Raising GIS earning exemption would help most low-income seniors, report says

A group of retired senior citizens gather for cards at the Citrus County Resource Center in Lecanto, Fla., on Wednesday, Sept. 10, 2014. (AP Photo/John Raoux)

OTTAWA -- A newly released government report shows a federal program that let low-income seniors earn more before their old-age benefits were clawed back had less of an effect on women and older seniors.

The research paper pointed out that seniors over age 70 and women didn't receive the same financial boost when the previous government increased the earning exemption on the Guaranteed Income Supplement to $3,500 from $500.

The Liberals increased the value of the GIS in their first budget, but didn't touch the earning exemption limit.

The 2014 government research paper, obtained by The Canadian Press under the Access to Information Act, suggests that raising the earning exemption on the GIS further would deliver an additional financial boost to low-income seniors.

"If you raise the exemption rate, you're giving them the option or making those who can go out into the workforce and earn an income even in retirement the option of doing so and making those dollars more effective for them, which is important for seniors living in poverty," said Wade Poziomka, director of policy for the Canadian Association of Retired Person.

Seniors generally have a harder time entering the work force and the barrier can be even greater for women and those over age 70, Poziomka said.

Current retirees may have been out of the labour market for years because there was a male breadwinner at home, he said. Older seniors are more likely than those nearer to age 60 to have medical issues that make it difficult to work full-time, he said.

The existing clawback for every dollar earned over $3,500 acts as a disincentive for poorer Canadians to work after age 65, Poziomka said. He said CARP is asking the government to consider reducing the clawback percentage as a way to prod more pre-retirement savings and employment after age 65, and make seniors benefits more generous.

Herb John, president of the National Pensioners Federation, said the trends outlined in the research report show aging Canadians find it necessary to supplement their income by returning to, or staying in the workforce.

"The increase in the earnings exemption does provide some relief, but much more could be done to address the real and growing issues of poverty, poor housing, health care and other issues that heavily impact aging Canadians standard of living," he said.

The May 2014 report found that between 2008 and 2014, a growing percentage of low-income seniors took advantage of the program, suggesting federal policies designed to encourage low-income seniors to work was gaining "some degree of traction."

The research paper estimates the move to increase the earning exemption limit cost the federal treasury about $120 million a year.

But the paper warned against enacting policies that entice seniors with financial incentives to keep working. Those kinds of policies "will have diminishing returns as seniors age, since they are generally able to replace employment earnings with other sources of income," citing the Canada Pension Plan, private pensions and personal savings.

Social Development Minister Jean-Yves Duclos said Tuesday that he and his provincial counterparts are looking at ways to increase support and make older Canadians less vulnerable.

With files from Gemma Karstens-Smith