Harper’s Public Pension Ploy

The Sunset Years | BCBusiness
Canadians’ golden years may not be so golden if Stephen Harper hikes the minimum age for the Old Age Supplement to 67.

We sincerely hope Stephen Harper isn’t the fanged monster many think he is for proposing to raise the age for the Old Age Supplement. Instead, he may simply have made the first moves in a campaign to realign the retirement support system.

Like many Baby Boomers, I can now see on the horizon the time when I’m going to need a retirement support system. So, of course I am very interested in Stephen Harper’s recent musing about cuts to the old age system.

Harper has been roasted since he announced at the annual banker bash in Devos, Switzerland, that he was thinking of cutting the Old Age Supplement (OAS) to keep it sustainable.

Well, not cutting it actually, but raising the age when a person is eligible from 65 to 67, which is kind of the same thing if you’re poor or aged and will probably be unemployable at 65.

From a money manager point of view, it was a good idea. As the age wave starts to wash on the shores of seniority, there exists a massive buildup of age entitlements that will strain the public purse for about 20 years or so until the wave subsides.

But it  was also a stupid one, in that it was a simple across-the-board cut of the type sometimes employed by extremely uncreative CEOs who slash workforces willy-nilly and damage, sometimes irreparably, their own company’s prospects at the same time. There’s cutting the fat, and there’s cutting the bone. One is helpful, the other is just mean-spirited and dumb.

Like any intelligent CEO, Harper might have thought about some targeted cuts, i.e. where the fat is. And that’s among well-off seniors – many of whom earn more in retirement through various pensions, investments and judicious tax planning than most people earn in their working lives.

In other words, they’re rich, and so don’t particularly need the OAS, which was meant to relieve the rampant poverty among seniors who weren’t able to earn big money while working.

Announcement A Feint

By positing a general cut, it’s obvious Harper is either extremely stupid and didn’t think about this, which I doubt, or he’s some kind of fanged monster whose teeth are dripping with the blood of poor seniors, which … well … I don’t think is true either.

It’s my belief Harper knew exactly what he was doing when he threw out this bombshell in Davos at a world economic summit that drew leaders from around the world (many of whom are struggling with the same issues, by the way).

By using that as a stage for an announcement that was really aimed at home consumption, Harper was cleverly softening up the Canadian populace for changes to come in our pension entitlements system.

Old age security has always been sacred in Canada. But, let’s face it, it’s been abused regularly. Many government workers are entitled to pensions that are higher than the average person’s working income; certainly parliamentarians are, plus they can head useless committees and perform other minimal tasks for healthy income supplements.

But your average person on the street? No such luck.

I personally think the Conservative government is looking at something that no other government has had the bravery to try – realigning the old age security system to help those who need it and remove that help from those who don’t.

By backing off from his initial option – raising the age requirement for everybody – Harper can accomplish his goal and look reasonable at the same time.

At least, I hope so.