Unindexed benefits that never get increased: A story of the very poor, the dead, and the distracted  

There is a lot of interest these days in automatic indexation of benefits as inflation rises to levels that we have not seen in the past 40 years.

Generally speaking, indexation is the federal rule and the provincial/territorial exception. But EI at the federal level is not indexed and most social assistance programs at the provincial/territorial level continue to slowly erode to inflation.

And now they are eroding much faster.

But lack of indexation is not synonymous with no increases at all.

And that actually does happen. Some benefits just don’t get increased at all…. for decades.

Let’s look at two examples.

The first is a small program called GAINS-A (The Ontario Guaranteed Annual Income System for the Aged) and the other is the CPP death benefit. 

GAINS-A (The Ontario Guaranteed Annual Income System for the Aged)

In the 1984 Ontario provincial Budget, Treasurer Larry Grossman said:

“Last month I released a policy paper detailing Ontario’s proposal for reform of Canada’s retirement Income system. As we have already indicated, Ontario will raise GAINS payments for the single elderly in conjunction with increases in the federal Guaranteed Income Supplement.”[1]

Who knew that GAINS would never increase again – not even by a single cent – from the amount set in 1984?[2] 

CPP death benefit

For its part, the CPP death benefit has not been increased since 1998.

In 2016, the Funeral Services Association of Canada said:  

“CPP underwent major reforms in 1997 to put it on more sound financial footing. Premiums were increased and benefits decreased. The death benefit went from 6 months of benefits, up to a maximum of $3,580, down to a maximum of $2,500 and it has remained fixed there since, eroded every year by inflation.”[3]

If they had been indexed

Inflation since 1984 – as measured by the Consumer Price Index (CPI) – according to the Bank of Canada – has increased by 145% and it has increased by 62% since 1998. If GAINS-A had been indexed to inflation, it would have risen from $83 a month to $203 a month. If the CPP death benefit had been indexed, it would have risen from $2,500 to $4,070.

Why indexation doesn’t happen

So, why so long without any increases?

There are plenty of reasons for no increases to GAINS-A.  Seniors’ benefits at the federal level have been raised far in excess of inflation over the long haul, camouflaging the inadequacies of the tiny GAINS-A program.

And CPP policy levers are complex and nested within a web of rules relating to the governance of CPP by two levels of government.

But rather than excuse decades of erosion, there are two groups that never seem to get an audience with politicians.

They are the very poor and the dead.

In the case of GAINS-A, the only seniors who receive it are those with non-benefit incomes of less than $2,000 a year. As you can imagine, not many seniors have income that’s that low. And people with income this low are often distracted by their poverty.

Looking at CPP death benefits, one of the largest groups that gets this benefit are elderly widows who must add it to their own taxable income in the year of their spouse’s death. Widows in this situation are distracted by a whole array of things related to funerals, estates and other life changes. CPP death benefit improvements may not be top of mind.

But it is beyond egregious that as a society we allow benefits to erode for decades just because advocacy is lacking.

So, let’s give ‘advocacy’ a nudge and shine a light not just on benefits that don’t get indexed but on important benefits that never seem to change.

It’s more than time to boost Ontario’s GAINS-A and the CPP death benefit.

JS/April 18,2022

[1] http://www.archives.gov.on.ca/en/historical_documents_project/82-86/ONTARIO_1984_BUDGET.pdf, p. 15

[2] In 2021, GAINS-A was briefly doubled as a response to the Covid-19 pandemic and then cut to the level it stood at in 1984. The CPP death benefit was also raised and then lowered again – a common element in the life of benefits that stay the same for decades.

[3] https://www.ourcommons.ca/Content/Committee/421/FINA/Brief/BR8111995/br-external/FuneralServiceAssociationOfCanada-e.pdf