Globe & Mail: A boost to OAS would help too little where it’s needed, and too much where it’s not

Originally published in The Globe & Mail on October 3, 2025

The Parliamentary Budget Officer warns federal finances are unsustainable, with the deficit climbing to $68.5-billion this year and the debt-to-GDP ratio no longer projected to decline. Perhaps this will finally focus political attention on the biggest pressure point: Old Age Security. Poorly targeted and $42-billion costlier than a decade ago, OAS adds more to today’s deficits than dental care, child care, or defence.

Despite the red ink, the largest retiree lobby, the Canadian Association of Retired Persons (CARP), presses for billions more. The first recommendation in its recent prebudget submission urges Ottawa to keep its “Hands Off OAS.” Under the pretext of protecting financially vulnerable seniors, it recommends Ottawa extend a recent 10-per-cent boost in the OAS – worth a maximum of about $890 a year – to all seniors 65 and up, not just those over 74. The Bloc Québécois backs the call, and its Deputy House Leader, Alexis Deschênes, recently said every retiree needs the extra funds.

Such rhetoric is powerful, but the reality is different. The proposed increase won’t lift most poor seniors out of poverty. Yet it would pad the finances of retirees with six-figure incomes and add more than $3-billion to the deficit. Canadians must see through this sleight of hand, calling out all who invoke poor seniors as cover to expand subsidies for those who don’t need them.

Research by the National Institute on Ageing at Toronto Metropolitan University helps make the case. Three-quarters of Canadians over 50 say their income is enough to live on, and more than half of those with annual household incomes above $80,000 report feeling financially secure. In Quebec, where Bloc MPs are loudest in demanding an OAS boost, older residents report the highest levels of financial security in the country.

All of this underscores the point: while some retirees do face hardship, a blanket OAS increase is the wrong tool. It spreads billions across most seniors, but does little to help the 405,000 who are poor. With OAS already projected to rise from $86-billion this year to $104-billion by 2029, Ottawa can’t afford to squander more dollars on its ineffective design.

Eligibility for OAS is more generous than other income subsidies. Retired couples with incomes of $182,000 are eligible for the full $18,000 OAS subsidy, while the Canada Child Benefit begins to shrink once family income passes $81,000. Although seniors are less likely to be poor and more likely to own homes, they can have $100,000 more income than young families and still receive taxpayer subsidies.

By reducing OAS for retired households with incomes over $100,000, Canada could redirect $7-billion a year to where it’s needed most, according to research I conducted at my University of British Columbia lab using Statistics Canada modelling. This proposal would virtually eliminate seniors’ poverty by adding $5,000 a year for every senior who currently falls below the official poverty measure – far more than the $888 recommended by CARP and the Bloc. It would also free billions to advance a top priority in Prime Minister Mark Carney’s mandate letter, which outlined the government’s priorities, such as lowering costs for Canadians, by easing housing expenses, student debt and child care fees, while still leaving room to trim the deficit.

CARP claims such a change would be “a betrayal. Canada cannot build a fair or sustainable future by hollowing out the financial foundation of retirement of those who built this country and who are also the fastest-growing demographic.” But the real betrayal is leaving hundreds of thousands of seniors in poverty while billions flow to households that don’t need it.

CARP also alleges that withholding the 10-per-cent OAS increase from those aged 65 to 74 “effectively penalize[s] an entire decade of older Canadians, many of whom are struggling on fixed incomes in an era of high inflation. This arbitrary age cutoff is unjust and ageist.”

Sadly, CARP fails to call out the deeper ageism: that younger Canadians underwrite generous subsidies for retirees with $182,000 household incomes, even as families with children see their benefits clawed back once their income hits half that.

In a world of hard choices, Ottawa must ask: what outcome do we want? If the goal is to eliminate seniors’ poverty, we can do it precisely and affordably. If the goal is to protect public finances, we can do that too. OAS’s current design does neither.

This is the heart of the challenge Ottawa faces. With deficits locked in around $68.5-billion for the medium-term, and OAS already the biggest driver of red ink, doubling down on untargeted expansion is reckless. Reforming OAS isn’t a betrayal – it’s a necessity.

Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on Bluesky, Facebook, Instagram, and LinkedIn, and subscribe to Paul’s Hard Truths podcast.