As Canada prepares for its November 2025 federal budget, a major debate has erupted over the future of the Old Age Security (OAS) program — one of the largest and most expensive benefits administered by the federal government. Advocates, economists, and policy experts are warning that without reforms, OAS could become unsustainable, forcing the government to make difficult decisions that may see future seniors lose or see reductions in their benefits.
Prime Minister Mark Carney’s Liberal government is facing growing pressure to control federal spending, and OAS — once a cornerstone of Canada’s retirement safety net — is now being targeted as a program that may need to be restructured to survive.
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Paul Kershaw, founder of the advocacy group Generation Squeeze, sounded the alarm this week, calling the $80-billion OAS program the “single biggest driver of federal deficits.” According to Kershaw, OAS spending has ballooned by $42 billion in the past decade, now surpassing federal expenditures on child care, pharmacare, dental care, and even defence.
“The Old Age Security program has drifted from its original mission of protecting vulnerable retirees to padding the comfort of affluent seniors,” said Kershaw. “Helping poor retirees is a duty. Subsidizing affluence is a waste.”
Why the OAS Program Is Under Fire
The Old Age Security benefit was created in the 1950s to help seniors who lacked adequate income after retirement. Over the decades, however, the program evolved into a near-universal payment, available to most Canadians over 65 regardless of their wealth.
Under current rules, retired couples with combined incomes of up to $182,000 per year still qualify for the full $18,000 annual OAS benefit. Critics argue this is excessive and undermines the program’s intent.
Generation Squeeze and other advocacy groups are calling for a reduction in benefits for couples earning more than $100,000 annually, a move that could save the federal government an estimated $7 billion per year. That money, advocates say, could be redirected to support low-income single seniors and those living below the poverty line.
Fiscal Sustainability at Risk
Canada’s Parliamentary Budget Officer (PBO) has repeatedly warned that the federal government’s spending path is unsustainable without major policy changes. OAS is at the center of this concern.
With Canada’s population aging rapidly, the number of Canadians aged 65 and older is projected to climb from 7.6 million in 2025 to more than 10 million by 2035. This demographic shift means OAS costs could increase by tens of billions of dollars in the next decade — even as younger generations struggle under the weight of taxes and housing costs.
If current trends continue, experts warn that the federal government could be forced to scale back or phase out certain OAS benefits for high-income retirees to keep the program solvent.
Bloc Québécois Pushes for OAS Expansion
While economists call for restraint, the Bloc Québécois is moving in the opposite direction. Bloc finance critic Jean-Denis Garon has placed an OAS increase for seniors aged 65 to 74 at the top of his list of demands for the upcoming budget.
Currently, only seniors aged 75 and over receive a 10% boost in OAS benefits, leaving younger retirees behind. The Bloc wants to extend this 10% increase to all seniors over 65, effectively adding billions more in annual costs to the program.
A motion supporting the increase passed in the House of Commons last year with the backing of the Conservatives, NDP, and Greens. However, Kershaw and other fiscal advocates warn that expanding OAS across the board would benefit the wealthy more than the poor.
“Prime Minister Carney’s first budget must resist the retiree lobby and the Bloc Québécois,” Kershaw urged. “Both are pressing Ottawa to pour billions more into OAS in ways that do too little for seniors who need it, and too much for those who don’t.”
The Political Tightrope for Mark Carney
The Carney Liberals, currently three seats short of a majority, face a politically delicate situation. With the Bloc’s 22 seats potentially crucial to passing the November 4, 2025 budget, the government must weigh political survival against long-term fiscal discipline.
Expanding OAS may win short-term political favor, but it risks worsening Canada’s structural deficit and intergenerational inequities. On the other hand, cutting OAS or tightening eligibility could provoke a strong backlash from older voters — a key demographic in federal elections.
This balancing act makes the 2025 budget a defining test for Mark Carney’s leadership and fiscal credibility.
What OAS Reform Could Look Like
If the federal government moves forward with reforms, several key changes could reshape OAS in the coming years:
- Stricter Means Testing: Reducing or eliminating OAS for high-income seniors to target funds more effectively.
- Indexing Based on Seniors’ Costs: Adjusting payments based on real costs faced by retirees, such as healthcare, housing, and food, instead of the general inflation rate.
- Redirecting Savings: Using funds saved from OAS reductions to increase support for low-income seniors, improve affordable housing, and strengthen healthcare services.
- Gradual Phase-Out: Implementing gradual benefit reductions over several years to protect those close to retirement.
Such changes would be politically sensitive but are seen by many economists as necessary to preserve OAS for future generations.
Generational Fairness and the Bigger Picture
Beyond fiscal math, the OAS debate highlights a deeper issue — generational fairness. Younger Canadians are facing record-high housing prices, student debt, and stagnant wages, while government resources increasingly flow toward older demographics.
Kershaw emphasized that if current spending trends continue, younger generations could be left with higher taxes and fewer services. “We cannot continue to spend billions subsidizing affluence while younger Canadians struggle to get ahead,” he said.
This sentiment is gaining traction among younger voters, many of whom feel left behind by a system that prioritizes benefits for retirees over investments in housing, education, and job creation.
Canada’s Old Age Security program stands at a crossroads. Once a proud pillar of the nation’s retirement safety net, it now faces mounting fiscal and political pressure that could reshape its future.
If Ottawa chooses to reform OAS in the November 2025 budget, it will mark a turning point — signaling a move toward targeted, needs-based benefits and a renewed focus on generational equity. However, if the government delays action, the burden of rising costs may eventually force deeper and more painful cuts down the road.
For now, one thing is clear: the era of universal Old Age Security may be coming to an end, and future seniors could face a very different retirement landscape than today’s retirees enjoy.