The catastrophic decline of the country's economy during the Great Depression of the 1930s, and the unprecedented unemployment that accompanied it, made a lasting impression on Canadian society, revealing that poverty could afflict anyone under certain conditions.
Destitute Canadian seniors who were prepared to endure the indignity of an intrusive means test were offered some shelter from the prevailing hardships through regular cash payments of the Old Age Pension introduced in 1927. The Department of Finance, which oversaw the pension program between 1935 and 1945, encouraged provincial and municipal officials to tighten eligibility in order to control costs, but the number of Old Age Pension recipients actually increased by the end of the 1930s.
Canada's entry into the Second World War put people back to work and breathed new life into the economy. Like the First World War, it also got people thinking about what they wanted from their government when peace returned. Canadians did not want a return to the economic insecurity and individual vulnerability to business cycles that had produced such tragic results during the Depression.
The post-war world, many believed, should see a more equitable society, with active government intervention in the economy and an expanded system of social security that would offer everyone some protection against poverty and the risks to livelihood associated with a modern industrial economy. While the federal government proceeded more cautiously than some would have liked, progress did occur in this area.
A beginning was made during the war with the introduction of Unemployment Insurance in 1940 and Family Allowances in 1945. By the end of the 1940s, a reform of Canada's social security provisions for seniors was being advocated. More than anything else, there was a desire to see an end to the despised means test, and its replacement by a universal pension. Proposed, too, was a lowering of the qualifying age for benefits.
The Canadian Congress of Labour and the Cooperative Commonwealth Federation were very active in seeking pension improvements, but a reform of the system also had the support of federal civil servants and all political parties. In 1951, the constitution was amended to allow the federal government to pass the Old Age Security Act, establishing a federally funded, flat-rate pension for men and women 70 years of age and over. To this was added the Old Age Assistance Act, providing a cost-shared, income-tested allowance for people between the ages of 65 and 69.