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Ellen Roseman: How To Fix OAS

The federal and provincial governments worked together to strengthen the Canada Pension Plan for future needs. They looked at the sustainability of Old Age Security at the same time.

No one anticipated any problems. The cost of paying benefits to those over 65 would go up temporarily, but the government could get through it. There was no need to lift the eligibility age to 67.

I think it's irresponsible of Harper to raise the issue now, just after receiving a majority mandate. Nothing was said during the campaign. Canadians would have liked to know before casting their votes.

Moreover, he's preparing to introduce measures in the federal budget to be tabled in March. That's too early to start phasing in what could be a long-term restructuring of the retirement income system.

Finance Minister Jim Flaherty tried to downplay the urgency by emphasizing that nothing would change until 2020 at the earliest. But a spokesman later said the minister hadn't revealed a timeline.

Old Age Security is already income-tested. If you're an affluent senior with a net income of more than $69,562, you start getting your benefits taxed back. You lose all your benefits once your income hits $112,772.

As an alternative to raising the eligibility age to 67, why doesn't the government change the tax rules for Canadians who are still working after 65 or still running their own businesses?

Here are a few solutions: Phase in the clawback at a lower income level. Don't adjust the clawback income levels for inflation each year. Use household income to determine the clawback, not individual income.

I think it's too soon to talk about across-the-board cuts for everyone. What about the people living on corporate or provincial benefits that are cut off at age 65? How will they fill the gap?

The age change could cost provincial governments millions of dollars. They're upset and they're telling Harper to rethink his plan. No one gains if there's a massive downloading of costs onto the provinces.

I'd like to see the federal government work harder to trim benefits for seniors who don't need them and keep them in place for those who do. That could help tame the cost of boomer retirements.

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