The single largest line item in the federal budget is not healthcare. It is not the military. It is not the carbon rebate, the Canada Child Benefit, or debt servicing. It is Old Age Security.
In 2024, Ottawa spent roughly $76 billion on OAS, the Guaranteed Income Supplement, and the Allowance, up from $44 billion in 2015. The Office of the Superintendent of Financial Institutions projects this line will hit $108 billion by 2030, $136 billion by 2035, and $276 billion by 2060. There is no trust fund behind it. There are no contributions feeding it. Every dollar paid out this year is collected from this year's taxpayers, overwhelmingly working-age Canadians who will never see anything resembling the same deal when their turn comes.
This is not a forecast. This is the program as designed, working as intended, growing faster than any other major federal commitment, and aimed at a cohort that already holds half the wealth in the country.
It is time to say the obvious thing out loud. Older Canadians should get what they paid in. They are getting a great deal more.
The math the boomers don't want you to do
Start with what people actually contributed. The Canada Pension Plan rate was 3.6 per cent combined, split between worker and employer, until 1986. Today, between base and enhanced CPP, the combined rate is 11.9 per cent. A boomer who started working in 1972 paid in at a third of the rate a millennial pays today, against a working-age population that was twice as large per retiree.
Then look at what they get back. Fraser Institute analysis of Office of the Chief Actuary data calculates the internal real rate of return on CPP contributions by retirement cohort. Canadians who retired in the 1970s saw a real return of 27.5 per cent on their CPP contributions. Boomers born in the late 1940s receive 3.6 to 4.3 per cent. Anyone born after 1970 is looking at 2.1 per cent, roughly the rate you'd get from a GIC, for a program you cannot opt out of and that takes 11.9 per cent of every paycheque.
That is a cohort transfer of staggering scale, and it's the defensible part of the system. CPP is partially pre-funded. The CPP Investment Board manages $651 billion in assets. The Office of the Chief Actuary's 32nd report, tabled in December 2025, confirms the program is sustainable for at least 75 years at a minimum contribution rate below the legislated one. Whatever else you say about CPP, it is not a Ponzi scheme. The contributions exist. The fund exists. The actuaries do their job.
OAS is a different animal. OAS has no fund. No contributions. No actuarial pretence of a savings vehicle. It is a transfer payment from current taxpayers to current seniors, paid out of general revenue, sized in the 1970s when there were seven working-age Canadians per retiree, and now being collected by a generation that lives in a country with three workers per retiree heading to two by mid-century.
The 2022 decision to permanently increase OAS by 10 per cent for seniors over 75 added roughly $3 billion per year in unfunded benefits. That money is not coming from the recipients' historical contributions. There are no historical contributions. It is being charged directly to people in their twenties and thirties whose own retirement security is, by every projection, going to be worse than the cohort getting the raise.
Roughly 16 per cent of OAS spending, well over $12 billion a year, flows to retirees in households earning more than $100,000. The maximum income at which a senior over 75 can still collect OAS is approximately $148,000. There is no plausible reading of "old age security" that includes households in the top quintile of Canadian incomes. This is not poverty relief. This is a universal entitlement to a cohort that does not need it, paid for by a cohort that cannot afford it.
The hospital bill nobody wants to itemize
The federal numbers are only half of it. The Canadian Institute for Health Information publishes per-capita public health spending by age cohort. In 2022, the provinces spent $2,195 per child, $3,818 per working-age adult, and $14,042 per senior. For Canadians over 75, the 2023 figure was $21,290, roughly six times what is spent on a child, roughly five and a half times what is spent on a working-age adult.
Seniors make up 18.9 per cent of the population. They consume 47.1 per cent of provincial health spending. That share has risen from 44.9 per cent a decade ago and will continue rising as the boomer bulge moves through. The Parliamentary Budget Officer's 2024 Fiscal Sustainability Report finds federal finances technically sustainable but flags Prince Edward Island, New Brunswick, Newfoundland, Manitoba, and the territories as fiscally unsustainable, driven largely by aging-related health costs.
This is not a complaint about old people getting sick. People get sick. They get expensive. Healthcare is need-driven, not generosity-driven, and the bill is what it is.
The complaint is about the layer on top. Provincial drug benefits that kick in automatically at 65 regardless of income. Long-term care rate reductions worth up to $25,000 per year. Property tax deferrals. The Ontario Drug Benefit covers 5,900 medications and is the largest single age-targeted prescription program in the country. Most of these programs are universal at age 65, meaning a retired surgeon with a paid-off Mount Royal home and a seven-figure RRIF gets the same benefits as a senior subsisting on GIS in a Forest Lawn rental.
The same design pattern as OAS, replicated across every province: define the entitlement by birthday, not by need.
The $1 trillion that's about to skip a generation
The wealth transfer is its own argument. Statistics Canada's Q2 2025 Distributions of Household Economic Accounts puts average boomer household net worth at $1.46 million. Average net worth for Canadians under 45 is $634,000. Boomers hold roughly half of all household wealth in the country. Millennials, despite being the largest cohort in the labour force, hold about 14 per cent.
Most of that boomer wealth is real estate purchased between 1975 and 1995, on a single income, at prices a millennial today would consider science fiction. A detached Toronto home that cost $200,000 in 1985 is worth $1.5 to $2.5 million now. The capital gain on that home, anywhere from $1.3 million to $2.3 million, is 100 per cent tax-free under the principal residence exemption. Canada is the only G7 country with no inheritance tax. We abolished ours in 1972. The Canadian Tax Foundation has estimated that taxing the principal residence exemption alone could raise $5 billion to $15 billion annually in forgone revenue. We have chosen, as a country, not to.
CPA Canada projects $1 trillion in inheritance flows from boomers to their heirs between 2023 and 2026. The catch, and it is a hell of a catch, is that this transfer concentrates wealth, it does not redistribute it. Only 31 per cent of first-time homebuyers in 2024 received family help, with an average gift around $115,000 from CIBC's data. Statistics Canada finds that millennials whose parents owned homes are roughly twice as likely to become owners themselves. The trillion dollars flows to the children of wealthy boomers. Indigenous Canadians, racialized Canadians, recent immigrants, and the children of working-class boomers without real estate equity get nothing. The intergenerational lottery becomes a hereditary one.
Meanwhile, the homeownership rate for Canadians aged 25 to 39 has fallen from 55.9 per cent in the 1991 census to 49.9 per cent in 2021. In Toronto, detached homeownership for that age cohort dropped from 32.7 per cent to 19.4 per cent. In Vancouver, from 36.3 per cent to 12.2 per cent. A boomer at 30 had a one-in-three shot at a Toronto detached home. A millennial at 30 has a one-in-five. In Vancouver, the millennial number is closer to one-in-eight.
The 35-to-44 age cohort now carries the highest debt-to-income ratio in the country: 254 per cent. Boomers paid for university with summer jobs. Millennials paid for it with loans. Now millennials are paying for boomer retirement with payroll taxes.
What "intergenerational fairness" looks like on a budget line
Generation Squeeze, the UBC research and advocacy outfit run by Paul Kershaw, has been doing the age-disaggregation work that the federal Department of Finance refuses to do. Their analysis of Budget 2024 found that new federal spending added roughly $3,500 per Canadian over 65 and $800 per Canadian under 45. That is a 4.4-to-1 ratio of new federal spending. In Budget 2023, the ratio was 5.5-to-1: $4,300 to $755.
Across forty years, per Kershaw's 2020 paper in the Canadian Journal of Public Health, per-person spending on retirees has grown four times faster than per-person spending on younger Canadians. Federal debt per Canadian under 45 has climbed from $15,000 in 1976 to $44,000 in 2016. The bill for the retirement of the wealthiest cohort in Canadian history is being parked on the balance sheet of the cohort least able to pay it.
The Parliamentary Budget Officer says the federal posture is technically sustainable. There is roughly 1.5 per cent of GDP, about $46 billion a year, of fiscal room before debt-to-GDP becomes destabilizing. "Sustainable" in this context means the math does not collapse. It says nothing about whether the burden is fairly distributed. The PBO is a fiscal arithmetic shop, not a justice tribunal.
The political question is the one Ottawa keeps refusing to ask out loud: should universal benefits to wealthy seniors continue to grow faster than every other category of federal spending while the cohort paying for them watches its own retirement prospects evaporate?
The defence that doesn't survive contact with the data
Defenders of the current system tend to recycle the same five arguments. None of them survive the numbers.
The first is that boomers paid taxes for forty years. They did, at rates lower than today's, into a CPP system whose contribution rate was a third of what it is now, in an economy with twice as many workers per retiree. The contributions made are the contributions a person should be entitled to draw on. That's CPP, and retiring boomers are getting it. OAS was never a contributory program. It was a tax-funded transfer when today's boomers were workers, and it is a tax-funded transfer now. The cheque the federal government writes a retired boomer was not pre-paid by that boomer. It is being paid by their grandchildren.
The second is that OAS lifted seniors out of poverty. It did. The poverty rate for seniors fell from roughly 30 per cent before OAS to 5 per cent in 2023. This is a genuine policy success and a real argument. It is also an argument for GIS, the income-tested portion that costs $18 billion of the $76 billion total and goes to low-income seniors, not for the universal OAS payment that flows to households earning $148,000. The poverty case justifies one program. The country is running two, and conflating them.
The third is that wealth is being transferred via inheritance. Some of it. To some people. Not to most younger Canadians, and not to the ones with the worst housing prospects. The trillion-dollar inheritance is a private wealth transfer that deepens existing inequality. It does not relieve the public-finance problem and it does not redistribute the boomer windfall. It concentrates it.
The fourth is that CPP returns fell because younger workers pay in over a fully-developed program. Partially true and not exculpatory. The Fraser Institute analysis still shows boomer cohorts receiving one-and-a-half to two times the real return of post-1970 cohorts. The directional finding is robust. Boomers got a better deal because they paid in less, the program was younger, and the worker-to-retiree ratio was favourable. None of that is a moral entitlement. It is a historical accident the boomer generation is now treating as a contractual right.
The fifth is that the 2012 reform raising eligibility to 67 was reversed. Yes. That reversal was sold as preventing 100,000 future seniors from poverty, and it preserves the universal benefit at full strength. It also walked away from $10 billion in projected long-term annual savings, savings that would have funded childcare, housing, or literally anything else aimed at a cohort under 45. The reversal was a political decision to protect a wealthy voting bloc at the direct expense of a poorer, less-engaged one.
The principle, stated plainly
A retirement system should provide three things. A floor below which no senior is allowed to fall, which is GIS, and it works. A return on contributions made during working life, which is CPP, and at the cohort-adjusted rate it works for everyone, even if it works much better for some. And a recognition that the social contract runs in both directions: the cohort drawing benefits today is also the cohort that voted for forty years of tax cuts, deferred maintenance, deferred climate action, and deferred housing investment that the next cohort now has to clean up.
OAS as currently designed is none of those things. It is a universal cash transfer, untethered from contributions, untargeted by need, paid for by a working-age population that is shrinking relative to the recipient population, growing faster than any other federal program, and going in significant volume to households who already control most of the country's wealth.
The Frontier Centre for Public Policy has called for an OAS-GIS Investment Board modelled on the CPPIB, pre-funding the program the way CPP is pre-funded. That's one option. Another is means-testing OAS sharply, so that the benefit phases out by household incomes well below the current $148,000 ceiling. Another is restoring the 67 retirement age and indexing it to longevity, the way Sweden, Denmark, the Netherlands, and Finland have done. Another is finally taxing capital gains on principal residences above a generous lifetime exemption, recovering some of the windfall from a cohort that benefited from forty years of zoning policy designed to inflate their single largest asset.
Any of these would be politically difficult. All of them would be more honest than the current arrangement, which is to keep promising every senior, wealthy or not, healthy or frail, contributor or not, a cheque that someone younger and poorer is paying for.
What this is really about
The line you will hear over and over from boomers, when this argument is put to them, is that they "earned it." Some of them did, in the narrow sense that they worked and paid taxes. So does every adult Canadian. The difference is that the boomer cohort entered a labour market with cheap housing, expanding pensions, free or near-free post-secondary education, a strong industrial base, and a state that was investing in their future. They are exiting it into a labour market with unaffordable housing, a CPP that takes 11.9 per cent of every paycheque to pay for them, post-secondary debt averaging $30,000 per graduate, and a state that has let the public infrastructure they grew up on rot.
Wanting the same deal the previous generation got is not entitlement. Demanding to keep getting more than was put in, while the cohort paying for it gets less than it puts in, is.
Older Canadians should get what they paid in. The arithmetic above is the arithmetic of how much more than that they are currently getting. The first step in any honest national conversation about intergenerational fairness is to stop pretending that's not what's happening.
Sources: Office of the Superintendent of Financial Institutions, 18th Actuarial Report on the Old Age Security Program; Office of the Chief Actuary, 32nd Actuarial Report on the Canada Pension Plan (Dec 2025); Canadian Institute for Health Information, National Health Expenditure Trends 2025; Statistics Canada, Distributions of Household Economic Accounts Q2 2025 and "Millennials in the Canadian housing market" (May 2026); Parliamentary Budget Officer, Fiscal Sustainability Report 2024; Department of Finance Canada, Report on Federal Tax Expenditures 2024; Fraser Institute analysis of OCA data; Generation Squeeze federal budget analyses; Kershaw, "Intergenerational fairness," Canadian Journal of Public Health (2020); CPA Canada, RBC, CIBC inheritance-flow estimates.
