Canada has an excellent track record when it comes to decreasing elderly poverty. Between 1976 and 1995, the rate of elderly poverty in Canada dropped from 36.9% to just 3.9%. Yet in the past two decades, elderly poverty in Canada has grown.
Current Elderly Poverty Rates in Canada
According to Ryerson University’s National Institute on Ageing, the rate of low-income older Canadians had increased to 14.5% by 2016. The situation is even more severe among certain groups, a recent study found. The nonprofit Social Planning Toronto and the research center Well Living House published a study in August 2020 finding that, as both a direct and indirect result of colonization, more than 90% of Toronto’s Indigenous seniors live in poverty. Poverty rates are higher among Indigenous Canadians because colonization has diminished Indigenous power and social structures.
Meanwhile, Toronto’s “racialized” and immigrant seniors live in poverty at double the rate of their counterparts. Discrimination leads to lower pay for racialized Canadians and immigrants, leaving them with less to live on when they retire. Additionally, immigrants may have less time to accrue assets and savings in the country before retirement.
Seniors Falling Through the Cracks
According to the National Institute on Ageing, Canada’s Retirement Income System stands on three pillars: government assistance, pensions that employers provide and seniors’ personal retirement plans, including tax-free savings accounts and non-registered assets.
However, in recent years, pensions have become a less common resource. Only about a third of working Canadians had registered pension plans from their employers in 2016, the National Institute on Ageing reported. Furthermore, even those with pensions still risk losing part of their pensions if the companies they work for go bankrupt.
Moreover, the most reliable and lucrative type of pension, a defined benefit (DB) pension, is becoming scarcer. Healthcare of Ontario Pension Plan, a defined benefit plan, explained in a 2017 report that DB pensions “are paid for life, and, for some, even rise along with inflation.” In contrast, with other types of pensions, which are becoming more prevalent, income is not guaranteed and may fluctuate over time.
Furthermore, saving for retirement is not possible for all Canadians, as the Healthcare of Ontario Pension Plan report notes. Those without pensions are in a particularly difficult position. The report indicated that the median retirement savings among pensionless Canadians are just $3,000.
Recent Steps to Combat Elderly Poverty
In early 2021, the government acted to address elderly poverty in Canada. In May 2021, Prime Minister Justin Trudeau announced that he would include several provisions in the 2021 budget to aid seniors. Under this new budget, the government’s Old Age Security Pension for seniors will increase. The budget states that the government will give full pensioners $766 more in the first year of the change and will adjust the amount based on inflation in future years.
About 3.3 million Canadians 75 and older will receive increased pensions under the 2021 budget. They will also receive a lump sum of $500 in August under the 2021 budget. Acknowledging that “too many seniors are worried about their retirement savings running out,” the government expressed its commitment to supporting seniors’ solvency in retirement.
However, the new budget has also received criticism for not doing enough. The Canadian Federation of Pensioners castigated the budget in a press release for failing to keep defined benefit pensioners from losing pension money when companies go bankrupt. Another organization dedicated to seniors, C.A.R.P., explains that pensioners of bankrupt companies “are not automatically able to negotiate their terms when assets are divided,” while other creditors are. As a result, if companies go bankrupt and cannot pay pensions, pensioners receive only part of what they should.
Changing Non-Guaranteed Pensions and Bringing in Bill C-253
C.A.R.P., the Canadian Federation of Pensioners and a third organization called the National Pensioners Federation have teamed up to change the system of non-guaranteed pensions. The organizations have suggested a government pension insurance program for federally regulated pensions. They are also pushing Canadians to contact their government. The Canadian Federation of Pensioners, in particular, encourages Canadians to ask their representatives to support Bill C-253, which will help prevent pension reduction when companies go bankrupt. A committee took the bill to the House of Commons as of June 6, 2021. The bill’s passage would be another step toward bringing down elderly poverty in Canada.
– Victoria Albert