In the 2012 Federal Budget, the Government of Canada proposes measures to ensure that the Old Age Security (OAS) program remains on a sustainable path.
1. Eligibility for the Old Age Security pension and the Guaranteed Income Supplement
The Government of Canada proposes to gradually increase the age of eligibility for the OAS pension and the Guaranteed Income Supplement (GIS) between the years 2023 and 2029, from 65 to 67. People currently receiving OAS benefits will not be affected by the proposed changes.
Click on the link below (your birth year) to see how your eligibility may change for the OAS pension and the GIS:
2. Voluntary deferral of the Old Age Security pension
The Government of Canada also proposes a voluntary deferral of the Old Age Security (OAS) pension that will give people the option to defer take-up of their OAS pension by up to five years past the age of eligibility, and subsequently receive a higher, actuarially adjusted pension.
3. Proactive enrolment for OAS benefits
To improve services for seniors, the Government of Canada proposes to start a proactive enrolment process that will remove the need for many seniors to apply for the OAS pension and the GIS. This means that eligible seniors will no longer need to complete an OAS pension or GIS application. Proactive enrolment will be implemented in a phased-in approach from 2013 to 2016. People who are eligible for proactive enrolment will be notified personally by mail. Service Canada will continue to send applications to those seniors who cannot be proactively enrolled for OAS benefits. Applications are also available on the Service Canada website.
Old Age Security for the first quarter of 2012 is paid at a maximum rate of $540.12, subject to a clawback that begins at $69,562 and ends at $112,772 when the clawback reduces OAS to zero. For single persons whose income, not including OAS, is less than $16,368, the Guaranteed Income Supplement is paid at a maximum rate $732.36, and for couples both over 65, and if income is less than $21,648, $485.61 per person per month.
Financial planning for retirement usually begins with the concept of preserving Old Age Security. the clawback, which reduces OAS payments at a rate of 15 cents for each dollar over $69,562, is effectively a tax on income received over that amount. therefore taxpayers who want to preserve their OAS benefits look to income splitting, often done by the simple expedient of shifting RRSP contributions to a spouse with a significantly lower income or shorter tenure in the labour force (which generally results in lower CPP entitlements).
| Type of benefit | Average amount (January 2012) | Maximum amount1 |
Income level cut-off 2a | Income level cut-off for top-ups 2b |
|---|---|---|---|---|
| Old Age Security pension3 | $510.21 | $540.12 | Not applicable | Not applicable |
| Guaranteed Income Supplement (GIS) | ||||
| Single | $492.26 | $732.36 | $16,368 | $4,448 |
| Spouse/common law partner of someone who: | ||||
| does not receive an OAS pension | $468.55 | $732.36 | $39,264 | $8,896 |
| receives an OAS pension | $309.28 | $485.61 | $21,648 | $7,456 |
| is an Allowance recipient | $399.49 | $485.61 | $39,2644 | $7,456 |
| Allowance | $414.08 | $1,025.73 | $30,336 | $7,456 |
| Allowance for the Survivor | $645.14 | $1,148.35 | $22,080 | $4,448 |
1 The maximum amount includes the new top-ups for the GIS and the Allowances effective July 1, 2011. More information is available on Seniors section of the Service Canada website.
2a, 2b The income level cut-offs do not include the OAS pension or the first $3,500 of employment income.
3 Pensioners with an individual net income above $69,562 must repay part or all of the maximum Old Age Security pension amount. The repayment amounts are normally deducted from their monthly payments before they are issued. The full OAS pension is eliminated when a pensioner's net income is $112,772 or above
Footnote 4 The Allowance stops being paid at $30,336 while the GIS stops being paid at $39,264.
The Canada Pension Plan (CPP) is changing. The Government of Canada is making changes to the Canada Pension Plan (CPP) intended to give Canadians more options so that they can make decisions that are right for them as they make the transition from work to retirement. These changes will gradually be introduce from 2011 to 2016, and will include:
The following table summarizes the impact of the CPP changes being phased in the years leading up to 2016:
| Age At Start | >CPP Adjustment | ||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| 60 | - 30.00% | - 30.00% | - 31.20% | - 32.40% | - 33.60% | - 34.80% | - 36.00% |
| 61 | - 24.00% | - 24.00% | - 24.96% | - 25.92% | - 26.88% | - 27.84% | - 28.80% |
| 62 | - 18.00% | - 18.00% | - 18.72% | - 19.44% | - 20.16% | - 20.88% | - 21.60% |
| 63 | - 12.00% | - 12.00% | - 12.48% | - 12.96% | - 13.44% | - 13.92% | - 14.40% |
| 64 | - 6.00% | - 6.00% | - 6.24% | - 6.48% | - 7.28% | - 6.96% | - 7.20% |
| 65 | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| 66 | 6.00% | 6.84% | 7.68% | 8.40% | 8.40% | 8.40% | 8.40% |
| 67 | 12.00% | 13.68% | 15.36% | 16.80% | 16.80% | 16.80% | 16.80% |
| 68 | 18.00% | 20.52% | 23.04% | 25.20% | 25.20% | 25.20% | 25.20% |
| 69 | 24.00% | 27.36% | 30.72% | 33.60% | 33.60% | 33.60% | 33.60% |
| 70 | 30.00% | 34.20% | 38.40% | 42.00% | 42.00% | 42.00% | 42.00% |
Note that the CPP operates throughout Canada, except in Quebec, where the Quebec Pension Plan (QPP) provides benefits. These changes do not apply to the QPP.
| Type of benefit | Average benefit (January 2012) |
Maximum amount (2012) |
|---|---|---|
| Retirement (at age 65)1 | $527.96 | $986.67 |
| Disability | $843.27 | $1,185.50 |
| Survivor - younger than 65 | $378.91 | $543.82 |
| Survivor - 65 and older | $309.11 | $592.00 |
| Children of disabled contributors | $224.62 | $224.62 |
| Children of deceased contributors | $224.62 | $224.62 |
| Death (maximum one-time payment) | $2,279.96 | $2,500.00 |
| Combined benefits | ||
| Survivor/retirement (retirement at 65) | $723.29 | $986.67 |
| Survivor/disability | $974.48 | $1,185.50 |
1 Starting in January 2012, if you are 60 to 65 years old, working outside of Quebec and receiving a retirement pension from the CPP or the QPP, you must make CPP contributions toward the Post-Retirement Benefit. If you are at least 65 years old but under 70, you may elect not to make such contributions. The Post-Retirement Benefit will be paid to you automatically starting in 2013, if you are eligible. More information is available on the Changes to the Canada Pension Plan section of the Service Canada Web site.