The NDP has promised to boost the Guaranteed Income Supplement (GIS) by $400 million as an “important step in lifting 200,000 seniors out of poverty”. Sounds lovely, but what can $400 million accomplish?

The NDP does not claim everyone will benefit from a GIS increase, rather they are targeting the seniors that are “most in need”. They don’t define exactly who they think that is. So, let’s try a few things to get a range for the effectiveness of this policy move.

According to the most recent actuarial report on the OAS program there will be 1,882 thousand GIS beneficiaries in 2016 (see Appendix E in the Actuarial Report). Adding $400 million directly to benefits would then raise average payments by $212 per year, or about $18 per month.

The OAS Act currently defines one’s GIS benefit according to one’s marital status. Putting aside our differential treatment of widows and divorcees before age 65, I’ll focus on what happens after age 65 and limit my attention to the differential between single and married seniors.

As I’ve pointed out before, and reproduced in the graph below, the maximum rates for OAS and GIS for our poorest seniors are enough to get married seniors up to low income cut-offs, but not single seniors. So, perhaps we can focus on them.

2015-GIS-39.4.schirle_fig01f

There will be 1,119 thousand single seniors receiving GIS in 2016. Dedicating $400 million to their benefits would add $357 per year to their budget, or almost $30 per month. That’s not much.

If we target even better, and only increase benefits to those with no other taxable income (so that they receive full GIS benefits), we would target about 184000 seniors – which seems to align with the NDP’s stated target of 200000 seniors in poverty! Then we could add $2174 to the annual budgets of the worst off seniors. That’s about $181 per month.

That’s certainly not enough to get an urban single senior up to the poverty line, but certainly can get them closer in a meaningful way.

There is much to be said about targeting benefits! Unfortunately such initiatives tend to be very political and I do not find recent inclinations toward universal benefits (including those by the NDP) encouraging.