At the beginning of the
20th century retirement was not an option. If a person became ill and unable to
work, the prospect was to rely on family for support or else face living the
remainder of life in poverty.
By 1908, in response to
the demand to help the elderly poor, the government began a program of
annuities. It was built on the belief that individuals must plan for their
future and shoulder the cost of their retirement. However, the program was not
successful since those for whom it was designed did not have the means to
purchase the annuities.
It was not until 1927
that the first public pension legislation (the Old Age Pensions Act) became
law. The pension was available to those who passed a means test. It was also
restricted to British subjects aged 70 and over who had lived in Canada for at
least 20 years. The maximum pension amount was $20 per month.
Old age pensions became
increasingly restrictive during the Depression. In addition to the means test,
provinces passed their own legislation to limit those who could qualify.
After World War II the
economy began to boom, and most individuals saw an increase in their standard
of living. However, because old age pensions did not allow for cost of living
increases, their value eroded over time. Many seniors again found themselves
living out their last years in financial hardship.
In 1952 the Old Age
Security Act became law, establishing the first universal, federally funded
pension for all men and women aged 70 and over. An Old Age Assistance allowance
was also introduced. The allowance was designed for seniors between the ages of
65 and 69 whose income was below a certain threshold.
Despite these programs,
many seniors still had little. During their working years, most had not had
jobs that offered an employee pension plan. Even those who had paid into such a
plan were often unable to collect because the contributory periods were very
long or the plans were not portable from one employer to another.
In response, the
federal government introduced the Canada Pension Plan (CPP) in 1966. (The
Quebec government had previously launched its own Quebec Pension Plan [QPP].)**
This was a compulsory, contributory program for both employees and the
self-employed between the ages of 18 and 70. The plan provided a source of
income for seniors as well as insurance for families in the event of death or
disability of the principal wage earner.
The next year the
Guaranteed Income Supplement was established. It was tied to the Old Age
Security pension for those who retired before they could take advantage of the
C/QPP.
Between 1968 and 1989,
the CPP underwent a variety of modifications designed to recognize changes in
society as well as in economic conditions. Some of these included the lowering
of the age of eligibility, the indexing of benefits, and the clawback of Old
Age Assistance beginning in 1989. As a result of concerns about the long-term
viability of CPP, the system moved in 1998 from pay-as-you-go to fuller
funding. This resulted in a phase-in period of increasing contribution rates.
Today's income support
programs for seniors have changed enormously from the original 1927 Old Age
Pensions Act. For example, in 1998 just over 2.5 million seniors received a CPP
retirement pension averaging $407 per month. In the same year, almost 3.7
million received Old Age Security benefits averaging $398 per month; about 1.4
million of these received an average monthly payment of $293 under the
Guaranteed Income Supplement program. In addition, most provinces have their
own income support programs.
The OAS application
form informs seniors of the availability of income support under the GIS and
invites them to apply for the benefit. The application further asks if the
client would like additional information on the GIS sent to them. While
individuals are responsible for applying for benefits, the legislation allows
for greater retroactivity in certain cases. For example, where the applicant
was unable to apply because of incapacity or in specific cases where an
administrative error was made or incorrect advice was given to a client.
Extending the current
retroactivity payment period would be a major departure from the retroactivity
provisions of other provincial and federal income support programs.
Provincial and Federal
Examples:
British Columbia
Seniors Supplement -
One year
Alberta
Widow’s Pension Act -
One year
Seniors Benefit -
Eleven months
Saskatchewan
Income Plan - One year
Manitoba
55 PLUS Program (Income
Supplement) - Three months
Ontario
Guaranteed Annual
Income (GAINS) - One year
Drug Benefit Program -
One year
Quebec
Shelter Allowance
Program - None
Family Allowance - One
year
Newfoundland
Seniors Benefit - Six
months
Nova Scotia
Special Social
Assistance – None
New Brunswick
Low Income Seniors
Benefit – None
Prince Edward Island
Seniors Drug Cost
Assistance Plan - Six months
Government of Canada
Canada Pension Plan -
One year
Government of Canada
War Veterans Allowance –
None
**Canada Pension Plan
and the /Quebec Pension Plan milestones
1966: The plans came
into effect. The federal government and nine provinces agreed on CPP while the
province of Quebec opted to operate its own plan.
1970: The first
disability pension was paid.
1974: Annual
adjustments were introduced to reflect the full cost-of-living increase as
measured by the Consumer Price Index.
1975: The CPP no longer
required persons aged 65 to 70 to retire from regular employment before
receiving benefits. The QPP followed suit in 1977.
1976: Full retirement
benefits became payable on the plans' 10th anniversary. From 1967 to 1975, 10%
of the potential maximum retirement benefits were paid.
1978: Splitting of CPP
pension credits earned during a marriage was allowed in the event of a divorce
or annulment
.
1980: Employment of a
spouse in an unincorporated family business was considered pensionable
employment if the remuneration was deducted under the Income Tax Act.
1987: Persons were
allowed to claim reduced benefits at 60 or increasing benefits after 65 up to
age 70. Also, the contribution rate began to increase.
1988: Contributions
were changed from a tax deduction to a non-refundable tax credit of 17% of
contributions.
1998: The CPP
Investment Board was created to manage and invest accumulated savings and
contributions not used to pay benefits.
1999: The QPP extended
benefits to common-law (including same-sex) surviving partners. The CPP
implemented this provision in 2000.
Source: Anderson,
Robert D. 2003. "Canada and Quebec Pension Plans." In Canada's
retirement income programs: A statistical overview (1990-2000). Chapter 2B.
Statistics Canada catalogue no. 74-507-XIE. Ottawa.
For more information on
the history of Canada's public pension plans see the Canadian Museum of
Civilization's Web site
No comments:
Post a Comment