Vol. 151, No. 23 — November 15, 2017
SOR/2017-225 October 26, 2017
OLD AGE SECURITY ACT
Regulations Amending the Old Age Security Regulations
P.C. 2017-1288 October 26, 2017
Her Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, pursuant to section 34 (see footnote a) of the Old Age Security Act (see footnote b), makes the annexed Regulations Amending the Old Age Security Regulations.
Regulations Amending the Old Age Security Regulations
1 Subsection 2(1.1) of the Old Age Security Regulations (see footnote 1) is repealed.
2 The Regulations are amended by adding the following after section 10:
10.1 If the Minister waives the requirement for an application for a supplement in respect of a person under subsection 11(3.1) of the Act, the Minister’s approval is effective as of the day on which the person attains the age of 65.
3 The Regulations are amended by adding the following after section 16:
17 If the Minister does not have sufficient evidence or information to determine if a person, for whom the requirement for an application for a supplement has been waived under subsection 11(3.1) of the Act, has a spouse or common-law partner, the Minister may use the tax return filed with the Minister of National Revenue by that person for the most recent calendar year for which the filing due date has passed to make that determination.
4 The heading before section 26.1 of the Regulations is replaced by the following:
Cancellation of Pension or Supplement
5 (1) Subsection 26.1(1) of the Regulations is replaced by the following:
26.1 (1) For the purposes of subsections 9.3(1) and 18.2(1) of the Act, a request for cancellation of a pension or supplement shall be made to the Minister in writing no later than six months after the day on which payment of the pension or supplement, as the case may be, begins.
(2) Section 26.1 of the Regulations is amended by adding the following after subsection (2):
(3) For the purposes of subsection 18.2(2) of the Act, the amount of any supplement and related allowance shall be repaid no later than six months after the day on which the request is granted.
Coming into Force
6 (1) Subject to subsection (2), these Regulations come into force on the day on which subsection 454(2) of the Jobs, Growth and Long-term Prosperity Act, chapter 19 of the Statutes of Canada, 2012, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.
(2) Sections 4 and 5 come into force on the day on which section 458 of the Jobs, Growth and Long-term Prosperity Act, chapter 19 of the Statutes of Canada, 2012, comes into force, but if these Regulations are registered after that day, sections 4 and 5 come into force on the day on which these Regulations are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Canada’s population is aging, and this is projected to increase the workload required for processing Old Age Security (OAS) and Guaranteed Income Supplement (GIS) applications. The number of GIS recipients is expected to increase within the next two decades, growing from 1.9 million in 2017 to 3 million by 2030. In addition, increasing service expectations of Canadians, as well as aging information technology infrastructure and business processes related to the processing of GIS applications, are already placing further pressure on workloads.
Currently, GIS recipients have their benefits automatically renewed each year, provided that they file an annual income tax return. However, the Old Age Security Act (OAS Act) still requires that individuals submit an initial application and provide the necessary information to determine eligibility for the GIS. The Minister of Employment and Social Development styled Minister of Families, Children and Social Development (the Minister) has committed to introduce automatic enrolment for the GIS by January 2018. However, regulatory amendments are needed in order to enable the determination of marital status for the purposes of automatic enrolment for the GIS. Making changes to the Old Age Security Regulations (OAS Regulations) will also provide an opportunity to make necessary repeals of outdated references.
Old Age Security program
The objective of the OAS program is to ensure a minimum income to seniors, and to help reduce the incidence of low income among this population. OAS benefits include the basic OAS pension, which is paid to all individuals aged 65 and over who meet the legal status and residence requirements, the GIS for low-income pensioners, and the allowances for low-income individuals aged 60 to 64 who are the spouses or common-law partners of GIS recipients, or who are widows or widowers. OAS benefits are indexed quarterly to reflect increases in the cost of living.
Eligibility for an OAS pension is based solely on age, legal status at the time of the application and the years of residence in Canada after age 18. The amount of a person’s OAS pension is determined by their years of residence and aims to strike a balance between the contribution made by Canadian residents to the economic and social fabric of Canada and the right to a lifelong public pension.
In addition, low-income OAS pensioners may be eligible for the GIS, which provides financial assistance to seniors who have little or no income other than the OAS pension. The GIS is income-tested to ensure that the highest benefits are provided to the lowest-income seniors, and is paid at different rates based on whether an individual is single or part of a couple. To apply for the supplement, individuals submit an initial application and provide the necessary income and marital status information to determine eligibility for the GIS. Provided that they file an annual income tax return, their benefits are automatically renewed each year.
In light of Canada’s aging population, it is expected that there will be a significant increase in the workload required to process benefit applications and to maintain accurate and timely benefit payments. In recognition of these pressures, in 2012, the Jobs, Growth and Long-term Prosperity Act introduced amendments to the OAS Act to implement proactive enrolment. This regime was designed to eliminate the need for many seniors to apply for OAS benefits through automatic enrolment. (see footnote 2)
Under automatic enrolment, a combination of data elements allows Employment and Social Development Canada (the Department) to waive an application and, in the absence of any information to the contrary, presume eligibility for a benefit.
Once an individual is selected for automatic enrolment, the individual must be notified in writing of the Department’s intent to waive their application for a benefit, and the information that the Minister intends to use to determine their eligibility must be provided to them. Unless the Minister is otherwise advised, the individual’s application is deemed to have been made and approved the day of their 65th birthday. Once the application is approved, a notice of entitlement letter is sent to the individual outlining the date the benefit becomes effective, the payment amount and their right to request reconsideration or an appeal.
The legislation also allows the Minister to cancel a pension or supplement after the commencement of payment at the individual’s request. Where an individual has cancelled their pension or supplement, the amount of the benefit must be repaid, and the benefit will be deemed not to have been paid. This allows individuals to take advantage of the voluntary deferral option to increase their pension.
Proactive enrolment — Phase 1
Proactive enrolment is being implemented in a phased-in approach. The first phase, which began in March 2013, focused on the automatic enrolment of Category 1 individuals for the OAS pension. These are individuals who, at age 64, have participated in the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) for 40 years or more (see footnote 3) and who are in receipt of, or approved for, payment of a CPP or QPP retirement, disability or survivor pension. CPP or QPP participation is used as a “proxy” to presume years of residence.
Proactive enrolment — Phase 2
The second phase, which was implemented in November 2016, is the automatic enrolment of Category 2 individuals who, at age 64, have participated in the CPP or QPP for 40 years or more, and are not in receipt of, or approved for, payment of a CPP or QPP retirement, disability or survivor pension at the time of selection, but have 40 years of tax filing information with the Canada Revenue Agency (CRA). The individual’s CRA information is used to supplement the residence “proxy” for those individuals.
By the end of 2016, 45% of new OAS pensioners have been approved and have begun to receive a full OAS pension through automatic enrolment. It is estimated that by the time the second phase of automatic enrolment is fully implemented, over 55% of new pensioners will be automatically enrolled for the OAS pension.
With automatic enrolment in place for Category 1 and Category 2 individuals, the Department will focus on the automatic enrolment of individuals for the GIS at age 65 beginning in December 2017. Amendments to the OAS Act allowing the Minister to waive the requirement for an initial GIS application will be brought into force in concurrence with the proposed regulatory amendments.
Repeal of the increase in the age of eligibility
Although not related to GIS automatic enrolment, the Department is taking this opportunity to repeal certain provisions of the OAS Regulations in order to support the legislative amendments to the OAS Act that cancelled the provisions that increase the age of eligibility for the OAS pension and the GIS from 65 to 67, and the allowances from 60 to 62. These legislative amendments were included in Budget 2016 and received royal assent on June 22, 2016.
The objective of these regulatory amendments is to define which information can be used to determine the marital status of potential GIS beneficiaries in order to help enable their automatic enrolment for the GIS. Automatic enrolment will improve services and create administrative efficiencies by maximizing the number of seniors who can receive the GIS automatically, thus removing the burden for seniors of completing applications and reducing administrative costs for the Government.
Proactive enrolment — Phase 3
To continue expanding the scope of proactive enrolment, these regulatory amendments will define which available information may be recognized as determinative of marital status in order to waive the requirement for a GIS application.
In order to waive the requirement for a GIS application, the Minister must be able to determine income and marital status by leveraging existing data from the CRA and within the Department. Given that the CRA already provides income information for GIS purposes as part of Service Canada’s ongoing renewal process, no regulatory changes are required to support the disclosure of income information. However, since there are different rates of payment for the GIS based on the individual’s marital status, an amendment to section 16 of the OAS Regulations is required to include marital status as declared to the CRA as acceptable evidence of marital status. Of note, CRA’s marital status information is based on an individual’s reported marital status as of December 31 of the previous tax year. In order to ensure accuracy, the OAS Act requires automatically enrolled individuals to correct any inaccuracies in their marital status information. For those individuals who are married or in a common-law relationship, the OAS Act stipulates that their spouse’s or common-law partner’s identity and information must also be available to the Department.
Finally, the OAS Regulations will specify that when an individual requests that a supplement be cancelled, the individual must repay any benefits they have received to date within six months from the date the Department granted the cancellation.
Repeal of the increase in the age of eligibility
The Department is also taking this opportunity to repeal subsection 2(1.1) of the OAS Regulations, which references the provisions under the OAS Act that were scheduled to increase the age of eligibility for OAS benefits. As the Budget Implementation Act 2016, No. 1 cancelled the increase in the age of eligibility, this subsection is no longer relevant.
The “One-for-One” Rule does not apply, as there is no change in administrative costs for business.
Small business lens
The small business lens does not apply, as there are no costs imposed on small business.
The amendments to the OAS Act to allow for automatic enrolment for the GIS were included in the Jobs, Growth and Long-term Prosperity Act, which received royal assent on June 29, 2012, and were discussed at the House of Commons Standing Committee on Finance, as well as at the Senate Standing Committee on National Finance. In addition, during the public comment periods following prepublication in the Canada Gazette of Phases 1 and 2, the Department was not made aware of any particular concerns with this initiative.
The amendments were prepublished in the Canada Gazette, Part I, on June 17, 2017, for a 30-day comment period. No comments were received.
Given that these regulatory amendments enable the expansion of the proactive enrolment initiative, and because of the technical nature of the amendments, no additional consultations were deemed necessary.
These regulatory amendments will have a beneficial impact by enabling the Minister to use existing data from the CRA as sufficient evidence to determine the marital status of a potential GIS beneficiary. This information will be used to determine the specific rate of GIS payment as part of the automatic enrolment initiative, which will eliminate the requirements for many seniors to submit an initial GIS application.
Automatic enrolment for the GIS is expected to lead to administrative efficiencies and offset projected operational pressures for the Department in the administration of the OAS program. The estimated cumulative cost savings for the Department stemming from GIS automatic enrolment will be $268,348 by fiscal year 2024–2025. These savings stem from the fact that Service Canada officers will no longer need to process and handle mailed-in applications for these clients.
With respect to the removal of subsection 2(1.1) from the OAS Regulations, the repeal ensures that the Regulations are brought up-to-date and are in alignment with the legislative amendments which cancelled the increase in the age of eligibility.
Implementation, enforcement and service standards
Automatic enrolment for the GIS will be implemented in phases as part of a multi-tiered strategy to simplify access to the GIS and improve take up.
Effective December 2017, individuals who are selected for OAS automatic enrolment under Category 1 or Category 2 will be advised of the Department’s intent to collect information from the CRA with the intent to enroll them for the GIS at age 65. They will also be advised that they must correct any inaccuracies to income or marital status and that they can choose to decline the benefit prior to age 65.
Individuals selected at age 64, who have not had any changes to their eligibility information, will have their application for the GIS waived once they reach 65. A benefit award letter will then be issued, along with rights to appeal. A separate notification will be sent to the spouse or common-law partner, which will require them to correct any inaccuracies in their own income or marital status information.
OAS pensioners who, for any reason, did not apply, or were not automatically enrolled for the GIS, will continue to have the ability to apply for the GIS. The Department will also continue its ongoing efforts to identify clients who are eligible for the GIS through periodic GIS take-up initiatives.
Systems, policies and procedural changes
In order to implement GIS automatic enrolment for Category 1 and Category 2 individuals, Service Canada has been developing system changes, policies and procedures for implementation in December 2017. It is estimated that the direct cost to support these activities will amount to approximately $1.9 million over the 2016–2017 to 2017–2018 period.
Systems and procedures designed for automatic enrolment will ensure the accurate assessment of eligibility for the GIS. Upon the implementation of the Regulations, Service Canada will include automatic enrolment for the GIS for Category 1 and Category 2 individuals as part of its regular quality monitoring and review processes.
Old Age Security Policy and Public Pension Statistics
Income Security and Social Development Branch
Employment and Social Development Canada
140 promenade du Portage, Phase IV, 8th Floor
- Footnote a
S.C. 2012, c. 19, s. 237
- Footnote b
R.S., c. O-9
- Footnote 1
C.R.C., c. 1246
- Footnote 2
Unless an individual is automatically enrolled, the OAS Act requires individuals to submit an application for OAS benefits. Applications are required to provide information necessary to determine eligibility. Evidentiary documents may also be required to substantiate the eligibility criteria.
- Footnote 3
Participation means any combination of years of valid CPP or QPP contributions, or years in receipt of a CPP or QPP retirement pension or disability benefit, or years when the child-rearing provision was applied to the contributory period.