February 1, 2012 / 10:54 PM / 6 years ago

Canada budget figures won't reflect pension change

OTTAWA (Reuters) - Possible reform of Canada’s Old Age Security (OAS) pension plan will not affect this year’s budget figures, Finance Minister Jim Flaherty said on Wednesday.

“There’ll certainly be nothing in this budget that will affect anyone receiving any benefits - OAS or any other kinds of individual benefits from the government of Canada - at the present time. There’ll be nothing like that, and any suggestion to the contrary is just flat wrong,” he told CBC television.

“But we are looking at long-term sustainability. So we could take some steps - we could - in the budget to say, ‘All right, here are some of the things that could be done in the future in order to make sure that these programs are sustainable in the long term.'”

The political opposition has had a field day attacking the government’s plans to limit the growth of spending on the Old Age Security program, a pillar of the pension system funded out of general government revenues.

Bob Rae, interim leader of the opposition Liberal Party, told the House of Commons on Wednesday: “The government’s position seems to be, ‘We want to protect Old Age Security and that is why we are cutting it.’ That is the logic of what the Conservatives are saying. It is preposterous.”

Conservative Prime Minister Stephen Harper responded that any changes would not affect anybody close to retirement or anyone already receiving benefits.

“What we are dealing with is people far off in the future who are very worried about their income security because they understand the pressures we are under,” Harper said.

Old Age Security payments go to all Canadian seniors, whether they were employees or not, to provide the basic necessities of life. The tax system claws some of the money back from higher-income seniors.

The government says the program is unsustainable, while the separate Canada Pension Plan, funded by employers and workers, is actuarially sound.

One idea that has been floated has been to increase the age when future retirees will be able to draw OAS benefits to 67 from 65, but the government has not confirmed if it was thinking of that.

Flaherty would not say when his budget would come down, but it is expected some time in March. He said he was not concerned about growth figures for individual months - November growth was negative - and said he saw modest growth of around 2 percent.

Editing by Jeffrey Hodgson

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