coming OAS crunch. CARP adds gasoline to fire

http://www.theglobeandmail.com/news/politics/old-age-security-for-baby-boomers-heads-toward-100-billion-a-year/article2280064/

“By 2030, the number of beneficiaries of the basic OAS pension is expected to double with expenditures projected to reach $108-billion,” states the June, 2011, briefing note, marketed “secret” and obtained under access to information legislation. The number of Canadians receiving OAS – a program that pays a monthly pension of up to $527 to virtually all seniors in Canada – is expected to climb from 4.7 million in 2010 to 9.3 million by 2030, before falling back.

...

A spokeswoman for Prime Minister Stephen Harper, Sara McIntyre, responded cryptically when asked whether the government is planning policy changes to the OAS to limit its cost.

“All seniors will continue receiving their benefits. Our country faces demographic challenges,” she wrote in an e-mail. “We will ensure our retirement security system remains strong and sustainable for generations to come.”

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So the gov't, in the face of crashed stock markets (permanently depressed as the Boomers cash out) plans to stay the course in the face of austerity measures.

Now let's talk about a group called CARP on retired persons.

http://en.wikipedia.org/wiki/CARP_(Canada)

The original mandate of CARP was to represent retired persons specifically, but for various reasons it has since expanded to cover the rights of all persons over fifty.
...
In early 2008, Moses Znaimer became executive director of CARP, and a Znaimer-controlled company now known as ZoomerMedia assumed responsibility for most of the organization's marketing and membership services.[1] ZoomerMedia also publishes Zoomer Magazine, previously titled CARP Magazine.

D - a Zoomer is anybody older than a Boomer. Meaning Gen XYZ are excluded.
That's OK - that IS the (fairly) natural fault line between generations.
In terms of math variables, we ARE X, Y and Z respectively. (Z cannot vote yet.)
That makes Boomers W. And the Great Generation (and I mean that) the V generation.
Z IS the end of the line. Why? They will inherit the equivalent of fiscal smoking ruins.

But surely, you say, Harper has a handle on things... right?
Not if everybody else can help it. I'd like to say now that I by and large despise the man and his party. But on this issue, his is the only party willing to 'hold the line'.

I think there is presently about 300,000 members in CARP - c. 1% of the population.

http://www.carp.ca/category/news/top-stories/

D- let's look at 1 of their top news stories.

CARP Open Letter calls on Finance Ministers to enhance CPP, cap PRPP fees and fund Home Care

D - "Enhance" CPP? What does that mean? Glad you asked.

"The CPP has successfully provided an affordable and reliable source of retirement security for the broadest reach of Canadians. However, the level of CPP benefits alone is inadequate and CARP has called for increasing CPP coverage and benefits.

To counter the criticism that increasing CPP premiums to pay for increased CPP benefits would be “job killers”, CARP offers a rough calculation [attached] of the dollar amounts that would be required to increase CPP benefits by a modest 10 percent. Subject to verification by finance officials, CARP estimates that employers and employees would each pay $45 more per month..."

D - About 50 per month. To bump up the payout of CPP from c. 2/3 to c. 3/4.
And why? Cuz some Boomers, spending like there is no tomorrow both at the public trough and in their private budgets, much like Aesop's grasshoppper, failed to save for retirement. Somehow, they view it as an affront to their dignity that they must then experience some loss in their standard of living.

D - and all this at a time when we have Gen XYZ saddled with (relatively late in Boomer careers) sudden spikes in CPP payout, a world economic meltdown, and pressure from credit rating companies for fiscal austerity from gov'ts.

D - CARP concluded that letting by saying the above policy would not be a "job killer". Funny, there'd be a hue 'n cry if we hiked income tax by $50/month. Why? Cuz the Boomers have felt entitled their entire lives. Entitled in youth to suddenly public universities with massive tax subsidies. Entitled to no-strings-attached student loans - which they then revoked after abusing so Gen X would carry their debt for up to ten years before default.
Then, as Boomers entered the workplace, entitled to low CPP premiums far past the point they realized the program had been rendered unsustainable demographically. After its reform, entitled to reduced income taxes, even though by then everybody knew they would be straining the social program funding with their 'Boomer Bulge'.
Entitled to GST and HST cuts (look up who voted for that), even though we desperately needed to demolish the debt before Boomers retired, instead of just passing the buck down the chain of gov't levels so that consolidated gov't debt levels, particularly when 'infrastructure deficit' is considered, changed not at all.
And now - lo and behold - (I hope you are sitting right now) the Boomers, as they reach age 55 and begin to retire, ... still feel ENTITLED.
I cannot say that I am surpised.

And how have the various political parties reacted to this CARP overture?

http://www.liberal.ca/issues/retirement-security/

"We will support a gradual increase of the defined benefits under the core CPP to enhance the retirement security of all Canadians."

D - they go on about how many private sector employees lack a pension plan through the workplace. And I DO sympathize. But notice how they support the CARP proposal, though using the incremental "boiled frog" approach so popular in politics. More like "death of 1000 cuts", IMHO.

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20110404/layton-pensions-110404?s_name=election2011

To remedy this issue, Layton said an elected NDP government would immediately work with the provinces to double CPP and QPP benefits. But he would allow Canadians to "prop up" their CPP savings with their personal income.
"This would be a low-cost, guaranteed alternative to Canadians fed up with the high mutual management fees and who want a more stable option when it comes to retirement investment," Layton said.
The NDP believes that doubling CPP and QPP benefits could require a 2.5 per cent increase in payroll deductions.
Layton also pledged to add $700 million to the Guaranteed Income Supplement (GIS) to help out seniors in the lowest income brackets.
The move would help "lift every Canadian senior out of poverty," he said.

D - so he is basically for the immediate implementation of CARP pension proposal.
Note the reasoning - as an anti-poverty measure.

D - just how bad is senior poverty, anyway? Not very, says this insurance association.

http://www.creditcards.ca/credit-card-news/how-much-retirement-income-do-canadians-really-need-1278.php

"Canada has a strong retirement income system. Alain Néemeh, Canadian Life and Health Insurance Association (CLHIA) chairperson, stated in a recent speech that Canada's retirement savings system has helped reduce poverty rates among Canadian seniors from 35 per cent in 1980 to just 5 per cent today."

D - note that OAS is intended for "(up to) low-to-middle income". Yet the clawback does not begin until much higher than that.

http://www.theglobeandmail.com/globe-investor/investment-ideas/portfolio-strategy/how-to-avoid-the-dreaded-oas-clawback/article2037894/

"OAS is a federal social program designed to provide a very modest pension to low- to middle-income retirees. The maximum monthly benefit right now is $526.85 or $6,322.20 a year. The clawback of OAS benefits starts with a net income of $67,668 and it completely eliminates OAS with income of $109,764."

D - the only way to avoid the OAS clawback ought to be being poor, period. Yet that is not the case. "Low-to-middle income" - really?!
Since when was $67,668 the thresh-hold for "low to middle income"? I assume that phrase is meant to mean upper-lower class.
Let's examine this amount more closely.

http://www.statcan.gc.ca/daily-quotidien/110615/dq110615b-eng.htm

"After-tax income for unattached individuals remained stable at $25,500, though this was not the case for all unattached individuals."

D - in no way does StatsCan support the hypothesis that single income earner without dependants is 'average' up to the OAS clawback. What we have here is 'creep' to subsidize not the poor but everybody up to upper-middle-class incomes! For that matter, the fact that somebody earning SIX DIGITS qualfies- to $109, 764, is simply scandalous.

D - well, if senior poverty is the issue, then here is my counter-proposal: just re-arrange OAS/ GIS funding and cut off the rich jerks feeding at a public trough intended to address poverty. Here is my proposal. Reboot OAS with its existing funding to focus exclusively on its original (and true) mandate- preventing poverty in retired seniors in a lower class income situation. How? Linkage. Link the clawback start and end to the level that other gov't policy suggests is an important middle class break point.

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

"Federal tax rates for 2011 are:

15% on the first $41,544 of taxable income, +
22% on the next $41,544 of taxable income (on the portion of taxable income between $41,544 and $83,088), +"

D - my suggested OAS start/end points for clawback are the top of the 1st and 2nd income tax tier at the federal level. $41, 544 and $83,088 respectively.
Take OAS funding from wealthy middle-to-upper class seniors and redistribute it to the poor ones, who are nominally the intended recipients of the OAS program.

But we won't see this proposal put forth into public discussion. You see, Boomers feel entitled as middle-to-upper class members of society to waste OAS funding intended to alleviate senior poverty. They feel entitled to hike pension payroll deductions in the very year they begin to retire at the age of "Freedom 55". Boomers are like the first date nobody wants. She orders the lobster, but is only getting started. The dessert and more champagne are also on the way. Care to guess which generation gets to pick up the tab, though?

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis13539

D - I detected a similarly strong correlation in the age Boomers entered the workplace and suddenly clamped down on student loans.

D - A coupla comments. I know that periods ought to stay inside quotation marks at the end of a sentence, but I don't like how they look. You also might be wondering about the images for this blog. Well, a CARP is a fish known for hoovering up every bit of low-end biomass, leaving nothing for anything that arrives later, too late for the feeding frenzy. CARP even went with the fish motif! I chose a snake - let's refer to it as an asp. Why? ASP stands for "Advocating Sustainable (social) Programs" - as in each generation paying for itself, particularly when the Boomers are twice the size of any other 1. Also, when I was generating visual graphs of Boomer spending and taxation patterns, the Hippocratic double helix of entwined snakes appeared, as did the fish motif. It looks like 2 sine waves cancelling each other out. One wave is the Boomers USING public funding for programs. Early in life, the Boomers used this funding for subsidizing post-secondary educational institutions. Now they begin to eye pensions and health care with the same avarice. Conversely, the other sine wave represents their opinion on taxation (particularly income tax) once they entered the workplace. The fish motif appears simply by drawing a coupla vertical lines, though I like to add fins and eyes too.

I am not accusing the Boomer generation of some grand conspiracy. No, this is simply a matter of benign neglect- and an overwhelming pervasive sense of ENTITLEMENT. When university students, they supported tuition subsidies and generous student loan terms. When working as adults, it was "income tax" that occupied their vision - with blinders on to all else. Finally, now and in the next few decades, they will remain par for course and do their best to gut social progams of use to them on the way out the door. By that, of course, I mean health care as well as income programs.

I know what their epitaph will be . "Entitled". Or: "Cuz we're worth it1"
Right...