When I was thinking about retirement I wondered what all the contributions I have made to the Canadian Pension Plan would yield. So I did some research and found this history about pensions.
Before the World War I, the Canadian government encouraged people to save for retirement by buying government annuities. Since few could afford them, the annuity program failed.
World War I thrust the world into industrialization. The jobs that evolved was strenuous and favoured the young over the old. Seniors were pushed out of the workforce with nowhere to turn to replace that income.
But in 1924, government studies concluded that 40% of seniors over 70 years would not pass a means test with meant they didn’t have enough income to sustain life. Seniors needed financial support. The government also recognized that younger people who were supporting aging parents could not afford to save for their own retirements.
In 1927, the Old Age Pensions Act was made law. It was available to seniors over 70 whose income including the pension was less than $365 per year. And it was made available to British subjects over 70 who had lived in Canada for over 20 years and whose income also met the seniors means test. Status Indians were not eligible.
The life expectancy of people in 1921 was less that 60 years and around 247,000 people were over 70. Not so many pension collectors.
The Depression hit in the 30s which increased the need for income support for Canadians as a whole. There was nothing materially done to improve the pension. In fact, the provinces enacted legislation whereby seniors had to prove their children could not support them, encouraged seniors to sue their children for maintenance, allowed for the payments to be withdrawn even after the senior had been proven eligible for the pension and, perhaps most draconian of all, payments could be recovered from the estate of seniors after passing.
World War II put many people back to work. Inflation increased and the pensions were not indexed so their value decreased. The desire for a national social security system was lobbied for by political parties, unions, seniors and social interest groups.
In 1940 the Unemployment Insurance and Family Allowance Acts were passed. And in 1952, the Old Age Security Act was put into law to provide pension for all men and women 70 and older. It provided $40 per month to those who had lived in Canada for 20 years or more. It included status Indians. No means test was required.
Further protection was provided to those who retired through the Canada Pension Plan enacted in 1966. It was provide to those who had retirement, included death, survivor and disability benefits, and was based on contributions made during years of work. Status Indians were not eligible for CPP.
Further protection was provided by the Guaranteed Income Supplement enacted in 1967 to provided additional income to retirees ineligible for CPP. It was income tested. It was initially temporary but eventually became permanent.
Some of the other changes to public pension system since inception were to allow collecting pension at 60, OAS became indexed quarterly and linked to CPI (Consumer Price Index), and status Indians could contribute to CPP and then collect in retirement.
In 2016, there were over 35 million people in Canada. 4.7 millions of them were over 70. The over 70 group has increased from 247,000 people in 1921 to to 4.7 million 95 years later, a 190% increase in just under a century. The impact of no war, healthier living, better food, and medical advances has affected longevity greatly. But that imposes a higher need for old age pension resources from the government, especially for those whose means are less than what is required for a basic life.
We are fortunate that the government has programs that provide income support for Canadian citizens. Not all countries do. Canada is envied for it.
2021
So much of what I learned about saving for retirement was learned in the last half of my life instead of the first half. Or maybe, the importance of saving even a little starting in my 20s wasn’t really clear until I was in my 50s.
I have not yet started to collect CPP. Not sure when I will. Some have said collect it as soon as you can since you don’t know how long you will get to collect it. And yet, if you wait there is a reward of more. For now I have decided to let it wait. I might change my mind on my next birthday.
I have learned in theses past six years that financial resources will define part of the quality of my retirement, but connection with people, a sense of purpose, physical movement have just as much an impact on my happiness as the money side does. As with anything, it’s about choice. So I can’t go on a world cruise for an entire year. Not sure I would anyways. But like the rest of life, living within my means and appreciating what I have makes life pretty simple. And pretty contented in retirement.
