Should affluent retirees still receive government benefits?
Those Canadians who’ve prepared for their retirement are going to be responsible for taking care of a “sizable” part of the population that didn’t get around to it, warns federal Finance Minister Jim Flaherty.
And we’re talking about a lot of people.
According to a recent TD study, while more than 36 per cent of Canadians can't wait to stop working and enjoy life, another 30 per cent say that even thinking about saving for retirement makes their hearts pound because they don’t see how they can do it.
Which explains why, on average, over 50 per cent of Canadians’ retirement income comes from government transfers, according to a new report from Russell Investments Canada.
According to the report, the average annual income of retirees aged 65 to 74 is $35,200. However, government transfers such as Canada Pension Plan, Old Age Security and the Guaranteed Income Supplement make up $18,300 of that number.
In comparison, more affluent retirees with average annual incomes of $82,800 receive $19,900 in government transfers – a number that many suggest should be clawed back even further than it already is. Right now, you start paying back OAS benefits once your income crosses the $66,000 threshold.
Although CPP is a fully funded program, OAS is paid for from current government income, as in taxes paid today are used to pay this year's benefits.
When government is transferring this money from people working today, it has to decide how to use it to accomplish the greatest good – which begs the question ….
Should those who’ve saved diligently lose even more of their pensions to support those who haven’t?
By Gordon Powers, MSN Money
Posted by: Kelly Pratt | Jun 22, 2021 4:47:33 PM
I apoligize if anyone was offended by my comments.They certainly were not meant for anyone with difficulities in life but for those persons who made excellant monies through the years and have absolutly nothing to show for it.Are we supposed to bail them out now.As for life kicking you in the ass,I do believe there should be more help available.But for those persons who chose not to invest in their retirement,too bad.That is just how I feel about this subject.You can't just go and change things without a few years warning.
Posted by: Doug | Jun 22, 2021 4:52:35 PM
People seem confused between OAS and CPP.Workers pay into CPP.What they receive depends on how long they work,and how much they pay into the fund.As of now,it is not clawed back.It is part of what CPP contributions earned.OAS,on the other hand,is paid for out of general revenue.It is something all Canadians are entitled to.And it is reduced as a persons income increases,and is subject to all applicable income taxes.All in all,not a bad idea at all.But NO,this is NOT a Conservative initiative.This has been the case for quite some time,and it makes perfect sense.The Liberal view of equality is quite unique,thus we get universal programs,with no effort to make sure our tax dollars are actually spent on people who really need them the most.It is blatantly "unequal" for some hard working people to pay extrat high taxes just so the government can send their money to people who really don't need it.I am not lobbying for a tax decrease,but instead rather bigger OAS cheques for those in poverty,paid for be people living in the lap of luxury.Not by higher taxes on everyone.
Yes.Claw back "universal programs" that are paid out of general revenue,and use a means based system that is generous,but realistic.Programs paid for by contributions ,liike CPP and EI should never be subject to clawbacks or income tests.Users made their contributions to specific programs, in good faith.Actuaries should decide the payouts that are sustainable.But those who paid the premiunms should receive the benefits.ALL of them.
Posted by: Greg Care | Jun 22, 2021 4:56:26 PM
I get a real laugh when I read comments from people saying if you didn't take care of your money that is just too bad. So much of our money goes in the form of high taxes and guess what that tax money is used for ? It is used to pay pensions, benefits and high wages to government workers and unionized workers the government has baled out. Think about it , the Canadian government takes our tax money and makes sure all GM workers continue to receive their pensions! What about all those Canadians who lost a lot of money watching their investments tank during the stock market fallout. I don't see the Government helping them out, they just collect more of our taxes to pay for a priviledged group.If there is going to be fairness in our country there is a need for the Canadian Government to offer a special pension plan for all those people that are not wealthy, are not in a union and are not working for the Government or related Government agency. In other words let everyone have a chance to retire comfortably!
Posted by: Dale | Jun 22, 2021 4:57:58 PM
I am one of the few that doesnt seem to have a problem with the $66,000.00 clawback level, my wife and I saved for our retirement when we could and put away some money. If the clawback stays at the current level you would have an income of $5,500.00 per month that is more than we made when we were working so I cannot see the problem with living on this level of income we currently live our retirement on a lot less and have a full life, many live on a lot less and should receive some help to at least live a decent life
Posted by: Ted C | Jun 22, 2021 6:01:31 PM
Angel seems to be the only one who really gets it here in my opinion. If you are making over $70,000 while in retirement from CPP and your investments, there shouldnt be ANY supplement from the taxpayers money (OAS) let alone have it cut back. My God, this is NOT money you earned, or paid in tax. If you cant live on $70,000/yr in retirement, you need to sell some assets or something. And those who are trying to get by on half that (or less !!!) can use the money to better advantage anyways. Be interesting to know what % of todays retirees earn over $80,000 in retirement. It should be cut back well before $70,000, and should be $0 by the time you earn $70,000. Again, this is NOT money that has passed through your hands at one time, its from the government on current gov't revenues. I DREAM of having $70-80,000/yr in earned income let alone in retirement.
Posted by: Craig | Jun 22, 2021 6:04:07 PM
What this Govt., is really doing is stealing my own money I had saved in my pre-retirement age..So we the Gray Population should dump any Govt. that supports the Claw-back.
and vote for any party that promises solemnly to scrap this Claw-back.
Posted by: Joy Byers | Jun 22, 2021 6:11:52 PM
NO we should NOT have to pay for those unprepared. Who do you think has payed the bulk of the income tax and other taxes throughout our lifetime of hard work and saving. Too many people has lived "the good life" - working part time or not at all. For years there have been many retirment programs and advice going around so theere should have been a plan.
Posted by: R.U. Knuttz | Jun 22, 2021 6:23:36 PM
Well, Lynda, look on the bright side, at least you can still afford to have the internet.
Posted by: Gary | Jun 22, 2021 6:33:04 PM
We have paid for the OAS pension
When I started working we paid in addittion to our income taxes a separate 2 % OAS premium. At some point of time they rolled that premium into the general tax rate. If the Government wants to rol back the OAS pension then perhaps the government should refund the premiums I paid for the last 50 years.
Posted by: Kevin | Jun 22, 2021 6:54:17 PM
I think we are now at the point that we need to trim back the excess pensions in government. Their pensions are gold plated and being paid for by those who have much smaller or no pension at all. We can no longer afford our current government. If this means we will not be able to hire the best and the brightest, then so be it. Considering the past performance of our federal and provincial governments, there is little chance others could do worse. If financial suffering is necessary, it should be shouldered by all. Let's face it, they are not the best or the brightest, they are family that take care of each other behind closed doors. I have met many politicians and have found most to be no smarter than the average person. Just look at the antics displayed by many of these people. They are like children. Spoiled children!!
Posted by: Working Lots | Jun 22, 2021 6:56:15 PM
I am on both sides of the fence here and the solution is of course, not an easy one. I have In-Laws who have worked all their lives which they have enjoyed immensely. They have traveled extensively with the extra income they have made in their careers. They decided from the get go that the government will be there for them and have refused to sock away any pension whatsoever. They have no life Insurance and no pension plan from work or any savings. They basically live cheque to cheque while making a combined income of 85K per year. They rent an appt.
I am considered affluent but my wife and I work very hard. Our own pension (RRSP's only - no company pension) will allow us to be one of those over the $80 000 per year at retirement. Am I supposed to help out those like my In-laws who have purposely decided not to save? How many are in this category? How do you differenciate them? Of course, I will be there for them but it does still bother me that they are reckless with their money by knowing the government (tax payers) will be there. In the end, I do want to help those that legitimately need the money because they did their best in life but never had a "break".
Posted by: Bw8255 | Jun 22, 2021 10:04:23 PM
Why in a democracy do people have such looney ideas that when you pay into a mandatory program for your entire life (through taxes), you don't have a right to that money because of your retirement situation? Sure some people have a better job and better ability to put their own money away, or they obtained employment with a good pension, but still put money in. I am all for supporting fully those who were unable to contribute to their own retirement during their working years, but don't expect me to give up any money that is earmarked for my retirement. Otherwise, I want to stop contributing right now!! Those who have made bad decisions in their financial lives or have merely had bad luck should be given a dignified retirement, but stop getting made at those people who worked the jobs that enabled them to retire comfortably.
Posted by: Mark | Jun 22, 2021 10:20:42 PM
"The government's income"? OAS is funded by the government? It is funded by people paying taxes!! Give it back to them!!
Posted by: TWC | Jun 22, 2021 10:27:29 PM
OAS is not a program that employees "pay into" for their retirement. It is a stop gap program to augment the income of those citizens who have been unfortunate enough to retire with few resources (however they got there).
CCP is a program that employees and employers contribute to on behalf of the employee that is administered by the government (through quasi third party entities) to provide for "minimal" retirement income. My personal calculations indicate that the combined contributions (employer + employee) yielding 5% is the approximate return one can expect. My biggest issue with the program is that if a contributor dies their contributions are forfeit forever (potentially up to 52 years of contributions evaporate and become general revenue for the CPP).
If it is a pension plan with assets it should be assignable to heirs or a charity of choice, not others in the plan.
I am all for a forced pension plan as few people have exhibited the personal fortitude to develop their own, however it needs to be person specific. If John/Jane Doe has accumulated $500,000 in their account it is their money. In the event they pass away without receiving anything or only a partial amount through monthly payments then the balance is part of their estate. The CPP already tracks how much we are "entitled" to, it should also track how much the plan is "worth"'
One last note - if you are relying on the government to fund your retirement through tax payers $$$$ expect to be eating cat food. I personally don't expect "one red cent" to be forthcoming when I hit 65 in 13 years. Somehow our elected officials will find a way to increase their guaranteed pension benefits while eliminating ours.
Posted by: HUGHIE | Jun 22, 2021 10:57:28 PM
WE PAID OUR DEBT BUT AGAIN THE GREEDY PEOPLE IN OTTAWA WANT IT ALL, PAUL MARTIN COULD NOT WAT FOR ME TO CONVERT RRSP AT 71 SO HE HAD TO RUISH IT AT 69 SO AGAIN SENIORS TAKE IT,I SAVED HARD SO I WOULD NOT BE DRAIN ON SOCIETY BUT I BELIEVE AFTER WORKING FOR 40 YEARS WE ARE ENTITLED TO OAS, I WORKED TO PAID THROUGH THE NOSE. SO WHY THING OTTAWA IS ENTITLED TO CLAW BACK, WE NEVER READ ABOUT THESE GREDDY DECISION MAKERS DECREASING THEIR GOD PLATES ONLY INCREASING. TIME FOPR GREY POWER TO STAND AND BE COUNTED,IF WE KICK OUT ONE CROOKS THE OTHERS WILL BE WAITIG T O BE ELECTED.
Posted by: Rob | Jun 22, 2021 11:40:13 PM
How come politicians who get a very generous handout for a few years of work can in their Ivory towers decided what is a claw back level or not to the average retired Canadian.
Our taxes have built in our contribution to a future OAS and is based on us working forty years in Canada. All the financial advisory people and pensions plans take this into account when deciding what our contributions and final payouts will be once retired.
So, here we come years later regardless of our life situations expecting what has been promised so we can live comfortably in retirement.
We do not have unions or associations to fight for us to get an increase every so many years and rely on the annual Cost of Living if applicable but then we get hit with increased provincial tax or HST or property taxes or medical fees.
No, I'm not about to give up what I paid for someone else who has not contributed to take that portion. Make it equal as noen of us know whet will happen to us financially down the road.
Posted by: Ash | Jun 22, 2021 11:41:41 PM
I'm sorry I know that it is unpopular, but I do not support CPP and OAS. With babyboomers soon to out number the next generation of workers, we will be paying more to support those who unfortunately were promised those benefits and have little to no CPP and OAS for ourselves. Our generation (post boomer) is unfortunately for the most part a "buy now pay later" generation who isn't thinking about our future's. I think that although the majority of us think that we aren't living above our means, we are. Homes are only expensive if you purchase more than you can afford. Cars are capable of lasting more than 3 years. Savings accounts are not for vacations. These are things that alot of people do not realize anymore. Inflation has not risen at astronomical rates, people are deciding to live much more indulgently. To those who are citing minimum wage as a reason to vote NDP, it is a ridiculous idea in my eyes. When minimum wage goes up to a 'liveable wage', retailers raise their prices not only to reflect the wage hike, but to use it as an ecuse to raise revenues. When minimum wage was raised in ontario, a cup of coffee at Timmies went up $0.10, the price of food went up and the cost of rent did as well. The raise in prices made the wage increase neglible and ending up costing everyone more money.
Posted by: Ken | Jun 23, 2021 12:10:58 AM
Let's talk about a claw back on MP pensions which are also paid from the current accounts. When I planned for retirement I counted on CPP and OAS to bring my savings up to a comfort level I wanted to have. Unfortunately, I was forced to retire early for health reasons. The Govt cut my Military pension immediately, lost my income and was not able to make my savings goal. $66,000 is not affluent, if Mr Flaherty things so then let's us reduce his salary to $66,000. I have paid taxes since I was 17 so I have paid my dues to OAS. The OAS claw back as is should be met with a tax credit for every $ clawed back. If the Govt is looking for Money let's claw back the millions given to Mulroney, fake lakes etc
Posted by: Rob | Jun 23, 2021 12:34:17 AM
Ash,, CPP is an employee and employer contribution and is meant to protect those who while working are unable to place any monies aside regardless if an employer pension plan exists and ensures that one is somehow placing something aside on the basis that 40 years from now you have something. The problem is that that money is taken into account to reduce your RRSP contribution and employer pension. Regardless even boomers and retired folks pay taxes just like everybody else so if more is need ed for your generation than it will come from us as the larger majority down the road.
My children who now have young families certainly struggle with mortgages and other payments but just like we did , only the numbers have changed.
I might have paid a 50 cents for a java but I only earned $400 a month . As you said it all comes down to common sense and realizing that the more years you can save a bit , it will be of benefit to you down the road. The CPP is a good benefit and thankfully it is funded and invested well.
Cheers
Posted by: Tania | Jun 23, 2021 11:02:24 AM
Absolutely brutal that the gov't wants to claw back more money from those who planned and saved...Why should those people be responsible for paying for those that didn't.....yes circumstances for some are terrible...but if those same people were forced to have their savings clawed back...they would be crying the blues too...I'm in my late 30's, I come from middle class- my parents couldn't afford to pay for my univeristy, so I borrowed gov't money and worked two jobs just to put myself through school to get a degree. I paid back every cent in student loans and now work a decent paying job so I can save extra...but I'm really starting to think twice about my retirement savings plans....definately a disincentive...and I agree with the others - let's talk about clawing back the gov't suits pensions and see how far that gets!!!