The federal government should reconsider its decision to keep the age of retirement eligibility at 65 as retirees continue to live longer, argues a new report from C.D. Howe Institute.
According to the , low fertility rates, rising life expectancies and aging baby boomers will 鈥渟train the sustainability of our social security systems and health care.鈥�
The report says Ottawa should raise the age of eligibility for Old Age Security (OAS) benefits 鈥渋n order to persuade more seniors to keep working.鈥�
In 2012, then-prime minister Stephen Harper announced plans to raise the OAS eligibility age from 65 to 67, starting in 2023. But after the Liberals formed government, Prime Minister Justin Trudeau reversed that decision in the 2016 federal budget, keeping the OAS age at 65.
The C.D. Howe report recommends slowly raising the OAS eligibility age that would 鈥済uarantee a constant proportion of one鈥檚 adult life is spent in retirement.鈥�
Looking at Canadian demographics, the authors of the report calculated that proportion as 34 per cent. They argue that the OAS eligibility age should first be raised to 66, a change that should be phased in between 2023 and 2025. Then, starting in 2048, the OAS age should be shifted to 67, the report suggests.
The report says the shift would improve the sustainability of old-age security benefits, while lowering the overall costs of social security and creating 鈥渁 nudge鈥� for Canadians to remain in the workforce a little bit longer.
The authors say other countries with aging populations, including Finland, Sweden, Norway, Poland and the United Kingdom, are raising the age of eligibility for social security benefits.
The report does note that moving up the retirement age would unfairly impact low-income workers since wealthier Canadians tend to live longer. But it says that problem can be mitigated by changing the current clawback formula used to calculate OAS and Guaranteed Income Supplement (GIS) payouts.
The federal government鈥檚 own economic advisory council recommended earlier this year that Ottawa raise the age of retirement eligibility in order to encourage older Canadians to work longer.
