Do seniors actually experience price inflation differently than other age groups in Canada?
A policy suggestion that was part of the Liberal campaign platform in the last federal election in 2015 assumes that’s the case. The proposal suggested it was time to link increases to senior-specific government benefits, such as old-age security, to a special seniors price index that would more accurately reflect the expenses older Canadians incur.
The government, however, has yet to act despite raising the issue at its first cabinet meeting of 2016 and mentioning the issue in its budget that year.
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Research conducted by Statistics Canada in 2005 demonstrated that while the rate of inflation has been slightly higher for seniors in recent decades, the gap is by no means dramatic. Between January 1992 and February 2004, the average annual rate of inflation was 1.95 per cent for seniors’ households and 1.84 per cent for all others.
While it’s true that seniors have different spending patterns than other households, the statistics bear out the theory that the price exposures balance out fairly between age groups. For example, electronics have declined in price, which has benefited many households but less so for seniors, according to Statistics Canada. Simultaneously, many households have felt the impact of rising tuition fees, which affect seniors far less.
However, while the average rate of inflation over time indicates less of a difference between seniors and other households, shifts in the prices of certain items could increase the impact on seniors, the research noted. The gap between seniors and other households’ inflation rates did begin to widen in 1998, which Statistics Canada attributed to mortgage rates and certain energy prices.
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Doubts have since arisen as to the continued relevance of the 2005 research, however. Since then, the government of Canada has allocated $45 million to enhance the consumer price index, which is the current tool used to calculate updates to old-age security and other benefits.
A spokesperson for the federal government says that, in “ensuring that old-age security benefits keep pace with the costs of living faced by seniors,” it intends to work closely with Statistics Canada to continue its explore whether a seniors price index would be helpful.
While Canadian seniors may take issue with the small monthly increases they see on their government benefits, they may fare better than their counterparts in the United States. While the law stipulates that the medicare Part B premium may not rise any more than the dollar amount of the social security cost-of-living adjustment, those receiving smaller benefits will have more of their increase taken up by the medicare levy. As reported by Reuters, those with a $2,000 monthly benefit will see an overall boost of $15 per month this year, while those with a benefit of $1,250 or less will see no net increase at all due to the rising medicare premium.
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Given the debate, do you think it’s time for the government to act on implementing a seniors price index to better protect them from rising prices? Or should it hold off given the many pressures it’s already under as a result of cost pressures from an aging population? Have your say in Benefits Canada‘s weekly online poll.
Last week’s poll asked if the slew of labour law changes, particularly those related to various types of leave, that have taken effect across Canada recently are a concern for employers. Most (68 per cent) respondents said the large number of changes represents a significant financial and administrative burden. No respondents felt employers should be able to manage them without undue burden. And 32 per cent said the changes are material but felt they provide long-overdue protections for workers.
