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The Conservatives and Low-Income Working Seniors

Page 150 of the Conservative Platform promises to make work pay for low-income seniors. They propose to double the Canada Worker Benefit (CWB) to a maximum of $2800 for singles and $5000 for couples for all of the working poor, including seniors receiving public pensions.

This promise is described as a “$1 per hour pay raise for low-income seniors” choosing to supplement their retirement income through paid employment.

The problem is that many working low-income seniors who receive the income-tested Guaranteed Income Supplement (GIS) on top of Old Age Security (OAS) are very unlikely to benefit from the higher CWB. The Conservatives do not seem to have taken into account interactions of the CWB rules with the GIS rules.

CWB benefits are paid to workers with qualifying low earnings, based on family income. For singles, benefits are reduced after adjusted net income is more than $13,064 and is lost completely for those with incomes of more than $24,573 (the comparable figures for couples are $17,348 and $37,173).

The current maximum income from Old Age Security and the Guaranteed Income Supplement combined is $18,746 for singles and $32,424 for couples.

Many seniors collecting OAS/GIS benefits thus have incomes that exceed the threshold for phasing out of existing CWB benefits. This problem would be exacerbated by doubling the CWB. Basically, the incomes of many if not most working seniors would be unchanged.

Note that seniors are allowed to earn $5,000 per year ($10,000 for couples) before losing any GIS benefit. A clawback of 50% is then applied.

If the goal is to help low-income working seniors, a better way would be to increase the earnings exemption.

Further reading: Canada's Working poor and the Working Tax Benefit.