PARRY SOUND-MUSOKA - MP Tony Clement has been getting calls from his constituents. Ever since Prime Minister Stephen Harper made a speech in Switzerland two weeks ago announcing to the world that Canada is looking into changes to its Old Age Security program, seniors have wanted to know what that will mean to them.
Clement says Old Age Security is unsustainable.
MP TONY CLEMENT
Harper suggested the government might change the age of eligibility from 65 to 67.
But, Clement says, this won’t affect people currently receiving benefits or people planning to retire any time soon.
“Anyone who’s a senior now – not affected. Anyone who’s near being a senior now – not affected. Maybe there are some 45 year olds out there that will be upset … but they can take into account the situation and they’ve got 20 plus some years to rearrange their affairs … and knowing full well when they need the system it will be fully funded, not a system that’s crashing.”
He said it is not yet policy so he can’t speculate about actual timeframes, but that it could be more than 10 years before changes take place.
He’s getting a couple of calls a day from area seniors.
Muskoka has a senior population of 24 per cent, compared to the provincial average of 17. There are currently 150 area seniors on a wait-list for affordable housing, according to Rick Williams, commissioner of community services for the District of Muskoka.
Clement is adamant that changes will not affect the Canada Pension Plan; that it is self-sustaining, but may affect Old Age Security, which is funded through the federal budget.
Williams said the current pension eligibility age of 65 was established when the average age of mortality was 71.
“And now it’s closer to 80 … there needs to be adjustment, sustainability.”
But he said that raising the age of eligibility would put more pressure on the provincial welfare system. Currently Ontario Works cuts off at age 65, when Old Age Security kicks in.
Also welfare payments have been historically at a lower rate than the pension rate, so seniors in poverty will have to make due with less for two additional years.
“There’s an inevitability to some reform, just how do you achieve fairness? There’s lots of tricky things in there,” said Williams.
Clement said demographic trends have pointed to a need for reform for a long time.
“The population is aging, there are fewer workers to support seniors in their retirement.”
He said the government is opening the discussion to get feedback from the Canadian public and is “crunching numbers” to determine how to reform the system to make it sustainable.
“This discussion is about people who are years away from retirement who want to gain access to retirement income other than the Canada Pension Plan and who want to make sure that program is sustainable. We want to make sure it’s sustainable too. That’s why we’re launching this dialogue.”
Clement said experts are backing the government statistics, saying that the current program costs $30 billion a year and if nothing is done by 2020 that will spike to over $100 billion.
“So clearly it’s unsustainable if everything stays the same or you start cutting
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other things like education or health care
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Clement on public pension plan
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and those kinds of things. People are living longer, which is great, and there are fewer workers per retiree who can continue to pay taxes to support the system. It’s the combination of those two demographic certainties that cause us some concern. Not now, not five years from now, not even 10 years from now, but for the next generation.”
He said the government wants to make sure that post-baby boomer generations are not left out in the cold.
“We have to have this dialogue now so people can plan for their retirement years, decades from now … if we don’t have discussion now, if we put it off and sweep it under the rug, the choices available to society 10 years from now are going to be a lot worse and that’s what you’re seeing in other countries around the world.”
Clement said there are at least 30 countries that have already made similar changes and the Canadian government has an obligation to make sure pension programs are sustainable for the future rather than creating a crisis situation years from now.
Critics have been calling any move to alter government financial support for seniors “political suicide” and reference Brian Mulroney’s failed attempt to open the dialogue in 1985 and Paul Martin’s similar debacle in 1996.
“Twenty years ago … we were 20 years farther away from a crisis point. Time is really not our friend right now. We either make some decisions now that are reasonable decisions ... the problem is when this issue comes up again it will be a very different and difficult set of decisions.”
Clement said the people calling his office tend to be over 60 and once they learn that they will not be personally affected by the changes being discussed, “people calm down and they concede that really in order to make sure the system is sustainable, you can’t just let things go. You have to face the reality of the situation. That’s the dialogue I’ve been having with constituents on this matter.”
As pension reform is discussed, the issue of public sector pensions is at the forefront, particularly the pensions for retired members of Parliament, which kick in at age 55 and many of which amount to over $100,000 per year.
“When you’re talking about changing public sector pension plans, you can’t really talk about that without talking about options for the MP pension plans,” said Clement. He added that he has been tasked with coming up with options to the current pension program for members of Parliament for the upcoming federal budget.
“Whatever we decide to do will both have respect for the employee, in this case the MP or other public servants, and at the same time have respect for the taxpayer. That’s the balancing act.”