Fiscal and Financial Planning Guide 2024-2025
Retirees > Old age security (OAS)
OAS background information
1927
Adoption of the Old Age Pensions Act. It appears that pension entitlement was severely restricted by income level and citizenship.
1951
Old Age Security Act, providing $40 per month to people aged 70 and over.
Old Age Assistance Act, under which people aged 65 to 70 could receive an amount of $40 based on their income.
1966 to 1970
The pensionable age is gradually being lowered to 65.
1985
In its 1985 federal budget, the government proposed that pensions be only partially indexed (3% below the rate of inflation). The government backed down under pressure from pensioners.
Older pensioners will remember the famous altercation on Parliament Hill, when Madame Solange Doris challenged Prime Minister Brian Mulroney: “You lied to us, Charlie Brown”.
1989
Introduction of a refund measure for people earning an individual net income of $53,000 at a rate of 15% on the excess.
1998
Finance Minister Paul Martin announced changes that made benefits more generous ($18,440 for a couple and $11,420 for a single person), but rapidly reduced based on net family income. Pensions were reduced to $0 when a couple’s family income reached $78,000 ($52,000 for a single person).
Faced with pensioners’ protests, the government once again backed down.
2013
A new measure allows you to choose to postpone the start of the OAS pension from age 65 to age 70.
2022
Since July 2022, the OAS is increased by 10% at age 75.
Amount of OAS
Since July 1, 2022, pensioners have benefited from a 10% increase in PSV when they reach the age of 75.
Full pension
Persons meeting the following conditions are eligible for the full pension:
- Be 25 years of age on July 1, 1977 (i.e. born before July 1, 1953) and have resided in Canada for 10 years prior to application.
- Have resided in Canada for 40 years after age 18.
People born before July 1, 1953, who could benefit from the first 10-year residence criterion, are now aged 71 in 2024 and already retired.
New retirees must therefore meet the second criterion of 40 years of residence after age 18 in order to qualify for the full pension.
Partial pension
People who are not entitled to a full pension may still receive a partial pension if they have resided in Canada for at least ten years after the age of 18.
They are entitled to 1/40th of the pension per year of residence. For example, if a person has lived in Canada for 25 years, he or she will be entitled to a pension of $5,386 i.e. 25/40ths of the full pension of $8,620 in 2024.
People living abroad must prove 20 years’ residence in Canada to be entitled to a pension.
Pension reduction
In 1989, the federal government introduced a OAS reduction factor of 15% for people earning at the time an individual net income of over $53,000.
In 2024, the individual net income at which the OAS is reduced is $90,997.
Strategies
The following income splitting strategies can be considered to avoid exceeding the individual net income $90,997 threshold at which the PSV begins to be reduced:
- retirement income (e.g. employer pension plan, IPP, RRIF)
- dividends from the time the incorporated professional reaches age 65, provided the spouse is a shareholder of the company.
Choice of deferral until age 70
Since 2013, it is possible to defer the start of the OAS until age 70. The pension is then increased by 7.2% per year of deferral, up to a maximum of $11,362 in today’s dollars.
OAS registration
Service Canada sends a notice in the month following a person’s 64th birthday.
Automatic registration
If Service Canada has sufficient information, the person receives a letter confirming registration, and payments begin at age 65.
ISP-3550 registration form
If Service Canada does not have all the information, the person must complete and return the ISP-3500 form received from Service Canada to request payment of the OAS.
Service Canada usually mails out the form one year before age 65, on your 64th birthday.