Does Reforming Old Age Security: Effects and Alternatives

The federal government announced in its 2012 budget its intention to delay the age of eligibility for Old Age Security and the Guaranteed Income Supplement from 65 to 67 years. By the time the policy is fully implemented (i.e., in 2030), this delay will have increased net revenues of the fedral government by 7.1 billion dollars per year (in constant 2014 dollars), but will reduce net provincial reveues by 638 million dollars. With constant labour and savings behaviour, this delay would also increase the percentage of individuals aged 65 and 66 years who are in the low income group from 6% to 17% (for an additional 100,00 low-income seniors in this age group) and would be most harmful to low-income seniors and to women. Alternative reforms to the Old Age Security could make it possible to aochieve similar effects on public finances without having such large impacts on the low income rate among seniors.