Tax revenue funded basic government pensions to seniors date back to 1927.

OAS in its modern form dates back to 1952. The age of eligibility was reduced from 70 years of age to age 65 between 1965 and 1969 and all OAS benefits have been fully indexed to inflation since 1972. OAS also includes the Guaranteed Income Supplement which is an income-tested benefit geared to the lowest income seniors. GIS was added in 1967 to create a form of guaranteed minimum income to help reduce poverty among seniors.

Anyone age 65 and over who meets a residency requirement in Canada of 10 years is eligible. This covers 98% of all seniors age 65 and over. The residency requirement is pro-rated – so those living in Canada for less time receive less benefits. To receive full benefits you would have to have lived in Canada for 40 years after age 18.

In 2011, 3.17 million seniors received OAS and 1.67 million received both OAS and GIS for a total of 4.852 million seniors receiving $29.5 billion in benefits.

The current maximum OAS benefit is $540.12 a month – $6,481 a year.

The current maximum GIS benefit is $732.36 for a single senior. You must be receiving OAS in order to qualify for GIS.

As a result, any increase in minimum age to receive OAS benefits will affect GIS recipients – the poorest of our seniors.

GIS is income-tested and benefits reduce at the rate of 50 cents for every dollar of income received on top of OAS benefits and the first $3,500 of employment income. Income for CPP, private pensions, RRSPs all reduce GIS eligibility and benefits.

Lost in the debate is the fact that OAS benefits (but not GIS benefits) are taxable so the government does recoup a portion of what it pays out. The amount recouped by the government through income taxes can be estimated to be about 20%.
OAS begins being clawed back when income is greater than $69,562 at the rate of 15% for any income above the threshold. It is fully clawed back on incomes reaching $112,772.

Ontario, Manitoba, Nova Scotia, British Columbia, Saskatchewan, Alberta and Newfoundland all provide top-ups for low-income seniors receiving GIS. If GIS is rolled into any changes to OAS regarding age eligibility, then these provinces may have increased downloading costs.

Program Finances

The most recent OAS actuarial report shows total program expenditures will rise from $38.8 billion in 2011 to $107.9 billion in 2030. The number of beneficiaries will rise to 9.3 million.

As a share of GDP the program is forecast to rise from 2.36% of GDP in 2011 to 3.14% of GDP in 2030. However it peaks in 2030 and the cost will begin to fall after 2030.