I will be speaking first. Thank you.
My name is Susan Eng, and I am with CARP. Our formal name is the Canadian Association of Retired Persons; however, we don't use the full, formal name anymore because most of us are either not retired or can't afford to retire, so we use the name CARP only. We're a national, non-profit, non-partisan organization with 330,000 members and 23 chapters across the country. Our main focus is the quality of life for Canadians as we age, and financial security is one of our three main advocacy pillars.
I'm going to focus on financial security for older Canadians. Much of the debate on issues of poverty generally focus on children and their families, and we definitely support and encourage and endorse all the recommendations in relation to improving the lot of all Canadians who face poverty.
However, we want to identify a particular challenge for the aging population. The first challenges are the demographics. The population is aging. The 65-plus cohort today numbers 4.6 million as of the 2008 Statistics Canada figures, or 13.7% of the population. They estimate that by 2031 there will be 9.1 million Canadians who are 65 or more, nearly double the number of today at 23%.
We also concern ourselves with those who are 55-plus and 45-plus because they share many of the same concerns as they face their own retirement. The 55-plus today number 8.5 million people, or 25% of the population, and by 2031 it is expected they will be 14 million Canadians, or 35%. When we think of the 45-plus, and the reason we do that is they represent the last of the baby boomer generation, the largest demographic, today they number 13.8 million people, or nearly 41% of the Canadian population. By 2031 they will be nearly half the Canadian population at that time, or 19 million people, so we're talking about a huge number of people whom we group under the heading of “older Canadians”.
Our association is affiliated with the magazine, which has been re-branded from CARP magazine to ZOOMER magazine, meaning boomers with zip.
Statistics Canada has projected that by 2015 Canadians over 65 will outnumber children under the age of 15, and this rapid aging of the Canadian population is due to the aging of the baby boomers, as I mentioned, combined with low fertility rates and increasing longevity. The projections show that population aging, which has already begun, would accelerate starting in 2011 when the first baby boom cohort, born in 1946, reaches the age of 65. This rapid aging is projected to continue until at least 2031, when seniors would account for between 23% and 25% of the total population, and that would nearly double their current cohort of 13%.
On the measurement and extent of poverty among seniors, the numbers are not as reliable as we would like. Frankly, it hasn't been well studied in terms of the focus on the seniors' cohort. There are many measures of poverty. The one that's more commonly used is the after-tax, low-income cutoff, or LICO. There are other measures of poverty as well, but the differences are not as meaningful. In 2005 Statistics Canada estimated the incidence of poverty using this measure by age and gender. They estimated the rate of poverty for people 65 or over was 6.7%. Applying this percentage to the 2008 population figures provides the estimate of over 300,000 Canadian seniors living in poverty. If nothing at all is done, and if this percentage is maintained until 2031, well over 600,000 seniors will be living in poverty, according to Statistics Canada's own measurements.
Even more dramatic, though, are the differences between men and women. The rate of poverty among women seniors is 8.6%, nearly twice that of men, at 4.4%. For unattached seniors, 28% of men and 38%, getting close to 40% or half, of women are in the low-income bracket.
The causes have been articulated. For women, it's an issue of lower incomes, lack of work, working in the home instead of out in the workforce, child care responsibilities, and now, in later life, often elder care responsibilities.
For people who are new to the country, there have been measures that look at people who have been in the country 20 years or less. Where they are unattached, the percentage of people living in poverty is as high as 67%. For those within families, the rate is 17.4%.
The trend is similar for those people under the age of 65. The unattached find their poverty rates are much greater, by several magnitudes more, than those who are in relationships.
And among people in a minority status, the comparisons again are stark. Of those who are part of a visible minority, 44% may find themselves living in poverty, whereas of those people who are not classed as part of a visible minority, 31% might find themselves in poverty.
What is the role of the federal government in reducing poverty among seniors? I'd like to focus entirely on the retirement income system that the country has. That is the primary role of the federal government in ensuring that there is adequate retirement income for the entire population. What are described as pillars one and two of the Canadian retirement systems, OAS, CPP, and GIS, together have been credited with the dramatic decline in poverty rates among seniors in the past 20 years. This is due in large part to the maturing of the CPP and the availability of GIS. These are the first two pillars of the retirement system, generally referred to as the public pension benefits.
The combined maximum is about $19,000 at age 65, but since the average CPP/QPP is about half the maximum, the typical retiree might be retiring on $16,000 annually, if he or she is relying only on public pension benefits. Some 35% of Canadians 65-plus are currently receiving the GIS, which ensures a minimum annual income of about $15,000. These are numbers as of March 2009. I do not have the numbers for 2008 to compare with the after-tax LICO, the government's own defined level of poverty, which for 2008 was defined as $12,000 for a single person living in a rural community and $18,000 for a person living in a city with a population of 500,000 or more. There is no other LICO for large urban centres, such as Montreal, Vancouver, or Toronto, and it may be argued that there should be a higher rate of LICO for those centres, since the majority of low-income seniors do live in urban centres.
Even with the existence of these programs in place, there is a prevalence of poverty among Canadian seniors. That level is still unacceptable, not only in the raw numbers but also because of the differential impact on their lives, most importantly because they really have little option to change their circumstances. As noted in the National Seniors Council report on low income among seniors, many seniors live on fixed and limited incomes, and slightly above LICO. So while they may not be officially living in poverty, they may be only one major expense or cost of living increase from that threshold.
Frankly, in this economic circumstance, there are a lot more people who are paying attention to their futures, or lack thereof, and the potential that they will face very harsh income circumstances. So the issue of poverty is an issue that has come to the forefront. In the past it has often only been the preserve of advocates and people on the fringes, whereas the debate now is much more front and centre.
So in the area of government income supports and public pension benefits, we would be recommending that the federal government increase the levels of OAS and GIS substantially to bring the guaranteed income to be at least LICO-appropriate for the urban centres or the places in which they live.
There is a web of clawback rules, all of which make a minuscule difference to the public purse but have important impacts for the people who are facing them.
I mentioned that there has been more public attention paid to people's own retirement these days, and, importantly, in the third pillar of our retirement system, namely the private pension savings system, there has also been a recognition that one in three working Canadians will have no meaningful retirement savings when they retire. It is to address that problem that CARP has also recommended that there be a universally accessible pension plan that will cover that issue.
From the standpoint of low-income seniors, that issue, unfortunately, is not as relevant. However, so long as the retirement system is here to prevent poverty in old age, and unless OAS and GIS are substantially increased, then some accommodation must be made in the reform of the third pillar.
I will comment on others when I have an opportunity in questioning--I recognize my time is up--and those will be in relation to the fourth pillar, the kinds of social changes, including caregiving responsibilities and so on.
Thank you.