A research report titled Financial Literacy and Take-up of Government Benefits submitted to the Task Force on Financial Literacy contains fascinating information on what percentage of Canadians actually take advantage of Government benefit programs that they are eligible for.

– 4% of eligible seniors are not receiving OAS payments; this rate represents about 160,000 seniors and accounts for almost $1 billion of pre-tax benefits.
– It is estimated that 135,000 to 150,000 senious do not receive a GIS to which they are entitled. 80% of those who miss out on the GIS are women, particularly those who are very elderly.
– 55,000 eligible Canadians representing about 1.8% of the beneficiaries were missing out on CPP retirement benefits (HRSDC data from 1999).
– 95% of eligible families with children receive the Child Tax Benefit.
– Only 16% of children eligible for the Canada Learning Bond ($500 in the first year and $100 thereafter) receive it.
– The take-up of the Canada Education Savings Grant is reported to be 39.3%.
– Only 50% of households headed by individuals aged 55-64 and without an employer pension have an RRSP.
– In 2007, only 31% of eligible tax payers made use of their RRSP contribution room. The median contribution was just $2,780 — representing about 6% of total eligible room available.
– In the first year of the TFSA, 4.7 million tax payers contributed $15.8B.

The report praises the Quebec Government for the close to 100% take-up rate for the Quebec Pension Plan. Officials in Quebec identify eligible seniors who are not receiving benefits to which they are entitled through databases and proactively phone or even visit them to ensure that they apply for their benefits. It is disheartening to see so many Canadians missing out on many hundreds of millions of dollars in benefits.

This article has 16 comments

  1. That is disheartening to see, but not surprising. I work at a University and you wouldn’t believe the number of scholarships that go unawarded simply because nobody applied for them.

    We made sure to take advantage of the Child Tax Benefit, Learning Bond, and CESG after our daughter was born. Even within your own employee benefits program there are things to pay attention to. My wife has MS, so for example we were able to get reimbursed for half the cost of an air conditioner through my employee health benefits.

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  3. Most of the benefits simply involve filing a tax return each year. That has steadily become too difficult for most low income seniors are either aren’t proficient on computers and tax software, or have mobility issues and can’t get out to get their taxes completed by someone else.

    There is low take up not because of a lack financial literacy – there is low take up because there are simply too many programs, with too many rules.

    It is amazing that this report took a task force a full 18 months to come up with the report. I can’t imagine what this cost to produce but I bet it would sicken most. The banks and government officals are calling the release of this “comprehensive report” a “watershed moment” for Canadians.

    Puh-lease. In 18 more months, NOTHING will have changed.

    The only answer is an overhaul of the tax rules and government subsidy rules that vastly simplify the myriad of programs that all work against each other. I am not holding my breath however.

  4. I think it is up to the government to let people know about their benefits. They are the only ones who know who those people are.

  5. @Echo: One surprising nugget in this report (for me at least) was that the take up of CCTB is close to 95%. I personally know many who never bothered to apply for the CCTB assuming that they won’t be eligible (admittedly, this was prior to the introduction of the UCCB). Goes to show that we shouldn’t draw inferences based on anecdotal evidence.

    @Rob: I bet it cost plenty. The task force visited major cities to obtain input from Canadians. I can’t complain too much that it reflects industry views because I wanted to provide input but couldn’t due to various other commitments. Still, I agree with you that it’s not going to fix much at all.

    @Money Smarts Blog: Yep. If Quebec can do it, so can the Government of Canada.

  6. @ CC
    The government does make it easy to apply for CCTB, UCCB, and other provincial programs now through the Automated Benefits Application (http://www.cra-arc.gc.ca/bnfts/tmtd-eng.html). You automatically register for these programs when you register the birth of your newborn.

  7. I wonder what happens to all of the funds that aren’t used. Are certian funds only to be used for certian programs or are they all part of the general government revenue?

  8. @Echo: ABA must be a new program. Our daughter was born in March 2009 and I recall filling out CCTB applications, SIN application etc. separately. Thanks for the information.

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  10. @DividendMan: I believe unused funds become part of general revenue. In the grand scheme of things, these don’t look like major amounts for the Government but for the people missing out on these benefits the money will make a difference in their lives.

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  14. do you think the government even allocates enough funds to pay off all the benefits or are they counting on these ratios to save money?

  15. I agree that it’s up to the government to let the people know of the benefits to which they are entitled. These people paid taxes for a reason.

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