What Is The Old Age Security (OAS) Pension?

Written on Jul 28, 2009 by Tom Drake

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As with the Canada Pension Plan (CPP), the Old Age Security (OAS) pension is an important part of Canada’s retirement income system. Old Age Security payments are available to any Canadian citizen or legal resident of Canada that is over the age of 65 and has lived in Canada for at least 10 years after the age of 18.

To receive a full OAS pension, you must have lived in Canada for at least 40 years after the age of 18. Those who have lived in Canada less than 40 years, but more than 10, can still receive a partial pension. So how much you can receive for a full pension? As of right now, the maximum benefit is $516.96. These rates are reviewed 4 times a year to adjust for changes in the cost of living, based on the Consumer Price Index.

There are some tax implications to be aware of with Old Age Security. If your retirement income is more than $66,335 (this amount is adjusted once a year) you then have to repay 15% of any income over that limit. For example, if your income is $76,335, you would be $10,000 over and your maximum pension of $6,203.52 would be reduced by $1,500 to $4,703.52 a year, or $391.96 a month. This is known as the OAS clawback. At the current rates, $107,692 of income is the point where you will have completely eliminated the OAS payment. Lower income earners may also be eligible for the Guaranteed Income Supplement (GIS), with is an additional monthly payment for incomes less than $37,584.

Old Age Security and the Canada Pension Plan, at a combined annual payout of about $25,000 per couple, are an excellent foundation to your retirement planning.