Proposal to cut OAS for high-income seniors could save billions

Old Age Security payments are under the microscope as Canada's federal deficit grows.

A University of British Columbia professor says changes to Old Age Security (OAS) could help reduce Canada’s projected $78-billion deficit.

Paul Kershaw argues the current income threshold for phasing out OAS benefits is too high. Under existing rules, retired couples earning up to $185,000 annually can still receive the full benefit of roughly $18,000.

Kershaw says that threshold means only about four per cent of seniors are excluded from receiving OAS due to high income.

“This generosity helps explain why OAS’s rapidly rising cost is a primary contributor to Ottawa’s $78-billion deficit,” he said.

A new poll by Research Co. suggests Canadians are open to changes. The survey found that three-quarters of respondents support reform—including three in four Canadians of retirement age.

About 70 per cent of respondents said OAS payments should be reduced for retirees with six-figure incomes. The proposal includes lowering the household income eligibility threshold from $185,000 to $100,000—a move Research Co. estimates could save roughly $7 billion annually.

Research Co. president Mario Canseco says just over 60 per cent of those surveyed believe the OAS threshold should be the same as, or lower than, the $81,000 cutoff used for the Canada Child Benefit.

Both Kershaw and Research Co. estimate that broader reforms could generate up to $20 billion in annual savings.

“That’s a huge amount of savings,” said Kershaw. “That’s enough to eliminate seniors’ poverty by adding an extra $5,000 for every low-income senior, lifting them above the official poverty measure.”

He added that the additional funds could also double federal investments in housing and post-secondary education, while boosting child-care funding by 50 per cent.

Ottawa responds

CTV News asked the Department of Finance on Wednesday whether any changes to OAS are being considered.

In a statement, the department did not directly answer the question, but said the government continues to focus on affordability and supporting seniors.

“In recent years, the government of Canada has advanced initiatives and made investments that benefit seniors, including funding for home care and long-term care, and steps to improve health workforce planning,” the statement read, in part.

“The government also increased Old Age Security by 10 per cent for seniors aged 75 and older, providing an additional nearly $880 to full pensioners in 2025.”

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