Retirement income problems

Part 2 of 2

Note: The federal budget of February 24 indicated the government is reviewing the Seniors’ Benefit proposals but is committed to proceeding with legislation in the coming months. There were further indications that implementation may be delayed until early in the next century and that the clawback rate may be modified. Since the government intends to have extensive national consultations on the legislation, there will be opportunity for input from organizations and individuals.

Canadian Association of Retired Teachers (CART) position

The CART-prepared brief on the income of retirees, that was submitted to the minister of finance, has been endorsed by the B.C. Retired Teachers’ Association. BCRTA has sent copies to all British Columbia Members of Parliament.

On Old Age Security/ Guaranteed Income Supplement, and Seniors’ Benefit

CART believes that:

• The present OAS benefit should be retained.
  
• No means test should be applied to OAS.
  
• The OAS clawback provision should be repealed.
  
• All persons who meet a citizenship or residency requirement should be eligible to receive OAS benefits at age 65, as individuals, regardless of marital status or living arrangements.
  
• The GIS benefit should be retained.
  
• The proposed Seniors’ Benefit should not be implemented.
  

The Seniors’ Benefit, as proposed, means that two groups of seniors will now exist side by side—those individuals who were, or whose spouses were, 60 or over on December 31, 1995, and those who were not. The concept of equal treatment will be a thing of the past.

When the universal OAS system came into being in Canada, it was hailed as a great advance—every citizen would be assured of the benefit when he/she met the age and residency requirement. Wealth or poverty, single or married, family or individual status did not affect the right.

Since the OAS benefit is considered income, those who have more than others are subject to the progressive tax system of the country.

With the OAS clawback, many seniors are forced to pay not only their income tax but, in effect, a surtax. This double taxation through the clawback system is anathema to equity and fairness. The clawback is to be perpetuated in the Seniors’ Benefit.

Under the Seniors’ Benefit proposal, subjecting a certain dollar benefit to a person’s living arrangement is equally repugnant to those who believe in the right of each individual to make such choices in the absence of any decisions of the state. This is a special attack on women—or men—who now qualify for an OAS cheque in their own right but face having it clawed back because of a spouse’s income.

The current clawback and all the proposals in the Seniors’ Benefit program are contrary to promises made by previous governments.

On RRSPs CART believes that the age for compulsory conversion of RRSPs to RRIFs or LIFFs should be returned to age 71 and that the RRSP limits should be increased.

The reduction in age for conversion of RRSPs to age 69 has shortened the period for RRSPs to grow and has lengthened the period over which the funds will be taxed. The end result is less money for retirement.

Government is reducing public pensions and at the same time it has frozen RRSP limits, thus making it more difficult for citizens to save for retirement.

On Income tax

CART believes that the seniors’ age tax credit and the pension-income tax credit should both be retained and that the clawback on the age tax credit should be removed.


The clawback on the age tax credit affects all low- and middle-income seniors and negates the concept of treating all taxpayers equally in relation to tax credits.

Excerpts from a speech by Bruce Watson, president of the Canadian Association of Retired Teachers, to the November 7, 1997, Representative Assembly.