Summary

Canada was a changed nation by the end of the First World War (1914-1918). War-time demand led to more industrial production. The urban labour force grew, so that by the 1920s most people lived in the city rather than the country.

New factories favoured the young and jobs that were traditionally done by older people began to disappear. Seniors could look forward to living longer, but many lived in severe poverty and workers who supported aging parents had a hard time saving for their own old age.

Survivor and disability pensions were created for war veterans and their families, but there was still a strong and growing need for a national old age pension system. The Government Annuities plan of 1908 was not the answer since few people could afford them. So in the 1920s, the issue of government assistance for the elderly was back on the political agenda. In 1924, Parliament appointed a special committee to study the question of pensions.

Political advocates like James S. Woodsworth and Abraham A. Heaps argued for a national pension scheme. When his government finally won a majority in 1926, Mackenzie King followed up on his promise to Woodsworth and Heaps by introducing legislation that became theOld Age Pensions Actin 1927.

In 1927, Canada's firstOld Age Pensions Actwas passed:

• The maximum pension was $20 per month or $240 per year.
• It was available to British subjects aged 70 or over who had lived in Canada for 20 years.
• It was restricted to seniors whose income, including the pension benefits, was less than $365 per year (this was determined by the "means test").
• Status Indians were excluded.

Although eligibility was limited, the Act was a modest beginning to nationwide benefits for the poorest elderly.

What happened next?

Compare to today

Government Annuities:

The Canadian Government Annuities Act of 1908 was one of the earliest significant pieces of social legislation in Canada.

Its purpose was to encourage Canadians to prepare financially for their retirement through the purchase of a government annuity. The Act allowed for the purchase of various annuities for different amounts and lengths of time. At a specified age, the recipient would begin to receive fixed yearly benefits.

The government guaranteed these benefits and assumed all the costs to administer them.

The first annuities issued were to a married couple from Quebec City.

The "Means Test":

The "means test" was used to determine a senior's income, or means.

The test involved provincial pension authorities calculating all aspects of a senior's income (e.g., pensions, income from boarding house operations, etc.) as well as the value of "perks" they received, such as free room and board. The means test, however, did not take into account how much money a person needed to pay for food, shelter, clothing, fuel, utilities or household supplies.

If a senior's annual income, including pensions, was greater than $365, he or she was not eligible for the Old Age Pension. The income each received determined the amount of assistance to which he or she was entitled.

The problem, however, was there was no specific way to calculate a senior's income. Provincial pension authorities had extensive discretion, so the calculations were inconsistent and varied greatly from province to province. For example, some calculations were based on the assumption of income from property when, in fact, such income did not exist. The value of free room and board varied depending on the province. Because a senior's income depended on where he or she lived, some seniors were denied assistance while others received widely varying amounts.