Mr. Speaker, with regard to government projections on the impact of inflation, in response to (a), old age security, OAS, and Canada pension plan, CPP, benefits are indexed to inflation. To retain their value over time and to protect the purchasing power of beneficiaries, OAS and CPP benefits are adjusted in accordance with changes in the consumer price index, CPI. The Old Age Security Act and the Canada pension plan also each contain a guarantee ensuring that benefits can never be reduced, even in the event of a decline in the CPI.
OAS rate increases apply to all benefits under the OAS program. This includes the OAS pension, as well as the income-tested guaranteed income supplement, GIS, and the allowances. Rate increases are calculated four times per year, in January, April, July and October, using the all-items index from the CPI. Quarterly indexation allows for faster adjustment of OAS benefit amounts following cost-of-living increases.
CPP rate increases are calculated once a year using the CPI all-items index and come into effect each January. Therefore, the value of benefits in pay is fully protected and takes into account year-over-year increases in prices as measured by Statistics Canada.
OAS and CPP benefit adjustments in accordance with changes in the CPI ensure that the value of benefits seniors receive is fully protected. As a result, seniors can rest assured that there will be no loss in spending power as a result of the higher inflation experienced in late 2021.
In response to (b), the vast majority of seniors in Canada receive the OAS pension. Low-income OAS pensioners are eligible to receive the GIS. Both of these benefits are adjusted four times a year based on changes in the CPI. Indexation on a quarterly basis allows for faster adjustments to OAS benefits following increases in inflation.
The Office of the Chief Actuary, OCA, is responsible for providing appropriate checks and balances on the future costs of the different pension plans and social programs that fall under its responsibility, including for the OAS program and the CPP. Every three years, the OCA prepares actuarial reports for both the OAS program and the CPP, which includes analyses of OAS and CPP benefits.
In response to (c), the OCA provides short- and long-term projections of inflation levels. Their projections are based on Bank of Canada inflation targets, as well as other economic forecasts. In the OCA’s most recent actuarial reports of the OAS program and the CPP, released in 2020 and 2019 respectively, inflation was projected at 2% per year.
A new actuarial report on the CPP will be tabled in Parliament in fall 2022, which will include new inflation projections.