Simple Changes Would Lift Most Seniors from Poverty: CPP Expansion Not Needed

In a report published today in advance of the upcoming federal budget by The School of Public Policy, Jack Mintz and Philip Bazel argue that efforts to revamp the Canada Pension Plan should take a backseat to a couple of straightforward policy reforms that would take 50-75% of single impoverished seniors, living alone, out of poverty. 

“The fact is that a lot of seniors have no claim to a CPP entitlement — and with their working years behind them — proposed expansions to CPP for retirement-income adequacy would not address the current needs of our most vulnerable seniors, namely single seniors,” said the authors.

Single seniors in Canada face the harshest financial reality: 32.6 per cent of single seniors have income less than $20,000.

Mintz and Bazel explain that fixing this situation comes down to just two seemingly simple policy changes: topping up the Guaranteed Income Supplement for single elderly households, and an expansion in CPP/QPP survivor benefits.

The former could be done to varying degrees, but as an example, the authors indicate that increasing the top-up to $3,000 would reduce the number of elderly Canadians currently below the low-income cut-off (LICO) threshold by nearly 165,000, or almost half. The cost of the change would be $1.35 billion.

The authors’ proposal to expand survivor benefits from 60 per cent of the deceased spouse’s entitlement to 100 per cent would cost roughly $2.8 billion.

To put these numbers in perspective, the 2013 federal budget showed total program expenditures of $244 billion in 2011-2012.

“Putting such a policy in place, one that advances the security and dignity of the most vulnerable seniors, comes with a very reasonable price tag,” Mintz said today. “Amidst the current discussion focused on the adequacy of pensions for middle-class and well-off seniors, it is hard to see why a policy that ensures the welfare of our lowest income seniors should not take immediate precedence, and could easily be included in this budget or the next.” 

The report can be found here.