Seniors on the margins Aging in poverty in Canada

Issues and solutions

In this section, the Council explores five areas that contribute to seniors' poverty and makes recommendations to reduce the economic vulnerability of seniors.

Shortcomings of the OAS and CPP

While the design of Canada's retirement income system has been widely praised, it is not without its faults. In a recent report, Social Development Canada pointed out that "there is still much to do to reduce poverty among Canadian seniors."¹⁹

For one thing, the GIS is sometimes insufficient to allow seniors, especially those unattached, to live above the LICO. In 2003, an unattached person who only received OAS and the GIS had an annual income of $12,031 – an amount inferior to the LICO in urban areas, where the cost of living is higher.²⁰ In its 2005 Budget, the federal government announced an increase in the GIS, but this modest increase is not enough.²¹ In order to account for the varying costs of living in Canada, NACA reiterates the recommendation it made in 1993:

Under-subscription

It is necessary to apply for OAS and public pension plan benefits; they are not paid out automatically. Unfortunately, some seniors who are not able or well informed, do not apply for the benefits and lose this important source of income.

In December 2001, under-subscription to the OAS and GIS made the headlines and Canadians learned that approximately 300,000 seniors eligible for the Guaranteed Income Supplement, the Allowance, or the Survivor Allowance did not receive these benefits.²² A Toronto food bank had raised the alarm when people 60 and over accounted for 10% of its users and only a minority of these individuals knew about and were receiving GIS and Allowance benefits.²³ They were living under very difficult conditions:

• Once the rent was paid, the median amount remaining per week for all other expenses was a mere $34.65! Yet the estimated average cost of food for one week in Toronto is $40.
• 40% of these individuals were having difficulty paying for their medication every month, and 27% were not taking their medication for lack of money.
• One-third of households with more than three people were living in a single room.

A House of Commons Committee investigated the issue of under-subscription to these programs and identified certain groups of low income seniors that did not apply for benefits. Among these are seniors who speak neither official language, who live in remote regions, who have physical or mental impairments, who have low literacy skills, or who are homeless. In addition, some seniors do not wish to subscribe to the GIS for religious or moral reasons while others believe that they are not eligible for these benefits.

In response to the House of Commons report on GIS under-subscription, Human Resources Development Canada simplified the process (through automatic renewal notices) and launched a publicity campaign. Until recently, the application forms and information sheets for CPP and OAS were 28 pages long, complex, and ill-adapted to seniors. The document has been reduced to 11 pages, uses simpler terms, is printed in a larger font size, and requires fewer attachments. Social Development Canada²⁴ reports on its efforts and progress in reducing under-subscription but does not publish the number of eligible seniors who have not applied.

As no reliable statistics existed on under-subscription or late renewals, NACA had research carried out in the summer of 2004 to assess the situation.²⁵ This research yielded a clearer picture of under-subscription to the OAS program and Canada Pension Plan, revealing that large numbers of eligible seniors have not applied for these programs.

The sums in question are considerable. For example, the 50,000 seniors who are eligible for OAS but do not apply sustain a total income loss of $250 million a year. It is more often women, particularly elderly women, who fail to apply for the GIS – a group that is most at risk of living in poverty. It is worth noting that seniors who are entitled to the GIS but who do not apply are deprived not only of their GIS income, but also of all the other benefits provided through provincial and territorial programs that use the GIS as an eligibility criterion.

NACA recognizes the efforts made by the federal government to increase the participation rate regarding income security programs for seniors, and recommends:

Late applications

The research conducted for NACA in the summer of 2004²⁵ showed an impressive number of seniors who applied late for their Old Age Security and the Canada Pension Plan:

Use it or lose it In 2001, Isabel, age 90, discovers that she has been entitled to the CPP Survivor benefit for the past 15 years but did not know it. Her husband, Jim, died at the age of 83 without ever drawing a pension. Her late application means she is entitled to retroactive benefits for a mere 11 months, even though her husband contributed to the Plan while he was working and the money was his due, and hers!

Women are three times more likely to be late applying for CPP. Late applicants are also noticeably more numerous in Quebec, Yukon and the Northwest Territories – regions where there are more seniors living under the LICO.

Lateness in applying for CPP benefits causes serious prejudice. Currently, a person who is late applying for his or her pension under the CPP is only entitled to 11 months of retroactive benefits (whereas the QPP provides up to 5 years of back benefits). The retroactive period for the CPP is clearly insufficient and unfair, as this program is based on employee/employer contributions. NACA therefore recommends:

Late renewals

In July, year after year, GIS and Allowance recipients must renew their application for benefits through filling out an income tax declaration or a renewal form. Every year, close to 100,000 seniors fail to renew their application on time. At present, they are sent a reminder with an enclosed renewal application form. If they fail to respond, they are temporarily excluded from the program and do not receive their benefits for July or the following months, until the application for renewal is completed. The figure below shows the drop in the number of GIS recipients in July because of this renewal procedure.

GIS renewal: 100,000 people lose their benefits every July

Source: Monthly Statistical Bulletins, Canadian Pension Plan and Old Age Security.
Online: www.hrsdc.gc.ca/asp/gateway.asp?hr=en/isp/statistics/
monthly.shtml&hs=ozs 
(Accessed February 28, 2005)

In July 2004, more than 105,000 seniors did not receive their GIS cheque and more than 9,000 did not receive their Allowance because they had not completed their renewal on time. For seniors with low literary skills, little or no knowledge of the official languages or with cognitive problems, this administrative process is difficult. At the actual rates, a person receiving GIS benefits can lose up to $561 each month – a significant amount considering that seniors receiving GIS operate on a very limited budget. NACA deplores the "all or nothing" approach and recommends:

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