Reform old age security to help tackle Ottawa’s deficit, advocates say
The federal government should reform old age security by cutting the amount going to wealthier seniors in order to give more to Canadians struggling with affordability and help shrink the federal deficit, advocates say.
Old age security (OAS) is a federal benefit available to Canadians aged 65 and older, with certain monthly amounts paid based on income, age and residency.
But advocates like Generation Squeeze say this means higher-income Canadians who may not need the extra money as much as those with lower incomes are still getting these payments automatically.
The group notes that old age security is one of the most costly contributors to Ottawa’s federal deficit, which was projected in the spring economic update to be $66.9 billion in the 2025-26 fiscal year.
Paul Kershaw, the founder of Generation Squeeze and a policy professor at the University of British Columbia, spoke in a House of Commons press conference Monday.
“That’s a scale of ambition to address affordability that we haven’t seen in my professional lifetime, and it is in reach for this prime minister and all of his cabinet at a moment that we cannot afford to be spending our dollars unwisely,” he said.
Generation Squeeze says Canada will send $17.5 billion a year in OAS subsidies to retirees with more than $100,000 in combined household income by 2030.
Currently, the government of Canada lists those aged 65 to 74 as eligible to receive $743.05 maximum a month if their annual net world income is less than $148,451. Those aged 75 and above are eligible to receive $817.36 maximum a month if their annual net world income is less than $154,196.
The federal government says if an individual made a net income that exceeded $90,997 in the 2024 tax year, those earners may need to repay part or all of their OAS pension.
The main suggestion for policymakers is not to reduce OAS payments overall, but to redirect funding to send less to those higher-income earners and more to those making below those thresholds.
This, researchers say, should be done by lowering the current income threshold for when OAS benefits begin to gradually phase out — for couples, from about $185,000 down to $100,000.
Changing the OAS claw-back threshold this way would funnel about $5,000 more per year in OAS payments for retirees who fall below official poverty measures.
Doing this would also save the federal government $7 billion annually starting this year, and $9 billion by the year 2030, which Kershaw says can be directed to help address affordability on multiple fronts.
“It allows us to, for a million young people, do substantive rental subsidies, help a million post-secondary students withstand what would otherwise be a cut to their support, actually meet the target of $10-a-day child-care spaces set by Ottawa, a billion and a half dollars to address youth unemployment further, and, first and foremost, eliminate seniors’ poverty by adding that $5,000 for every retiree who falls below the official poverty measure.”
In a poll from earlier this year, Generation Squeeze found that nearly three-quarters of respondents supported these measures. Those same supporters said it was only on the condition that the savings be used to eliminate seniors’ poverty and reduce living costs for younger generations.
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