Old Age Security
our own Canadian people-and this, when all is said and done, is the truest test of what we are here attempting to accomplish for our people.
What, then, will be the results of the new program when it comes into operation, in January, 1952, after approval by this parliament?
1. It will abolish the means test for some
320.000 persons presently in receipt of old age pension on a means test basis.
2. In addition to this, some 380,000 individuals not presently in receipt of pension will benefit for the first time under the provisions of this new legislation, making a total of
700.000 persons in all to benefit from the provisions of the Old Age Security Act in the first year of its operation.
3. When, to this total of 700,000 persons 70 years of age and over, we add 145,000 persons who will benefit under the provisions of the Old Age Assistance Act passed in June of this year and 8,000 persons'under the Blind Persons Act passed at the same time, we find that no less than 853,000 aged and blind individuals in Canada will be covered by the legislative program being implemented this year to replace the existing Old Age Pensions Act.
4. The benefits under this new legislation will provide an invaluable foundation on which hundreds of thousands of Canadians can build for themselves their own retirement security programs. This will be done in many ways: through commercial or government annuities, through the establishment or adjustment of industrial pension plans, and through a wide variety of other personal savings programs.
I am sure that as this new program comes to be integrated into the existing pattern of retirement provisions provided by individuals, by employers and in other ways, it will be recognized for what it is intended to be-not as a total retirement security scheme in itself, replacing and supplanting all others, but as the core, the keystone of a national savings and retirement plan, around which each individual in this country will be encouraged to build his own retirement security program in a manner and to an extent peculiarly suited to his own needs.
My colleague, the Minister of Labour (Mr. Gregg), will shortly be revealing to this house the manner in which it is proposed to modify the government annuity scheme so as to fit into this new pattern.
Through amendments which will be introduced to the Government Annuities Act, facilities will be offered to permit individuals
or groups purchasing government annuities to integrate their annuity purchase plans with their old age pensions in such a way as to provide a substantially higher monthly amount on retirement than has hitherto been possible.
Let me take as an example the case of an individual who has purchased a government annuity providing $50 monthly beginning at 65. On reaching his 65th birthday, such an individual will receive a monthly payment of $50 from his annuity alone, altogether apart from any other income or resources he may possess. If he has no other income or resources, he may be eligible for additional assistance under the Old Age Assistance Act, amounting to $10 monthly in the case of a single person, or the full $40 if he is a married person. But this will, of course, depend on his undergoing a test of need. I think I am answering in part the questions put to me by the hon. member for Rosedale (Mr. Henry).
At the end of five years, on reaching his 70th birthday, the annuitant will find his monthly annuity of $50 augmented by the $40 monthly benefit to which he will then become entitled as of right under the Old Age Security Act. His assured income will then be $90 monthly and he will be able to count on this continuing for the rest of his life.
It will be clear from what I have said that an individual in the position I have described will have considerably less in the way of assured income from his annuity during the first five years of his retirement than he will have from the annuity and pension combined when he has reached 70.
Many persons on finding themselves in these circumstances would naturally prefer to rearrange their personal retirement program so as to provide for themselves at no additional cost a higher, uniform amount from 65 years onward.
This is exactly what the amendments to the Government Annuities Act will make possible. Provision will be made for the purchase of a new type of annuity, to be known as "term annuities", in addition to the life annuities presently purchasable. These will be made available both to individuals and to groups, so that employee pension plans as well as individual programs can be rearranged along the lines I have suggested.
An individual will shortly be able to purchase, for example, a 5-year term annuity of, let us say, $40 monthly beginning at 65 and continuing until his 70th birthday when he will be eligible for a pension in the same amount under the Old Age Security Act. At the same time, he will be able to purchase a life annuity of, say, $35 monthly, beginning
at age 65 and continuing throughout his lifetime. The figures I use are merely illustrative of what might be done: the amount of the term and life annuities could, of course, be lower or higher and could commence at an earlier or later age if so desired.
The combination of a term annuity and a life annuity which I have used by way of illustration will cost approximately the same as the present cost of a life annuity of $50 monthly at 65. The result will be that through the combination of these term and life annuities with the old age pension payable at 70 the individual who wishes to do so may provide for himself a uniform monthly benefit of $75 from 65 years of age onward, instead of having to content himself with $50 in the initial period from 65 to 70, and then finding his monthly income after 70 increased to $90.
I may say that industry and labour have shown great interest in this question of the proper integration of their present plans with the new old age security legislation. Already the departments of National Health and Welfare and of Labour have had numerous inquiries concerning them. I believe that a number of life insurance companies are also considering an adjustment of their annuity plans to achieve results similar to these which will be achieved through the proposed amendments to the Government Annuities Act which I have mentioned.
These examples I have given are illustrative of what I mean when I say that the result of this new program will be to encourage individuals, either alone or in concert with their employers, to build upon this basic provision offered through governmental action a retirement program suited to their individual needs. The sum total of these individual efforts will, I am sure, yield significant results in terms of the encouragement given to national thrift and national saving.
The house will recall that in anticipation of this present legislation, authority was given in June of this year to proceed with an advance registration, in order to ensure prompt payment of pensions with the commencement of the new year.
From questions which have been asked from certain quarters of the house, hon, members will, I know, be anxious to hear what progress has been made towards achieving our objective in the three months since we last met. Remember there are three months still to go.
Arrangements have already been completed to take over, without interruption, 94699-25
Old Age Security
from provincial old age pension rolls approximately 320,000 persons who are now in receipt
of means test pensions. For these, no new application will be necessary. Special provision is made in the new legislation to cover this automatic transfer, and administrative arrangements have already been completed to ensure the smoothest possible transfer of these present pensioners to the new federal rolls in January next.
The balance, numbering approximately
380,000 persons 70 years of age and over, are not presently in receipt of old age pension.
For these, a new and simple application form has been made available through all post offices. Already, as of October 24, 284,239 applications have been received from this group in our 10 regional offices, and applications are continuing to flow in at the rate of 9,000 weekly.
If this rate continues, and we expect it will, we can count on having almost complete registration by the end of the year.
To sum up, as of yesterday, we were in a position to put into pay immediately approximately 494,000 claims out of an anticipated 700,000.
We are now approving 15,000 to 20,000 applications weekly, about twice the rate of new applications now being received. At this rate we are rapidly catching up on the backlog of applications now in our hands and should be in a position to dispose of all of these which do not present particular difficulties by the end of the year.
Instead of there being confusion, the officers of the treasury and of the Department of National Health and Welfare deserve from me today, as one of the ministers concerned, a special word of tribute for the work they have done. The work has taken many long hours of overtime during these past few months, particularly in the summertime, to accomplish this enormous administrative task. The work has been undertaken by the employees of our 10 regional family allowances offices with a very modest addition to existing staff. The additional personnel required on a continuing basis totals only 123 persons spread over our 10 regional offices. Only one additional person has been added to the headquarters staff here in Ottawa.
The figures which I have mentioned regarding the volume of expenditure and the number of persons who will benefit give evidence as to the comprehensive nature of the program which the government is proposing for the greater security and well-being of our aged people. Mere statistics, however, are totally