What Canadians Received
Canada's first public pension plan had been introduced in 1927 with the passing of the Old Age Pensions Act. That legislation established a means-tested pension for men and women 70 years of age and over who had little or no income. Benefit costs were shared equally between the provinces and the federal government until 1931, when Ottawa's portion was increased to 75 per cent. This increase was the result of an election campaign promise made by Prime Minister Bennett.
The provinces joined the program gradually. British Columbia led the way in 1927. The other three western provinces joined by the end of the decade, as did Ontario. The Atlantic provinces were relative latecomers, partly because of internal political factors and partly out of concerns over the cost. These provinces were not well off financially, and they had larger than average numbers of seniors amongst their populations.
Prince Edward Island began participating in the Old Age Pensions program in 1933, Nova Scotia in 1934, and New Brunswick in 1936. Nova Scotia was helped in meeting its pension payments by the revenues from government-owned liquor outlets opened after the ending of Prohibition in the province.
Quebec entered the program shortly after New Brunswick in 1936. By this time enduring traditional attitudes to poor relief that saw responsibility resting with municipalities and charities, not with the state, had been overcome by political figures and labour groups in the province.
Over time, amendments to the Old Age Pensions Act relaxed some of the eligibility criteria and opened the program to greater inclusiveness. In 1937, benefits for blind people over the age of 40 were provided, and in 1947 the British citizenship and five year provincial residence requirements were removed, while the age of qualification for blind pensioners was reduced to 21. Incidentally, 1947 was also the year that Canadian citizenship first became possible, by virtue of the new Canadian Citizenship Act. It is interesting to note the implications that this had for women. The Old Age Pension legislation had made a point of allowing widows who had been British subjects before marriage to a non-British subject to continue to qualify for a pension under the program like other British subjects. This had to be clarified since, before the 1947 citizenship legislation, a married woman was usually seen to share the nationality of her husband. Now she was able to hold citizenship in her own right.
While the most recent Old Age Pensions scheme was an improvement on earlier relief practices, official efforts to minimize public costs and enforce family responsibility for the care of seniors made it increasingly unpopular. The means test, for example, was justified by the fact that the provinces formally obliged adult children to support their aged parents if they were able to do so.
Applicants had to prove that their children could not support them in order to be considered for a pension. Officials even encouraged some elderly parents to sue their children for maintenance so that the state could be relieved of responsibility or, at the very least, benefits could be reduced.
Equally distasteful was the provision in the Old Age Pension program that enabled the government to recover the total amount of benefits paid out through claims against the estates of deceased recipients. By the end of the 1940s, the Old Age Pension system was in disrepute. There was popular demand for reform that would do away with the degrading means test and lower the qualifying age to help workers who found themselves out of the workplace before reaching the age of 70.
By 1951, maximum Old Age Pension payments were $40 per month and 308,825 people were participating in the program. The latter figure amounted to about 47 per cent of Canadians 70 years of age or over. In comparison, more than 3.5 million people in Canada received the maximum Old Age Security pension in 2000. According to Statistics Canada's data this represents 93 per cent of the population aged 65 and over, with the majority of non-recipients being newcomers to Canada who had not met the minimum residence requirements.
In 1951, the Old Age Pensions Act of 1927 was replaced by the Old Age Security Act and the Old Age Assistance Act. The new programs generated by this legislation went into effect on January 1, 1952 under the administration of the federal Department of National Health and Welfare.
The Old Age Security Act introduced a universal, flat-rate pension for people 70 and over, with 20 years residence in Canada immediately prior to the approval of an application as sufficient qualification. People who had been absent in that time could still receive payments if they had been a resident prior to the 20 years for twice the length of time away, provided the last year had been spent in Canada.
Benefits would be $40 per month as they had been since 1949 under the Old Age Pensions Act, an amount that would be equivalent to $266 in the year 2000. The program would be managed by the federal government alone. Old Age Security pensions would be financed through a small (two per cent) increase in personal income and corporate taxes and the earmarking of a portion (again, two per cent) of manufacturers' sales taxes for this purpose. Application forms for the new pensions could be picked up at the post office and once enrolled in the program, everyone received the full amount. Pensioners who went to live abroad forfeited their benefits, but an absence of six months or less entitled them to receive payment for three of those months upon their return.
The number of Canadians receiving old age pensions more than doubled with the introduction of the new program, and this time status North American Indians were included. Blind people, formerly receiving benefits under theOld Age Pensions Act, were provided with their own program under theBlind Persons Actpassed in 1951. By March 1952, Old Age Security was being paid to over 643,000 people. Over the next full fiscal year, that figure would rise steadily and expenditures would reach $323 million, or about seven per cent of the total federal budget. In comparison, combined Old Age Security and Canada Pension Plan payments totalled $42 billion in 2000 and represented about 25 per cent of federal spending in Canada.
To complement the new Old Age Security program, theOld Age Assistance Actestablished a cost-shared, income-tested allowance for people between the ages of 65 and 69. The provinces would administer the Old Age Assistance program and the federal government would reimburse them for 50 per cent of their benefit costs through grants-in-aid from the Consolidated Revenue Fund, made up of general revenues. When recipients reached 70, they would transfer to the Old Age Security pension.
Eligibility was confined to people between 65 and 69 whose income fell below a certain threshold. Maximum benefits were set at $40 per month, but as outside income approached the threshold, the $40 figure would be reduced. Residency rules were the same as for Old Age Security, except that it was not necessary to have lived in the country for the year immediately prior to the start of payments. Old Age Assistance would not be paid for absences from Canada.
There was no citizenship requirement, and Aboriginal peoples were eligible for this program as well, but exclusions included people who were in receipt of war veterans or blind persons allowances. Significantly, the federal government no longer insisted that provinces make recovery attempts against pensioners' estates. A little over a year after Old Age Assistance went into effect on March 31, 1953, approximately 20 per cent of the population between the ages of 65 and 69 were receiving these benefits.