billion a year by shifting its OAS payment clawback threshold so seniors in households with six-figure incomes don’t receive as much. 

“I think if we actually had ESDC bureaucrats … not just collecting data, but actually analyzing it they’d see there are reasons to think our systems are working reasonably well, but there’s an opportunity here to recalibrate them, to refine how we’re distributing cash so we don’t have to spend more, but we could spend differently and we could achieve so many other social objectives, including eliminating seniors poverty once and for all.”