National Council of Welfare

Conseil national du bien-être social

FOR IMMEDIATE RELEASE

GOVERNMENTS SHOULD USE INTERNATIONAL YEAR OF OLDER PERSONS AS OPPORTUNITY TO FIGHT POVERTY AMONG SENIORS

Governments should take advantage of the U.N. International
Year of Older Persons to renew the fight against poverty among
seniors, the National Council of Welfare said in a report
published today.

"Contrary to popular opinion, the war on poverty among
seniors is not yet over," said the report, A Pension Primer.
"Poverty rates have indeed declined more or less steadily
within the past generation, but 17 percent of Canadians 65
and older were poor in 1997."

The overall poverty rate for seniors can be misleading,
because poverty rates for married seniors are very low and
poverty rates for seniors living on their own are very high.
The poverty rate for unattached women 65 and over was 42
percent in 1997 -- the second highest rate for any of the
eight major family types in Canada.

A Pension Primer is an updated version of earlier reports
by the National Council of Welfare that describe the
three levels of Canada's retirement system. Although the
system as a whole has improved markedly over the years, there
are still major problems that governments have not yet addressed. -2-

"The sad truth about the last several years is that most
governments have been more interested in extracting money from
seniors than helping them maintain a decent standard of living,"
the report concludes.

At the first level of the retirement income system,
combined federal and provincial benefits are not high enough
to get most seniors over the poverty line. The last major
increase in federal benefits for seniors was an increase in
the Guaranteed income Supplement at the end of 1984. The last
increase even proposed by Ottawa was an increase of $10 a
month per household in 2001 as part of the switch to the
proposed new Seniors Benefit. Plans for the benefit were
subsequently abandoned by the federal government.

At the second level, the shortcoming of the Canada
Pension Plan and Quebec Pension Plan that overshadows all
others is the low limit on retirement benefits. The plans
were designed to replace a maximum of 25 percent of earnings
up to the average industrial wage. That's not enough to keep
most seniors out of poverty. The last round of changes in
the CPP, however, showed that the federal government and most
provincial governments were much more interested in trimming
benefits than enhancing them.

The occupational pension plans and registered retirement
saving plan (RRSPs) in the third level of the system work very
well -- but only for the people who are able to take advantage
of them. Many employers in the private sector have not set
up plans for their workers. And in terms of private savings,
many poor people do not have the money to contribute to RRSP. -3-

The latest Statistics Canada figures show that the total
poverty gap for seniors -- or the amount of money it would have
taken to raise the incomes of all poor seniors up to the poverty
line -- was just under $1.5 billion in 1997.

That may sound like a lot of money, but it is a very small
percentage of federal government spending. Ottawa could get the
money to wipe out poverty among seniors simply by converting tax
deductions for RRSPs to tax credits. Tax credits would give the
same tax break to all people who contribute to RRSPs, and they
would save the federal government about $2 billion a year in
lost revenue. The $2 billion could be used to help low-income
seniors.

The National Council of Welfare is a citizens' advisory group
to the Minister of Human Resources Development. __________________________ For more information, please contact: National Council of Welfare 1010 Somerset Street West, 2nd Floor Ottawa K1A 0J9 (613) 957-2961

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