One Year Later: Has Justin Trudeau Kept His Promises to Older Canadians?
After one year in power, Gordon Pape tallies up what the Liberals have done for older Canadians.
This month (October 2016) marks the first anniversary of the election of the Liberal party. In the followup to their majority victory last October, I identified the many pocketbook promises the party made to attract older voters and suggested that if they wanted to follow through on their agenda, the “next few years were going to be busy.”
After only one year in power they have indeed been busy. Let’s reflect on what the government of Justin Trudeau has done for older Canadians (quite a bit) as well as what it has taken away (this may surprise you).
Old Age Security
In 2012, the former Conservative government initiated a long-term plan to raise the limit for drawing Old Age Security from age 65 to 67. Under it, the phase-in would have started in 2023, and by 2029 only Canadians 67 and older would be eligible to draw benefits. Some saw the move as a precursor to lifting the entitlement for Canada Pension Plan benefits to the same level down the road.
The Liberals vowed to restore the OAS limit to 65, with the prime minister calling the Tory plan “a mistake.” It will cost the government a lot of money – an estimated $11 billion a year by 2030. But the gap between the normal retirement age of 65 and the Tory target of 67 would have left many households scratching for income.
Topping up the GIS
The Guaranteed Income Supplement provides additional benefits over and above Old Age Security to low-income seniors. In their first budget, the Liberals fulfilled a campaign promise to increase the top-up benefit to single seniors by a maximum of $947 a year. It’s an overdue move for people near the poverty line.
Government grabs more of your RRSP
Not many people noticed it, but the introduction of the 33 per cent tax bracket on income more than $200,000 will have an impact on a lot of RRSPs/RRIFs. If you die with no surviving spouse, your RRSP/RRIF is deemed to be cashed in at fair market value, and your estate is taxed accordingly. The new tax bracket increases the federal levy on amounts over $200,000 by four per cent, presenting a new challenge to estate planners.