Mr. Speaker, the low-income rate among Canada’s seniors has declined dramatically, from 21.4 percent in 1980 to 4.8 percent in 2007. The current rate is now one of the lowest among countries in the Organization for Economic Co-operation and Development. Together with other elements of the retirement income system, public pensions have contributed to this positive outcome.
The old age security, OAS, program provides a critical role in enabling low-income seniors to maintain a minimum standard of living in retirement. The program provides a basic monthly pension to 4.5 million seniors aged 65 and over and additional monthly income through the guaranteed income supplement, GIS, to 1.6 million seniors who have little or no income other than their basic OAS pension.
The vast majority of GIS recipients have incomes above Statistics Canada’s after-tax low income cut-off, LICO. Out of 1.6 million GIS recipients in 2007, less than 170,000, or 10% of all GIS recipients, were below the after-tax LICO.
In order to bring the maximum level of OAS/GIS benefits in par with the LICO, the GIS would have to be increased by about $360 per month for single seniors. This would cost approximately $4.5 billion per year, as all single seniors, about 1 million, would benefit from the increase, not just those below the LICO.
GIS recipients have benefited from recent measures targeted to seniors most in need. These include, but are not limited to: a 7% increase to the GIS benefit, over and above indexation, since 2006; an increase to the GIS earnings exemption from $500 to $3,500 in July 2008. This means that low-income seniors who wish to work can retain more of their GIS benefits; and the creation of the tax-free savings account, TFSA, to increase tax-efficient savings opportunities for Canadians. TSFA investment and withdrawals do not affect GIS benefits, which is an important feature for low-income seniors.
As the Government addresses the income needs of seniors through public pensions, it also recognizes the importance of early planning by individuals and families. To help Canadians better understand and manage their finances, including planning and saving effectively for their own retirement, the Government launched Canada's Task Force on Financial Literacy to provide recommendations on a cohesive national strategy on financial literacy. The independent task force is undergoing cross-country consultations this spring and is expected to report back to the Minister of Finance by the end of the year.