It’s part of the NDP’s plan for seniors.
Leader Tom Mulcair is promising to roll back changes the Conservatives have made to pensions.
Among the promises, he wants to bring eligibility for Old Age Security back down to 65 and also protect retirees from employers that try to reduce benefits they’ve been promised.
Mulcair says these changes will ensure seniors can retire securely, and get the benefits they deserve.
How True Is It?
Watch NDP Leader Tom Mulcair make his retirement plan promises here:
Old Age Security costs
The NDP’s plan to reduce OAS eligibility back to 65 from 67 will open up the plan to more people, but that comes with a cost.
When the Conservatives introduced the eligibility increase in 2012, Canada’s Chief Actuary Jean-Claude Ménard suggested it would save Canadians an estimated $10-billion in savings annually by 2030.
So, going back to the old rules would mean losing those savings.
Either way, OAS is going to be a hard program to afford in the long-term.
Costs are expected to balloon from $48-billion now to to $96-billion by 2030, thanks to an ageing population.
By then we’ll see 2.6-million more seniors eligible for OAS, up to 8.4-million people.
No matter which party forms government, paying for OAS is going to be a challenge. An extra $10-billion makes it even more difficult.
The NDP released its retirement-based promises on September 3rd. The party released its fiscal plan on September 16th.
That plan makes no mention of increased costs due to changing the OAS eligibility back down to 65, but does promise not to run deficits.
CKNW reached out to the NDP for clarity on this issue, and has yet to hear back.
Forcing employers to keep pension promises
The NDP also wants to axe changes the Conservatives brought in, which give employers in federally regulated businesses the ability to reduce pension benefits.
Mulcair says, “a deal is a deal.”
“When you’re promised a pension, you deserve to get that pension. When Canadians pay into their pensions, they’re keeping up their end of the bargain. I’m going to make sure their employer honours their promise as well.”
Pension expert Jeremy Bell is a Partner at George & Bell Consulting.
He says the NDP’s plan will likely give current pensioners peace of mind, but it has it’s downside.
“The reason [the Conservatives] actually made that rule change is because employers were having a tough time bearing pension costs, so with having a Target Benefit Plan which allows some decreases in pension, the whole goal is actually to increase pension coverage overall.”
Bell notes if companies aren’t able to pay for these pensions, the end result will be less Canadians with pensions.
“If you’re a company and you’re sponsoring a pension plan and it becomes really expensive, [because] people live longer, [or] interest rates go low, you’ve got to put in a chunk of money. It means some companies have stopped providing pension plans because they don’t want to have that huge obligation possibly hit them.
Bell adds the changes were only brought in by the Conservatives quite recently, so going back wouldn’t be too complicated.
That said, if the overall goal is to get more Canadians pension coverage, putting those types of restrictions on employers won’t work.