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Ottawa looks abroad for OAS pension solutions

Minister of Human Resources Diane Finley speaks during question period in the House of Commons on Parliament Hill in Ottawa on Friday, February 3, 2012.

Sean Kilpatrick/CP/Sean Kilpatrick/CP

The Conservative government is looking abroad to find the best way to phase in a higher qualifying age for Old Age Security.

Human Resources Minister Diane Finley argued Sunday that Canada is one of the only countries in the 34-member Organization for Economic Co-operation and Development that isn't already raising their retirement age.

Ms. Finley was asked directly on CTV's Question Period whether the government's plans would see Canadians having to wait until age 67 – rather than the current 65 – in order to qualify for Old Age Security.

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"That's one option. But let's look at it. It used to be people were expected to have a life expectancy [of]between 68 and 71. Now it's 81, and they're still expecting to retire at the same age," Ms. Finley said. "Almost all of the other countries in the OECD have already moved in this direction. The U.S. started doing this a little close to 20 years ago."

Ms. Finley, 54, continued the government's practice of offering hints at the government's pension reform plans without specifically spelling out when the change would take effect or what it will involve.

"What I'm saying is that in terms of implementing it, we're not going to tell people that they have to adapt within two years to a dramatically different model. … We're going to make sure that people my age and younger have time to adjust their retirement plans," she said.

Alice Wong, the Minister of State for Seniors, told the House of Commons last week that more information on the changes will be in the 2012 budget. The date of the budget has not been announced.

The federal government paid for a research report that summarized what other countries are doing in terms of raising the eligibility age of retirement programs. The October, 2010, report described Canada as an outlier.

"Canada stands out among the OECD countries in not having in place explicit plans to increase the age of eligibility for public pension plan benefits," states the report, titled Age of Pension Eligibility, Gains in Life Expectancy, and Social Policy, prepared by researchers at McMaster University.

The report includes examples of what other countries are doing:

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The U.S. passed legislation in 1983, gradually raising the eligibility age for social benefits by two months each year for five years. The age reached 66 in 2008 and will hit 67 in 2025.

Germany will increase its normal pension age from 65 to 67 between 2012 and 2029

The United Kingdom will raise the age for full pension benefits for women from 60 to 65 by 2020, and the age for both men and women will increase from 65 to 68 over a 22 year period starting in 2024.

Denmark, Finland, Portugal and Sweden have all linked benefits to gains in life expectancy.

The report concludes by recommending that Canada also bring in gradual and modest increases to the eligibility age, predicting it would moderate the inevitable decline in the size of the labour force relative to the size of the retired population. The authors say it would also make it possible to reduce the amount of taxes levied by the government to fund the public retirement income system.

The report's recommendations are in contrast to another report to Ottawa that found "there is no pressing financial or fiscal need to increase pension ages in the foreseeable future." That report, by OECD pension expert Edward Whitehouse, noted that a higher pension age could however be used to augment the value of benefits.

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If Canada is also planning changes that won't take effect for years, that may ease some of the heat the government is currently feeling over the issue. However a longer timeline also means the issue could play out during the next federal election campaign, which is expected in 2015.

The opposition NDP and Liberals have been highly critical of the Conservative plans to change OAS since they were first hinted at by Prime Minister Stephen Harper in Davos, Switzerland, during a Jan. 26 speech to the World Economic Forum.

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About the Author
Parliamentary reporter

A member of the Parliamentary Press Gallery since 1999, Bill Curry worked for The Hill Times and the National Post prior to joining The Globe in Feb. 2005. Originally from North Bay, Ont., Bill reports on a wide range of topics on Parliament Hill, with a focus on finance. More

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