Evidence of meeting #61 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was transfer.
A recording is available from Parliament.
Senior Director, Strategic Policy and Legislative Reform, Department of Human Resources and Skills Development
Bell Canada is a federally regulated industry, yes.
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
So this act would be more important to them than it might be to someone else who is provincially regulated?
Senior Director, Strategic Policy and Legislative Reform, Department of Human Resources and Skills Development
Well, in this instance, this only applies to the construction sector, so typically it wouldn't apply to communications workers.
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
Quite often during construction, though, at the times when wiring is being run before the walls are put up and so on.... But anyway, I'm not going to take it too far, because I don't think it's necessary. I understand the point you've made, so I'll leave it at that.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Marston.
Are there any other questioners on this?
Okay, Ms. Duff, thank you very much for being here with us tonight. We appreciate your information.
We will now move to division 24, the Old Age Security Act, and ask those officials to come forward.
We welcome our officials here this evening to present to the finance committee, and I invite one or more of you to present and give an overview of division 24.
Dominique La Salle Director General, Seniors and Pensions Policy Secretariat, Department of Human Resources and Skills Development
My name is Dominique La Salle—
I am Director General of Seniors and Pensions at HRSD.
—at HRSDC.
We are honoured to be with you this evening. I am here with some colleagues, Nathalie Martel, who is Director of Old Age Security Policy,
Ms. Annette Vermaeten, who is the director of the OAS task force; and Mr. Bruno Rodrigue, who is the chief of income security at the Department of Finance.
I will begin with a quick overview of the provisions under division 24, part IV, of Bill C-38, specifically clauses 445 to 467 of the bill, which amend sections of the Old Age Security Act.
This concerns three initiatives.
The first concerns the increase in the age of eligibility for Old Age Security.
Starting in April 2023 the age of eligibility for the OAS pension is proposed to be gradually increased by two years, from age 65 to age 67. In addition, the eligibility age for the allowances would be increased from age 60 to age 64, and be moved to age 62 to age 66 in parallel.
This age increase is being proposed with many years of advance notice to provide adequate time for Canadians to adjust. The change is preceded by an 11-year notification period, from now until April 2023. The actual change in the age of eligibility will then be phased in over a period of six years, from April 2023 to January 2029. The eligibility age will be increased by one month every three month—thus on a quarterly basis.
The change to the age of eligibility for the OAS program will not affect current seniors. Anyone aged 54 or older as of March 31, 2012, will not be impacted by the age increase. The government has announced that it would adjust programs under federal jurisdiction, since some programs use age 65 as a trigger for benefits. Such programs exist at Aboriginal and Northern Affairs Canada and at Veterans Affairs.
The government will also work with provinces and territories to fill the gap that this change would create for the Canada pension plan disability benefits and survivors' pensions. Finally, the government has committed to compensating provinces and territories for any net additional costs they may face resulting from the increase in the age of eligibility for OAS benefits.
The second initiative is voluntary deferral for Old Age Security pensions.
Starting in July 2013, a voluntary deferral for OAS pensions is proposed for introduction. This will provide eligible Canadians the option of deferring their take-up of their OAS pensions by up to five years past the age of eligibility, and for them to subsequently receive a higher actuarially adjusted pension. The voluntary deferral of the OAS pension will be available between the ages of 65 and 70, until the age of eligibility is increased, at which point it will start moving and gradually reach age 67 to 72 in parallel with the increase. The actuarial adjustment to the OAS benefit will be 0.6% per month, or 7.2% for a full year of deferral. Over five years, the maximum increase to the OAS benefit would be 36%, which would be paid to recipients for the rest of their lives and be fully indexed to the consumer price index, as are all OAS benefits.
Lastly, the third initiative concerns what is called proactive enrolment.
This initiative will allow the Minister of HRSDC to waive the requirement for an application, thus allowing for the introduction of automatic enrolment of seniors where the department has sufficient information to satisfy its integrity requirement. Where the available information is not deemed sufficient to automatically enrol a senior, the available information will be used to pre-fill the application form. We refer to this as a streamlined application process, which will make it easier for seniors to apply for the OAS benefit. This initiative will be implemented over a period of four years, beginning in 2013, and be fully in place in 2016.
Mr. Chair, that concludes my introduction.
If you wish, my colleague Ms. Martel can briefly explain the most important sections, the most important clauses.
or the more salient clauses involved.
Nathalie Martel Director, Old Age Security Policy, Department of Human Resources and Skills Development
Do you want a clause by clause description? Sure.
Conservative
The Chair Conservative James Rajotte
No. I think we'll just stop it there and then we'll go to questions from members, and then you can provide details in response to their questions.
Director, Old Age Security Policy, Department of Human Resources and Skills Development
Okay.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Thank you very much for being here this evening.
At the briefing for this bill, people were told that the full costing of the changes to OAS using the Social Policy Simulation Database or other types of econometric modelling had not been performed. Why has the government not costed this program change, when it is designed basically to reduce costs?
Bruno Rodrigue Chief, Social policy, Income Security, Department of Finance
Just so that I better understand your question, is it on the cost of the program? I ask because we know the cost of the programs.
NDP
Peggy Nash NDP Parkdale—High Park, ON
What is the cost of raising the age from 65 to 67, for example?
Chief, Social policy, Income Security, Department of Finance
There's no cost associated with doing that.
Chief, Social policy, Income Security, Department of Finance
I think the minister addressed this question when he presented to this committee, and we don't have any further comments to make on that.
NDP
Peggy Nash NDP Parkdale—High Park, ON
If the point of doing this is to make the program sustainable, how do you know it's sustainable based on this change of increasing the age to 67?
Director General, Seniors and Pensions Policy Secretariat, Department of Human Resources and Skills Development
Go ahead.
Chief, Social policy, Income Security, Department of Finance
In fact, the reason why this program is sustainable,
why it will become sustainable, is that it's estimated that there will be fewer workers at the time, and also that the number of seniors will be increasing.
In terms of the exact savings and the growing costs, we know that in 2030 the cost of the program will be $108 billion.
NDP
Peggy Nash NDP Parkdale—High Park, ON
You know the number of seniors and you just said that you know how many people this would affect, because we know these demographic numbers. So you must have done the calculation as to what that will mean in terms of people in the future not receiving OAS for those two years.
Chief, Social policy, Income Security, Department of Finance
Yes. The changes to the OAS program will ensure that the program remains sustainable over the long term and that it reflects demographic realities. In terms of additional information with respect to the estimated savings, the minister has addressed this question. We don't have any further comments on that, and it would be very difficult for me to provide comments or details on the content of briefings that have been prepared for the budget. However, if you have any questions specifically on the proposed amendments that are included in this bill, my colleagues from HRSDC have the expertise to answer these questions.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Could I make a request then? Could you do this analysis and provide it to our committee?
Chief, Social policy, Income Security, Department of Finance
Once the legislation has been tabled...this information from the Chief Actuary, the minister of HRSDC has to cause an evaluation report. At that time there will be an actuarial report on the program that will be tabled in the House of Commons. Before that, as I said, it's difficult for us to provide any additional information.
NDP
Peggy Nash NDP Parkdale—High Park, ON
In other words you're saying that once this is passed, then we'll find out the impact on Canadians. Is that what you're saying?