“The comments we hear from seniors, every day, are that government changes are needed to areas affecting finances,” says Yvonne Ziomecki, senior vice president at HomEquity
Bank. “Some are struggling while others face dire financial challenges.”
On the bright side, the most important promise of the Liberal government to retirees is what it won't do and that is end pension income splitting. At the same time, the Trudeau government will introduce a new Seniors Price Index to ensure that Old Age Security benefits keep up with actual rising costs.
“Both policies will help us to remain in our home, which is a major priority for us,” says Joyce Wayne, Professor Emeritus Journalism, Sheridan College and blogger. “On the downside, Justin Trudeau has pledged to cut the Tax Free Saving Account yearly contribution from $10,000 back to $5,500. The increased TSFA limit was a critical piece of my retirement plan. Now I must calculate how much faster I'll need to withdraw funds from my RRSP, and that means adding to my taxable income.”
Keeping in tune with seniors’ concerns is paramount for HomEquity
Bank, as it is the only Canadian bank working exclusively with seniors, helping them remain in their homes by using the CHIP reverse mortgage solution, and Income Advantage products.
It is through this product that seniors can supplement their income via reverse mortgage monthly or lump sum payments, says Ziomecki.
According to the Liberal party website 'Retirement Security For Our Seniors' section, the new government plans to:
- Restore eligibility for Old Age Security and the Guaranteed Income Supplement to 65, allocating an average of $13,000 annually to the lowest income Canadians as they become seniors.
- Increase the Guaranteed Income Supplement for single, lower income seniors by 10% providing up to an additional $920 per year for Canada's lowest income seniors. Current benefits generally ensure couples are able to stay out of poverty, however more than one in four single seniors is defined as low income. This will allocate $840 million by 2019 and benefit 1.25 million seniors, including 900,000 single women.
- Develop a new measure for the cost of living faced by seniors: the Seniors Price Index. OAS and GIS will be indexed to this new, more accurate and more generous measure, rather than to the Consumer Price Index that reflects the wider population. In periods when the Consumer Price Index grows faster than the Seniors Price Index, the traditional Consumer Price Index will be used. Pension income splitting will remain.
- Work with provinces and territories, workers, employers and retiree organizations to enhance the Canada Pension Plan.
- Introduce a more flexible and accessible Employment Insurance Compassionate Care Benefit so six months of benefits are available to those who provide care to a seriously ill family member, rather than only those caring for a loved one at risk of death.
- Commit to a new, 10-year investment of $20 billion in social infrastructure, prioritizing significant new investment in affordable housing and seniors facilities.
Canadian seniors worried about finances may be wondering what changes they can expect now that a majority Liberal government has been elected.