Canada budget raises pensions benefit age and cuts penny
- 30 March 2012
- From the section US & Canada
The eligibility age for Canada's Old Age Security (OAS) benefits will rise to 67 from 65 starting in 2023, as part of the government's new budget.
The budget outlines C$5.2bn (£3.3bn) in cuts, with reductions across defence, health care and agriculture.
It also stops the minting of the Canadian penny, for a savings of C$11m. Pennies can still be used in purchases.
The change to the OAS will not affect Canadians who are currently above the age of 54.
Canadian Finance Minister Jim Flaherty announced the budget on Thursday, calling the OAS change an example of the government looking ahead over the next generation.
"Canadians are living longer and healthier," he told the House of Commons. "Canada has changed. Old Age Security must change with it."
The benefit is worth C$6,000 a year and the age change will also apply to a supplemental programme.
While the move has been explained as a way to deal with increasing costs of the benefit to the government because of the baby boomer generation, most boomers will not be affected by the increase.
End of the penny
Canada now joins at least 10 countries in ending the minting of low denomination coins, including Switzerland and Brazil. The cost of producing a one cent coin is 1.6 Canadian cents.
The proposal had support from the opposition as well.
New Democratic Party (NDP) MP Pat Martin, who has campaigned for the change, told Reuters the move was a "no-brainer slam dunk".
"There are 30 billion pennies in circulation and every year they are minting more," he said. "It's a place where we can save money."
The budget recommends rounding transactions to the nearest five cents, but allows debit and credit card purchases to be priced in individual cents.
Moving towards balance
Critics of the budget include newly elected NDP leader Thomas Mulcair.
"The Conservatives were elected on a promise to create jobs, instead they're slashing health care, they're slashing pensions," he said in a statement.
Liberal leader Bob Rae also warned the budget changes would fall hardest on the provinces.
Officials are now planning for a balanced budget in three years, slightly earlier than expected.
The C$5.2bn cut is larger than a recommendation made in last year's budget, but smaller than earlier proposals of C$8bn.
Department cuts include C$1.1bn for defence, and C$370m for public safety, while the budget looks to encourage skilled immigrants by refunding the application fee to the immigration scheme.
The foreign skilled worker programme will now also include nurses, doctors and teachers.
In the public sector, the budget plans to cut 19,200 public service jobs, with 600 at the executive level, and raise the government retirement age to 65 for new hires.
MPs will eventually join public service workers in paying 50% of their pension, increasing the proportion they pay gradually starting in 2013.