Ottawa halts change that would leave low-income seniors in lurch

Published Friday, Nov. 26, 2010 12:45PM ESTLast updated Friday, Nov. 26, 2010 1:28PM EST150 comments

The Harper government has suspended a new policy change affecting low-income seniors after The Globe and Mail reported it could lead seniors to unknowingly surrender their federal income support.

Human Resources Minister Diane Finley made the announcement Friday in the House of Commons. She said she has instructed federal officials at Service Canada to contact all Canadians who might be affected.

Some seniors were poised to lose a key part of their monthly income because of a new policy approved by the federal government without public notice, according to internal guidelines.

The rules would have changed the way lump-sum withdrawals from Registered Retirement Income Funds affect Guaranteed Income Supplement payments.

However, in Ottawa Friday Ms. Finley said seniors who were caught up in the problem this year will be contacted directly and allowed to use the old rules.

“I was very concerned by what was reported this morning,” said Ms. Finley, when asked about the issue by Liberal MP Gerry Byrne in the House of Commons. “That is why I have instructed departmental officials to immediately put a hold on this policy while we review it completely. I have also instructed officials to contact those individuals affected directly so that their applications can be reviewed and evaluated for eligibility under the old policy.”

Mr. Byrne, who first raised the issue in the House earlier this week, responded with skepticism to the minister’s suggestion that she first learned of the issue in Friday’s Globe and Mail.

“Mr. Speaker, review is not reversal. No notice, no consultation, no information and no compassion,” he said. “The minister now says it is brand new information. Allow me to table letters the minister signed to senior citizens across Canada informing them of this policy just recently. Now she says that she will review it.”

Opposition MPs said the minister should go further and scrap the policy permanently.

The new policy meant that if seniors withdrew more than the minimum allowed from their RRIF – which is what a Registered Retirement Savings Plan becomes in retirement – it could affect the threshold for receiving GIS payments, which are meant to ease the financial burden of low-income seniors. In the past, seniors could have their GIS eligibility calculated based on projected income, which did not take into account large RRIF withdrawals.

The issue is surfacing as new data show the number of Canadian seniors living in poverty jumped nearly 25 per cent between 2007 and 2008, to 250,000 from 204,000, according to Campaign 2000.

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