There are 2 main types of government pensions that most Canadians can expect to receive during their retirement years: Old Age Security (OAS) and the Canada Pension Plan (CPP). Both OAS and CPP benefits are indexed to inflation as measured by the year over year change in the Consumer Price Index (CPI).
Old Age Security
The Old Age Security program is the foundation of Canada's retirement income system and provides you with a modest pension at age 65. To receive the maximum OAS pension, you must have resided in Canada for periods totaling 40 years after reaching the age of 18. Unlike CPP, OAS is an income-tested benefit. OAS payments cannot be split with your spouse.
A list of OAS payment rates and clawback rates is available on the Service Canada website.
You must apply to receive OAS benefits. We recommend applying for OAS benefits 3 months before your 65th birthday. If you do not apply on time, you may receive the back payments for up to 12 months only, including the month your application is received.
Canada Pension Plan
CPP benefits are based upon your contributions over time and are not affected by other income you may receive. CPP can be taken as early as age 60 or delayed until age 70, but prior to age 65, CPP payments can begin only if you are substantially retired. If taken prior to age 65, the pension amount is reduced by 6% for each year you are under the age of 65. If, on the other hand, you start taking it later (after age 65), the monthly income received will be higher by 6% per year.
A list of CPP payment rates is available on the Service Canada website.
In addition, CPP benefits can be split with your spouse once you are both 60 or older, helping to split your total family income more effectively. For example, if you are receiving $800 per month and your spouse is receiving $100 per month, together you can split the CPP benefits so that you would both receive $450 per month (800 +100 = 900/2 = $450 each).
There are 2 main types of government pensions that most Canadians can expect to receive during their retirement years: Old Age Security (OAS) and the Canada Pension Plan (CPP). Both OAS and CPP benefits are indexed to inflation as measured by the year over year change in the Consumer Price Index (CPI).
Old Age Security
The Old Age Security program is the foundation of Canada's retirement income system and provides you with a modest pension at age 65. To receive the maximum OAS pension, you must have resided in Canada for periods totaling 40 years after reaching the age of 18. Unlike CPP, OAS is an income-tested benefit. OAS payments cannot be split with your spouse.
A list of OAS payment rates and clawback rates is available on the Service Canada website.
You must apply to receive OAS benefits. We recommend applying for OAS benefits 3 months before your 65th birthday. If you do not apply on time, you may receive the back payments for up to 12 months only, including the month your application is received.
Canada Pension Plan
CPP benefits are based upon your contributions over time and are not affected by other income you may receive. CPP can be taken as early as age 60 or delayed until age 70, but prior to age 65, CPP payments can begin only if you are substantially retired. If taken prior to age 65, the pension amount is reduced by 6% for each year you are under the age of 65. If, on the other hand, you start taking it later (after age 65), the monthly income received will be higher by 6% per year.
A list of CPP payment rates is available on the Service Canada website.
In addition, CPP benefits can be split with your spouse once you are both 60 or older, helping to split your total family income more effectively. For example, if you are receiving $800 per month and your spouse is receiving $100 per month, together you can split the CPP benefits so that you would both receive $450 per month (800 +100 = 900/2 = $450 each).