Should Wealthy Seniors Get Less Old Age Security? New Reform Proposal Sparks Debate

Think Tank Urges Cuts to Wealthy Seniors’ OAS to Support Youth and Low-Income Canadians

A major policy debate is brewing in Canada ahead of the 2025 federal budget: Is it time to reform Old Age Security (OAS)?

According to Generation Squeeze — a non-profit think tank advocating for intergenerational equity — Canada’s OAS system urgently needs restructuring. The group proposes reducing payments to high-income seniors and reallocating the funds to benefit younger Canadians and lower-income populations.

Dr. Paul Kershaw, founder of Generation Squeeze and professor at the University of British Columbia, says that OAS is now the fastest-growing component of the federal budget, partially because substantial payouts are made to retired couples with combined incomes exceeding $180,000.

“OAS is growing faster than almost any other spending area,” Kershaw said. “And we’re doing this at a time when the government is running significant deficits — projected at $42 billion in Fall 2024 — likely to grow even further due to tax cuts and NATO commitments.”

A Cost Spiral That Can’t Be Ignored

According to actuarial estimates, the cost of the OAS program is set to skyrocket over the next several decades — from $77.8 billion in 2023, to $136.6 billion by 2035, and $276.5 billion by 2060.

Currently, OAS provides monthly payments of up to $727.67 for individuals aged 65 to 74, and up to $800.44 for those aged 75 and above, provided their 2024 annual income is below specific thresholds: $148,451 for the younger group and $154,196 for the older. Those with incomes above these levels do not receive OAS.

For individuals earning above $90,997 annually (or couples above $180,000), OAS benefits may be partially clawed back through a recovery tax.

Generation Squeeze’s proposal, submitted to the Department of Finance’s 2025 pre-budget consultation, argues that the government could save up to $36 billion over five years by reducing benefits for couples earning over $100,000 by about $3,200 annually.

These savings, they suggest, could be redirected toward:

• Low-income seniors
• Affordable housing initiatives
• Postsecondary education
• Expansion of childcare affordability
• Debt reduction

A “Triple Win” for Canada?

Generation Squeeze describes this reform as a “three-win” solution: one that supports budget sustainability, improves fairness between generations, and increases resilience to global economic threats such as U.S. trade policies.

Their proposal also aligns with the Office of the Auditor General’s 2024 review of aging-related federal spending programs. The report highlights that OAS costs are expected to triple by 2045, not only due to aging demographics but also due to inflationary pressure.

Budget Process Now Open to Public Input

The federal government is currently accepting submissions as part of the 2025 pre-budget consultation process. In response to questions about whether OAS reform is on the table, the office of Finance Minister Francois-Philippe Champagne issued a statement affirming that feedback from stakeholders across Canada will help shape the upcoming budget.

Canadians are invited to participate by submitting written responses or filling out a five-minute questionnaire via the Department of Finance website:

Pre-Budget 2025 Consultation Info

Submissions will be accepted until August 28, 2025, either via email (yourbudget-votrebudget@fin.gc.ca) or by mail to the Department of Finance, Ottawa.