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Winter ’14 New Rules for the Old Age Security Pension (OAS)

Dave's Investment Insights Newsletter – Winter 2014

Written by Dave Lee
January 1, 2014

***Note that in 2016 the shift to 67 for OAS was cancelled – this article was accurate in 2014 when it was written***

Currently, OAS begins at age 65 and increases with inflation on a quarterly basis. Most Canadian residents receive the same amount ($551.54) regardless of employment history.

Under the new rules, OAS will start at age 67 instead of 65. However, those who were born before 1958, (including everyone who is already receiving OAS) will not be affected.

There will be a phase-in period between 2023 and 2029 during which the starting age will gradually rise, and then age 67 will be the new standard age for starting the OAS pension.

Another change is that voluntary deferral of the OAS pension is now allowed. You can now choose to delay receiving your OAS pension for up to five years, and for every month you delay receipt of your OAS pension, you will receive an increased monthly pension of 0.6% per month up to a maximum of 36% at age 70.

For most people, it is better to start the OAS pension right away. However, if your income is high enough to trigger a claw-back of your benefits, the deferral may be a good option.

Overview of Canada Pension Plan (CPP)

Unlike the OAS which is based on residency, the CPP is based on each tax payer’s contributions during their career. The more years you worked, and the higher your income (up to certain limits), the higher your CPP payment in retirement.

Your CPP payment is calculated assuming that you will begin to collect at age 65. However, you can defer until age 70 to get a larger pension, or take it as early as age 60 and settle for a smaller pension.
The rules around government pensions are more complicated now than they used to be, so please feel free to call me to discuss how the changing rules affect you and your loved ones.

Also in this edition:

  • RRIF minimum withdrawal rates
  • Uluru / ayers rock
  • Making tax time easier

Download the Complete Winter 2014 Investment Insights Newsletter