With federal coffers under growing strain, pressure is mounting on the governing party to revisit the structure of the Old Age Security program as preparations continue for the upcoming budget. Paul Kershaw, the head of the group Generation Squeeze, has pointed out that the program, which has grown significantly in recent years, may now extend substantial payments to households that perhaps no longer depend on them.

Old Age Security (OAS) currently provides a maximum of $727.67 per month for Canadians aged 65 to 74, and $800.77 for those 75 and older, as of the January to March 2025 payment period. The amount is based on how long a person has lived in Canada after age 18. Payments are income-tested, meaning benefits are reduced or eliminated for individuals whose annual net income exceeds a set threshold.

These reform-voices argue the program’s original purpose—to support financially vulnerable seniors—has shifted toward a broader benefit model that now encompasses retirees with substantial income. They assert that millions could be redirected more effectively into targeted supports if eligibility thresholds were adjusted.

The demographic transformation in Canada plays a key role in the debate. With the senior population set to rise steeply in the coming decade, the cost of maintaining current benefit levels is expected to escalate, adding pressure on younger taxpayers and other federal priorities. Analysts caution that without changes, the growing expenditure on age-based pensions may crowd out investment in areas such as housing, health care and youth supports.

Politically the matter is delicate. Seniors represent a formidable electoral group, and any signalling of reductions invites backlash. At the same time, the government must demonstrate a credible fiscal framework and inter-generational fairness to maintain broader public support. The challenge is magnified in a minority-government scenario where consensus across party lines may be necessary.

Potential reform paths under consideration include lowering income ceilings for full benefit entitlement, increasing clawback thresholds for higher-income seniors, and redirecting savings toward lower-income retirees or other social supports. The upcoming budget decision will serve as a yardstick for whether the government is willing to tackle one of its largest single expenditure items.