3.1 Description of Current Programs

The federal government contributes to seniors’ income and well-being in a variety of ways. Canada’s retirement system is often described as having three pillars. The first pillar comprises universal income support programs (Old Age Security (OAS), Guaranteed Income Supplement (GIS), and Allowance). The second pillar is the Canada/Quebec Pension Plan (CPP/QPP). The third pillar includes voluntary employer and union registered pension plans (RPPs) and personal savings (Registered Retirement Savings Plans (RRSPs) and Tax-free Savings Accounts (TSFAs)).[70]

This chapter provides information on the main components of the federal retirement income system. It then goes on to review what the Committee heard from witnesses and written submissions with respect to income security for the population aged 65 and over.

A. Federal spending reaches seniors directly through income support programs and indirectly through the tax system

Federal income support programs comprise the first two pillars of the retirement system: OAS, GIS, and CPP.[71] The tax system is used to support the third pillar of the retirement system (e.g. RRSPs, RPPs, and TSFAs). The tax system also supports targeted credits for Canadians over the age of 65 (e.g. the Age Credit).[72] Federal spending on income supports, tax incentives and tax measures related to seniors is estimated to exceed $136 billion in 2017–2018 (Figure 3.1).

Figure 3.1: Estimated Federal Spending Related to Seniors Income Security and Tax Expenditures: 2017–2018 Estimates in Billions of Dollars

Note:      Estimates for tax expenditures are for the calendar year 2017. Main estimates are for the government fiscal year 2017–2018. Also note that expenditures related to veterans are not included in the estimates.

Source: Table prepared by the authors using data obtained from Treasury Board Canada, 2017–18 Estimates, 2017; and Department of Finance Canada, Report of Federal Tax Expenditures: Concepts, Estimates and Evaluations, 2017.

B. Income support programs

In 2017-2018, federal spending on income security programs related to seniors is estimated to exceed $85 billion (Figure 3.1 above). Figure 3.2 breaks down federal spending by program category.

Figure 3.2: Estimated Federal Spending on Income Security Programs for Seniors in percentages: 2017–2018

Source:  Figure prepared by the author using data obtained from Treasury Board Canada, 2017–18 Estimates, 2017.

Estimates of the monthly benefits provided by OAS and GIS are detailed in Table 3.1.

Table 3.1: Old Age Security pension and Guaranteed Income Supplement Maximum Monthly Payment Amounts

Family Situation	Maximum monthly payment amount	Maximum annual income
Old Age Security Pension
Regardless of marital status	$586.66	$122,843 (individual income)
Guaranteed Income Supplement
Single, widowed or divorced pensioner	$876.23	$17,784 (individual income)
Spouse/common-law partner receives the full OAS pension	$527.48	$23,520 (combined income)
Spouse/common-law partner does not receive an OAS pension	$876.23	$42,624 (combined income)
Spouse/common-law partner receives the Allowance	$527.48	$42,624 (combined income)

Note:      These are the amounts for January to March 2018. The maximum annual income is the income level at which one cannot receive the Old Age Security pension or benefits. For more information on what income and deductions are considered in the maximum annual income allowed to be eligible for the OAS pension please refer to Canada Revenue Agency, Line 113 - Old age security pension.

Source: Government of Canada, Old Age Security payment amounts for January to March 2018.

Estimates of the monthly benefits provided by the Canada Pension Plan are detailed in Table 3.2 below.

Table 3.2: Canada Pension Plan pensions and benefits - Monthly Payment Amounts: 2018

Type of pension or benefit	Average amount for new beneficiaries	Maximum payment amount
Retirement pension - at age 65	>$641.63	$1,134.17
Survivor's pension - 65 and older	$308.66	$680.50
Death benefit - one-time payment	$2,299.93	$2,500.00

Note:      Average amount in October 2017, Maximum amount for 2018

Source: Government of Canada, Canada Pension Plan – How much could you receive

OAS is the largest income support program (Figure 3.2). It is a monthly payment available to most Canadians who are 65 years of age and meet the status and residence requirements.[73] In 2017-2018, program expenditures exceeded $38 billion. The GIS is a monthly non-taxable benefit provided to OAS pension recipients who have a low income and are living in Canada.[74] In 2017-2018, program expenditures approached $12 billion. OAS/GIS payments are funded out of the general revenues of the Government of Canada and are considered to be the first pillar of Canada’s retirement income system.[75]

The CPP is a mandatory public pension plan funded through contributions by employers and employees that are invested by the Canada Pension Plan Investment Board.[76] Eligibility is based on age and payments are based on the amount contributed. The CPP is considered to be the second pillar of the retirement income system and includes a retirement pension, disability benefits, survivor’s pension, children’s benefits and a death benefit.[77] The CPP operates throughout Canada, except in the province of Quebec, where workers are covered under the QPP.

1. Tax measures and incentives

The third pillar of the retirement income system consists of private retirement savings. The federal government offers incentives to encourage Canadians to save for retirement. Testimony on the merits of these programs is provided in the “What the Committee Heard” section of this chapter.

RRSPs are retirement savings plans in which contributions can be used to reduce your tax owing.[78]Any income earned in the RRSP is usually exempt from tax as long as the funds remain in the plan. Contributors pay tax when funds are withdrawn. The TFSA allows individuals to set money aside tax-free throughout their lifetime.[79] Contributions to a TFSA are not deductible for income tax purposes; however, income earned in the account is generally tax-free. Because RRSPs and TFSAs provide preferential tax treatment, there is a tax expenditure cost associated with them.[80] Registered pension plans, while not government programs, also receive preferential tax treatment and thus there is a tax expenditure associated with them.

The Department of Finance also identifies five additional tax measures as specifically targeted to benefit seniors: the Age Credit, non-taxation of GIS and allowance benefits, the Home Accessibility Tax Credit, Pension Income Credit and pension income splitting.[81] In 2017, federal spending on incentives and tax expenditures related to seniors was estimated to exceed $50 billion (Figure 3.3).

Figure 3.3: Estimates of Federal Spending on Tax Measures and Incentives Related to Seniors: 2017 Estimates in Billions of Dollars

Source: Figure prepared by the authors using data obtained from Treasury Board Canada, 2017–18 Estimates, 2017; and Department of Finance Canada, Report of Federal Tax Expenditures: Concepts, Estimates and Evaluations, 2017. *Non-taxation of benefits also includes Allowance benefits as well as GIS.

The Age Credit is provided to individuals aged 65 and over.[82] The value of the credit is calculated by applying the lowest personal income tax rate to the annually indexed credit amount ($7,125 for 2016). The credit is income-tested – the credit amount is reduced by 15% of net income in excess of an annually indexed threshold amount ($35,927 for 2016). The credit is completely phased out at a certain income level ($83,427 in 2016). Any unused portion of the credit may be transferred to a spouse or common-law partner.

The Home Accessibility Tax Credit provides a non-refundable tax credit of 15% on up to $10,000 of eligible home renovation or alteration expenses per calendar year for a qualifying individual.[83] When there is more than one qualifying individual for an eligible dwelling, the total eligible expenses cannot be more than $10,000 for the dwelling. Qualifying individuals are persons 65 years of age or older or people with disabilities who are eligible for the Disability Tax Credit.[84]

The Pension Income Credit is a non-refundable credit that provides tax relief to taxpayers receiving eligible pension income.[85] The value of the credit is calculated by applying the lowest personal income tax rate to the first $2,000 of eligible pension income. Any unused portion of the credit may be transferred to a spouse or common-law partner. Canadian residents receiving income that qualifies for the Pension Income Credit can allocate up to one half of that income to their resident spouse or common-law partner for income tax purposes. This is referred to as Pension Income Splitting.[86]

The GIS and Allowance benefits are effectively non-taxable.[87] Although these benefits must be included in income, an offsetting deduction from net income is provided. This approach ensures that such payments are taken into account in determining other income-tested credits and benefits.

3.2 WHAT THE COMMITTEE HEARD

A. The income security system has worked well for many but needs updating

On more than one occasion, the Committee was told that the federal income support system consisting of OAS, GIS and the CPP/QPP is a great public policy success story.[88] However, witnesses also suggested that in light of changing circumstances, the government needs to take a closer look at how these programs can be updated and improved for the 21^st century.[89]

The income support system was largely developed in the 1960s and 1970s and is built around CPP (a contributory program) and OAS/GIS (funded from general revenues). At that time, the OAS and GIS addressed very high rates of poverty among older women who had limited experience in the paid workforce and thus did not have a sufficient CPP/QPP benefit or workplace pension.[90] In the mid-1970s, it is estimated that over 35% of senior women and 28% of senior men were living in low-income situations. These rates fell dramatically until the mid-1990s when it is estimated that about 5% of women and 3% of men were living in low income. Since the 1990s, low-income measures after tax (LIM) have been rising, as explained by a Statistics Canada researcher:

Why did low-income rates increase among seniors? It's not because the incomes of seniors fell, but rather because the incomes of other Canadians grew faster, which raised the low-income threshold. In other words, seniors' incomes have fallen behind those of other Canadians.[91]

Policy work by the Ontario Human Rights Commission identifies two groups of seniors that experience “unique issues based on the intersection of age with other aspects of their identity.… These are elderly women and elderly persons who are disabled.”[92] In the same vein, Statistics Canada researchers emphasize that the rising low income rates are consistently higher for women, and particularly for recent immigrant women (LIM 20.3%), women with a disability (LIM 20.5%), Indigenous women (LIM 24.9%) and single women (LIM 33%).[93]

It was also noted that OAS and GIS do a good job of raising the income of married couples, but these programs are less effective for unmarried individuals.[94] With respect to older Canadians who are single and in the 60-64 age range, for example, Tammy Schirle, professor of economics, at Wilfrid Laurier University indicated that, “[I]f a person is divorced or simply not married, they are ineligible for the benefits available to otherwise equivalent married and widowed low-income seniors in that age range. I think this reflects the expectations for family structure and work that prevailed in the late 1960s and 1970s. It is not clear to me why this penalty for being divorced remains in place.”[95]

The Committee heard testimony related to the hardships experienced by vulnerable seniors from immigrant and racialized communities, rural and remote northern communities and First Nations, Inuit and Métis seniors. This testimony helped to give voices and faces to the data.[96] Lola-Dawn Fennel of Prince George Council of Seniors told the Committee that the majority of her clients are in crisis: facing eviction and homelessness, utilities have been shut off, and roofs are leaking and in dire need of repair.[97]

Further, she explained to the Committee how poverty erodes health:

Diets are poor. They cannot physically manage transportation for grocery shopping or carrying groceries upstairs. Incomes necessitate inexpensive foods, and lack of teeth or dentures prevents adequate chewing. Healthy fruits and vegetables are the first items cut out. Many have to choose which crucial prescriptions to fill and which to ignore each month. Lack of appropriate eyeglasses and hearing aids isolates them further.[98]

Several witnesses asked the government to look more closely for ways to close the significant income gaps between men and women and address important inequities experienced by First Nations, Inuit and Métis seniors, recent immigrants, racialized minorities, linguistic minorities, and members of the LBGTQ2 communities.[99]

It was suggested that there was both need and opportunity for reform.[100] The Committee heard that the patchwork of benefits and tax expenditures should be streamlined. If the system were more transparent and accountable, offering direct benefits rather than tax expenditures, resources could better target vulnerable populations.[101] A better structured system could also better incentivize labour force participation for those who are able and want to continue working.[102]

B. The rules for Old Age Security and the Guaranteed Income Supplement could work better to support vulnerable seniors

Several witnesses questioned the present rules around the OAS program, albeit without much consensus. For example, two witnesses indicated that the expenditure is large and only going to get larger as our society ages. Because it is delivered as a demogrant (i.e. a grant awarded solely upon a demographic criterion such as age), eligible recipients include people with significant incomes.[103] While OAS is income-tested, the claw-back starts at around $75,000. Lowering the claw-back level of income was suggested[104]

A federal official described the flexibility of the CPP model, which allows low income seniors to access the program sooner while encouraging others with high incomes to delay receiving it until a later age.[105] In this vein, Richard Shillington from the Council on Aging of Ottawa stated,

I actually favour delaying OAS to 67, or even later over time, as long as you leave GIS where it is; or we could in fact debate moving GIS to age 60. You would, then, delay OAS for most seniors but keep in place income protections for seniors who are vulnerable from an income point of view.[106]

Furthermore, several witnesses noted that both OAS and GIS are indexed to inflation. If OAS and GIS were indexed to wages or gross domestic product growth, pension incomes would better keep pace with income growth in the working age population.[107]

It was also pointed out that the present rules disadvantage low-income immigrants who have lower OAS pensions because they have lived in Canada less than 40 years.[108]

Finally, witnesses thought that the levels of employment earnings exemptions ($3,500 per year) were too low and the claw-back rates (50% or higher) for earned income and other forms of income were too high. They felt that these rules were too stringent and made it much harder for vulnerable seniors who are able to work to get ahead.[109] In this regard, it was also suggested that income exemptions include all income, not just employment income.[110]

C. The Canada Pension Plan is an important pillar of the retirement income system

The Committee heard support for the recent CPP expansion but some witnesses suggested that it could have gone further.[111] With fewer workers having access to long term employment with secure pension benefits, younger generations are more likely to be reliant on the public pension system.[112] Witnesses also questioned why provisions that protect workers who need to drop out of the workforce periodically to engage in childrearing, caregiving or for reasons of disability were not included in the CPP expansion. It was argued that years of zero or low earnings pull CPP benefit levels down and unfairly penalize people who do “socially valuable work” or who are unable to work due to disability.[113]

There was also testimony related to CPP and low wage workers:

The big concern here is that when individuals while working are making contributions as low-income individuals, they're not going to reap the same rewards as a higher income senior when they start to pick up their CPP.[114]

To address this concern, it was noted that the plan to increase the Working Income Tax Benefit (WITB) makes sense.[115] The WITB is a refundable tax credit intended to provide tax relief for eligible working low-income individuals and families who are already in the workforce and to encourage other Canadians to enter the workforce. Increasing WITB can help lower earning workers fund their CPP rather than having to rely on GIS later. Witnesses suggested that enhancing WITB is prepaying future pensions with today's tax dollars rather than passing the cost down to the next generation.[116]

D. Many seniors are healthy and want to stay in the workforce longer

The Committee heard from several witnesses that Canadians are living longer and healthier lives, and that employment income can be an important part of the income security system as our society ages.[117] The trend of seniors working longer is illustrated in Figure 3.4. It was noted that the employment rate for men aged 65 to 69 nearly doubled between 2000 and 2016 from 15.5% to 30%. For women between the ages of 65 and 69, employment rose dramatically over the same period, albeit from a very low point, 6.9% in 2000 to 20.1% in 2016.[118]

Figure 3.4: Employment Rates among People in Their 60s: 2000–2016

Source:  Figure prepared by the author using data obtained from Statistics Canada, Labour force survey estimates by sex and age, CANSIM 282-000211.

Increases in longevity are coming with a growing number of healthy years, providing an opportunity and a challenge to enable people to work longer if they so wish. To take full advantage of these changing demographics the incentives need to be there, and thought needs to be given to reducing financial and other barriers for the people who do wish to work. Seniors are well positioned to take advantage of a “gig economy” that offers flexible work hours and self-employment options.[119] Technological advances related to medicine, mobility, eyesight, and hearing have the potential to accommodate older workers so that they remain active and productive at work.[120]

E. Private workplace pensions need protection

The Committee heard from several witnesses about the importance of protecting defined-benefit pensions. Wanda Morris of CARP (formerly known as Canadian Association of Retired Persons) and Mark Janson of the Canadian Union of Public Employees (CUPE) made references to the hardships being faced by some retirees (e.g. former Sears or Nortel employees) because bankruptcy laws fail, in their opinion, to adequately protect employee pensions and allow the employer to avoid delivering on their promises.[121] Another witness noted that private pension benefits already being drawn can be reduced, creating additional stress for people who are already struggling on a fixed income.[122]

The National Association of Federal Retirees and CUPE testified about problems they saw with Bill C-27, An Act to amend the Pension Benefits Standards Act, 1985, which, at the time of their appearance, was still at first reading before the House of Commons and had not received Royal Assent.[123] Both witnesses expressed concerns that the proposed legislation would give employers an unfair advantage by allowing them to renegotiate pension commitments and retroactively change the pension benefits retirees are presently receiving. This could in turn further erode income security for seniors.[124]

F.   Registered Retirement Savings Plans are not the best savings option for low-income people

Several witnesses echoed what the Committee heard in its recent study Breaking the Cycle: A Study on Poverty Reduction, with respect to the general lack of understanding of RRSP rules. People living in low-income need to know that RRSP withdrawals impact their GIS benefit.[125] Michael Veall, professor of economics at McMaster University, explained the problem:

Potential GIS recipients should not be contributing to RRSPs, at least until they have maxed out on their TFSAs.… As an example, suppose someone I will call Chris is 64 and puts $1,000 in an RRSP. Chris is in the 20% tax bracket and therefore gets a tax refund that year of $200. Then Chris becomes eligible for GIS at age 65.

Now when Chris takes that $1,000 out of the RRSP, it is going to cost Chris much more than $200. The GIS clawback will be at least $500, and with other clawbacks and tax, it is possible to lose the whole $1,000. Furthermore, if someone knows they are going to be GIS eligible, it is often better to take money out of an RRSP at age 64 and pay the tax on it then, rather than be subject to the clawback, especially if it enables a larger TFSA contribution.[126]

Michael Veall went on to say that it is not obvious how public policy can solve this problem. It is important to inform citizens who are not yet GIS recipients but likely will be when they are 65, to use TFSAs rather than RRSPs as their primary saving vehicle. In a written submission, he added that “we should all do what we can to publicize that for most low-income individuals, Tax-Free Savings Account contributions dominate Registered Retirement Savings Plan contributions.”[127] Moreover, for those with significant RRSP holdings, it may well be beneficial to consult a qualified financial planner so as to ensure that all of the rules relating to RRSPs and Registered Retirement Income Funds along with their impact on GIS, are well understood.[128]

G. Home equity, under the right circumstances, can be a source of income security

Financial instruments that allow seniors to take advantage of the value of their homes while remaining in them, sometimes referred to as reverse mortgages, have the potential to help many maintain their standard of living in retirement, according to some witnesses.[129] For instance, Thomas Davidoff, professor at the Sauder School of Business at the University of British Columbia said:

In markets like Victoria, Toronto, and of course Vancouver, there are countless seniors with enormous home equity holdings but maybe rather meagre retirement wealth and income, so finding a way to use home equity to finance seniors' retirement is something I think you should put considerable thought into.[130]

The Committee heard that reverse mortgages are a very small portion of the financial and retirement industry in Canada but that they hold potential.[131] It was pointed out, however, that reverse mortgages are not appropriate for everyone. It was noted further that reverse mortgages worked well in jurisdictions where government insurance is available for the product. In addition, these jurisdictions offer standardized products with provisions for a non‑growing balance that are monitored and regulated by a government entity.[132] Another analysis of retirement income by two Carleton University professors saw merit in exploring reverse mortgages, with the proviso that “[p]ublic policies are needed to ensure that proper reverse mortgage regulation and tax issues are in place.”[133]

H. Financial literacy needs to be combined with programs and financial products that are easier to understand

It was noted that many seniors have increasing debt levels: maxed out credit cards, payday loans with high interest rates and Canada Revenue Agency arrears. While witnesses suggested that financial literacy was important to address this issue, they felt it was not a “silver bullet” and should be accompanied by other measures.[134]

We put far too much emphasis on financial literacy and consumers and not nearly enough on how we can make that process simpler, fair, and more accessible.[135]

Many thought that both government programs and financial services needed to be simpler and that seniors needed multiple ways of accessing information, including in-person services.[136] According to Lola-Dawn Fennell, “[s]o much information that is available to seniors now is becoming available only via the Internet, and we have a large number of seniors who do not use computers.”[137] In other cases, seniors are living in communities that do not have reliable, or even any, Internet connectivity.[138]

It was noted further that having access to knowledgeable government workers who could explain things and help fill out applications was essential. It is not sufficient to inform people that the information is available online or that they should visit a non-profit service provider in their area.[139] According to Richard Shillington, “I've been on the phone with many seniors who are missing out on benefits they're entitled to because they couldn't navigate the system or were not aware that they were eligible.”[140] A brief submitted by the Little Brothers Organization points out that many seniors left the workforce before technology was in such widespread use and may not have access to either computers or their own telephones. They called for “parallel access points that enable persons with disabilities to access the services intended for them and to ensure individualized, in-person access to services so that, despite advanced age and growing obstacles, vulnerable seniors can continue to exercise their rights.”[141]

I.   Elder abuse is a serious problem

Witnesses told the Committee that more needed to be done to protect vulnerable seniors with respect to their financial resources.[142] Anna Romano, Director General, Public Health Agency of Canada told the Committee that, “an estimated 8.2% of older Canadians experience some form of psychological, physical, sexual or financial abuse.”[143]

It was explained that financial abuse is increasing and that financial vulnerability puts seniors at an increased risk of other types of abuse.[144] As Lola-Dawn Fennell of the Prince George Council of Seniors explained:

I see more elder abuse as younger people also struggle. I worry about the technological gap between those with access to information and those without.… When I first started this job a decade ago, that happened once in a while; now it's commonplace.[145]

The Committee was made aware of important Statistics Canada survey data showing that in 2015 more than 9,900 seniors were victims of police-reported violent crimes in Canada. Of these victims, one-third (33%) were victimized by a grown child, spouse, sibling or extended family member (at a rate of 60 per 100,000 population). Figure 3.5 illustrates that women were more likely to be victimized by a family member (a rate of 66 per 100,000 population). Men are more likely to be victimized by a friend or a stranger.[146]

Figure 3.5: Senior victims of police-reported violent crimes by relationship of accused to victim: Rate per 100,000 population

Source: Statistics Canada, Senior victims of police-reported violent crime, by sex of victim and relationship of accused to victim, Canada, 2015

The Committee heard that the government’s efforts in this area have focussed on developing tools and resources to raise awareness among the general public and health professionals. The government is also supporting the collection of elder abuse data as part of the Canadian Longitudinal Study on Aging.[147] It was pointed out that there were measures that the government could be taking to better protect seniors from financial abuse. For example, bank tellers could be trained and required to report instances where there is reasonable suspicion that an elder is being exploited by a family member or someone in a position of trust.[148] Several witnesses told the Committee that more could be done to educate seniors and the general population.[149]

J.   Income is only half the story

The Committee heard that, “[i]ncome is only half of the equation. The other half is the expenses the senior has to pay out of pocket for what have become the necessities of life at the age of 85 or 90.”[150] As discussed in the next chapter, numerous witnesses explained that the federal government’s efforts to improve income security for all seniors will not succeed in the face of inadequate access to suitable affordable housing and necessary health and homecare services.[151]

1. Lack of affordable housing can undermine income security

The importance of having access to suitable affordable housing was a message that was echoed by numerous witnesses.[152] According to CARP, “With respect to the question of how the government can improve income security for vulnerable seniors, the biggest challenge is to improve affordable housing.”[153]

a. Suitability and accessibility are related aspects of housing affordability

The costs related to making one’s present home more accessible and therefore suitable for aging in place are important aspects of housing affordability. Réseau FADOQ explained that investments in the development and construction of affordable housing specifically for seniors should offer supports to age in place for as long as possible.[154]

Réseau FADOQ also cited their own research on the high cost of rent in private seniors’ residences. Their research suggests that some seniors would like to move to a seniors’ residence that can better meet their needs but the cost is prohibitive, “Faced with this situation, these seniors may choose to remain in a less suitable environment, which often increases the risk of accelerated aging and may even cause a greater loss of autonomy.”[155]

The Committee also heard about how costs were a barrier for many homeowners who wanted to make modifications to their homes to improve accessibility and suitability. The Committee heard that offering more incentives to homeowners of all ages through tax credits as part of a broader national program to encourage accessibility-related renovations would help seniors who need to make modifications now but would also help the entire population to age in place in the future.[156]

2. The costs of home and health services also undermine income security

The Committee heard that there can be considerable variation across provinces and territories with respect to the level and kinds of home and health services supports that are publically funded. Isobel Mackenzie noted: “Some provinces provide partial coverage for such things as mobility aids. Some provinces provide free housekeeping. Some provide dental care. Others provide nothing. No one provides it all.”[157] Ms. Mackenzie went on to explain that the situation is further complicated by seniors who are covered by private benefits plans that are purchased or received as part of a workplace retirement benefit.[158]

The crisis, however, comes when people develop chronic health conditions at advanced ages. As Bonnie-Jeanne MacDonald, Actuary and Senior Research Fellow at the Ted Rogers School of Management of Ryerson University explained, “Once you develop a chronic health condition, you don't have the option to go back to work and you cannot curb spending because the associated costs are not voluntary costs: they're fixed costs, and they cannot be postponed.”[159]

Moreover, the higher one’s income, the more likely one is to be covered by a benefit plan which could help cover some of these fixed costs. Research conducted by the Office of the Seniors Advocate of British Columbia found that 65% of low-income seniors, or households under $30,000, had no supplemental benefits coverage.[160] The largest financial burden is therefore falling upon those with the least ability to pay.[161]

3. Informal caregivers are essential for making necessary home and health services affordable

Family caregivers are essential for promoting well-being and for allowing older adults to age in place, yet the Committee heard often that government is not doing enough to support informal (or unpaid) caregivers.[162]

According to a Canadian Medical Association study, most home care in Canada is provided informally by unpaid family, friends, and neighbours. In fact, the Conference Board of Canada report in 2007 estimated that unpaid caregivers provide ten times more hours of home care than paid workers.[163]

While it is difficult to estimate financial costs related to caregiving, several witnesses referenced a recent report by CIBC Capital Markets entitled Who Cares: The Economics of Caring for Aging Parents, which estimates the total cost in 2017 for caregiving at $33 billion.[164] This includes out-of-pocket expenses (about $6 billion) that the working age population spends to care for aging parents and relatives, and about $27 billion in lost income and foregone vacation time.[165]

The Committee heard that at present the Canada Caregiver Credit offers limited benefit, as it is a non-refundable tax credit and benefits only those who pay taxes.[166] It does not help the individuals who have quit their jobs to provide full-time care or those who are only earning limited incomes.[167]

The Committee also heard that employees with caregiving responsibilities can find themselves in a vulnerable position if they need to take time off work or request a more flexible schedule in order to accommodate their caregiving responsibilities.[168]

4. Longevity and long-term care insurance was also explained as something that could improve income security

The Committee heard that widespread ownership of long-term care insurance could help reduce financial pressures on individuals, families and governments in the future. Long-term care insurance typically provides daily or monthly cash benefits that can be used at the discretion of the policyholder to fund costs associated with their care, whether they stay at home with nursing care, or seek out care in a private long-term care facility. It allows individuals to take action now, buying a policy and paying premiums, in order to finance possible future long‑term care needs.

The Committee also heard that long-term care policies can be extraordinarily expensive. In addition, because of the existence of the publicly funded long-term care facilities, private insurance is difficult to make work.[169]

The Committee heard that publicly administered longevity insurance is successful in other places in the world but is available in Canada only as an option from private-sector insurance companies. Such public insurance plans are sometimes called “long-term care insurance” or “autonomy insurance.” In Japan, for example, which has the largest proportion of seniors among OECD countries,[170] a long-term care insurance was introduced in 2000 with mixed sources of funding:[171]from taxes (45%), from social contributions (45%) and from cost-sharing (10%). One witness told the Committee that longevity insurance at the federal level could allow people to integrate their RRSP or a portion of their savings and put it into a pool, and that “[t]his pool would pay out a guaranteed income for those among them who live past age 85, the time at which they will develop chronic health conditions.”[172] This witness, in a later article, elaborated that such a plan would be “a national program, giving retiring Canadians (e.g., ages 60 to 65) the option to buy into a pooled fund that provides a stable income stream starting at age 85 and continuing until death.”[173].

The difficulty with longevity insurance is that only the healthiest people have incentive to buy it. In her testimony, Bonnie-Jeanne MacDonald explained that:

[i]f you do it as a national program, that does amazing things in terms of reducing the cost, because a lot more people will buy it. What we know about seniors is that they actually want this protection in later life. Again, this is a way to help Canada's economy later on, because we are getting the people with the money and the savings to save the money for when they need it so that they don't become dependent on the state later on in their retirement.[174]