The Old Age Security Pension & You

May 29, 2024

An Important Discussion About the Increase in Old Age Security (OAS) Pension Payments

Employment and Social Development Canada announced the following in July 2022: “The Old Age Security (OAS) pension has permanently increased by 10% for seniors aged 75 and over. This means that full pensioners will get more than $800 extra over the first year.”

This was a long-awaited announcement, and the release went on to say, “This will be the first permanent increase to the OAS pension since 1973, other than adjustments due to inflation. It will strengthen the financial security of 3.3 million seniors. Eligible seniors will not have to take any action to receive this increase – their payments will be automatically increased.”

The announcement further stated that the measures included the following:

  • restoring the age of eligibility for the OAS pension and the Guaranteed Income
  • Supplement (GIS) to 65 from 67
  • enhancing the Canada Pension Plan for future retirees
  • increasing the GIS for single seniors
  • raising the GIS earnings exemption
  • amending the Old Age Security Act to exclude federal pandemic benefits from the calculation of income for GIS/Allowance purposes.

In its introduction to an extended analysis of the news, The Globe and Mail commented: “Seniors aren’t required to take OAS at age 65. They can defer their OAS pension for up to five years, in return for a monthly payment that is increased by 0.6% per cent for each month the pension is deferred – up to a maximum of 36 per cent more, if OAS is claimed at age 70.

Delaying public pensions – and getting more worry-free, inflation-indexed pension income that’s guaranteed for life – is a great financial strategy for improving long-term retirement income security. In fact, when to start taking public pensions such as OAS, Canada and Quebec Pension Plan (CPP/QPP) benefits, is one of the most important financial decisions that Canadians make at retirement.”

In support of this observation, The Globe and Mail cited the concept of “Lifetime Loss” as introduced by Bonnie-Jean MacDonald in her report, Get the most from the Canada and Quebec pension plans by Delaying Benefits, published by the National Institute on Ageing (Toronto Metropolitan University).

To paraphrase the “Lifetime Loss” idea, you can think of it as a calculation designed to demonstrate how much money you can potentially lose by taking your public pension benefits at an earlier rather than at a later age.

The Decision Can, However, be Complicated by Other Issues

In some cases, it makes sense to take your OAS benefits earlier. If you have a limited life expectancy, or if you don’t have enough personal savings to supply the retirement income you’ll need until your larger CPP benefits kick in, then there’s an argument for taking the benefit the moment you’re eligible to do so.

Not Sure Which Option is Best For You?

To establish how such a calculation applies to your specific circumstances, it makes a lot of sense to take the issue up with your Coastal Community Private Wealth Group advisor. Planning ahead for your retirement, (or if you’re already retired and need financial advice) is well worth a discussion.

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