What Is The Old Age Security (OAS) Pension?

Canada is a country that is devoted to ideals of supporting its population in old age. Canada’s retirement system, though not perfect, has a number of benefits attached to it. One of those benefits is the Old Age Security pension.

As with the Canada Pension Plan, 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.

OAS - What Is The Old Age Security Pension?It’s important to note that the OAS pension is not designed to be an income replacement. The government still expects you to fund your retirement mostly on your own, with the help of registered and non-registered accounts. However, the income from the government as a result of OAS can still be quite helpful as you live during retirement. It gives you a bit of a boost.

Who Receives the Full OAS Pension?

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 $549.89. These rates are reviewed 4 times a year to adjust for changes in the cost of living, based on the Consumer Price Index. It’s also possible to receive your benefits as early as age 60 if you are low-income and qualify. Realize, too, that the amount you receive phases out according to your income. Once you reach a certain income level, you are no longer eligible for OAS payments.

It’s also possible for you to receive OAS if you live abroad. You can even arrange to receive your payments in your local currency, if you are eligible. Check with Service Canada for more information regarding what you need to do in order to arrange OAS pension payments if you plan to live outside the country.

Tax Implications of the OAS Pension Payments

There are some tax implications to be aware of with Old Age Security. Every year, the government figures out a certain income level for repayment of what you receive. If you are above that income level, you then have to repay 15% of any income over that limit. This is known as the OAS clawback. It can be painful to deal with the clawback if you haven’t made plans to deal with it. Lower income earners may also be eligible for the Guaranteed Income Supplement (GIS), which is an additional monthly payment.

Make sure you understand the implications involved with OAS pension payments, and prepare yourself for the possibility of a clawback. You can consult with a tax specialist or a retirement specialist to help you figure out how best to deal with the tax implications.

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.

Written by Tom Drake

Tom Drake is the owner and head writer of Canadian Finance Blog. While you’re here, consider signing up for the RSS feed or email subscription. Both deliver the latest articles directly to you everyday! Have a Twitter account? Then follow me for all the latest posts or to send me any comments or questions!

13 Responses to What Is The Old Age Security (OAS) Pension?

  1. george simpson says:

    Hi if i LOST my OAS for having a higher income due to selling my business Do i have to re apply the next year when my income was only $25.000.00 thanks G

    • I don’t believe so, you are part of the program and once your income in the given tax year is below the claw back thresholds you will begin to receive payments. Be sure to file your return. Call 1-800- O’Canada to double check.

  2. Alex Hung says:

    The briefing on the OAS was necessary and I’m sure the older generation deserves this aid for their medical or personal support. The clauses for receiving the OAS is written clearly and is definitely beneficial. The readers can guide their parents or old friends about OAS and help them.

  3. barry christiansen says:

    PLS. HELP, MY OAS WAS SUSPENDED BECAUSE THEY DID NOT RECIEVE A QUESTIONAIRE IN TIME, IT WARNED ME IF I DO NOT REPLY WITHIN 10 DAYS I WILL BE CANCELLED. I LIVE IN PHILIPPINES WTH MY FAMILY AND DELIVERY TIME CAN BE UP TO 21 DAYS AND REPLY 21 DAYS. I DID REPLY BY REGULAR MAIL AND CALLED CANADA PENSION,EXPLANED SLOW MAIL SERVICE AND WILL SEND AGAIN BY REGISTERED MAIL.CALLED CAN, PENSION AGAIN THEY CONFIRMED THEY DID RECIEVE MY QUESTIONAIRE.AND THIER IS NO PROBLEM NOT TO WORRY.THAT WAS IN APRIL 2011,THEY CUT MY PENSION FOR AUGUST 2011 SO I LEFT PHILIPPINES TO GO TO THAILAND FOR NEEDED HEART OPERATION.NOW I HAVE MOUNTING MEDICAL EXPENSIVES IN NEED OF MY $500.00 TO PAY BILLS.I DONT UNDERSTAND HOW THEY CAN MAKE SENIORS SUFFER HARDSHIPS

  4. theona anderson says:

    i wanted to know how much will i work limited a year ..correct $4 thousand dollars a year..thank you..

  5. Susan Imre says:

    My husband get CCP and OAS ,but both is not over $1000/month.Can he apply for Guaranteed Income Supplement?

  6. alan redway says:

    When was the OAS clawback first institued?

  7. Mike DOIRON says:

    I will receive OAS this year being 65 yrs old. My spouse is 55 and still working. Is the amount of OAS reduced because of combine income of spouses.

    • Hi Mike, Your OAS is based of your taxable income. Your spouses income at this point is not a factor in determining you qualification.
      Remember that dividends from qualified Canadian corporation are grossed up to determine your taxable income which can impact your OAS.

  8. Tom – a reminder that the OAS is technically not a pension. Individuals do not contribute to it and there is not a pool of money being managed by a pension board the way the CPP is.
    OAS is paid for out of general tax revenues. To call it a pension I think is a little misleading.

    Great article though. :-)

  9. paulkim says:

    Hi, I would like to share other three other benefits of OLD AGE SECURITY (OAS) are

    1. The Guaranteed Income Supplement (GIS)— The GIS is a monthly benefit available to eligible Canadian residents who receive an OAS pension and have little or no other income. Just like OAS, you have to apply for GIS.

    2. The Allowance —If you are between 60 and 64 and your spouse or common-law partner is entitled to receive an OAS pension and is eligible for GIS, you should apply for the Allowance.

    3. The Allowance for the Survivor —If you are between 60 and 64, have little or no income, and your spouse or common-law partner has died, you may qualify for the Allowance for the Survivor.

  10. Thank you for mentioning the clawback. You’re right, it’s very difficult for people to come up with the repayment funds if they haven’t already made concessions for them within their budget. While there are many good overviews of OAS online, I often end up commenting, telling people about the clawback because it wasn’t mentioned in the article. I thank you for pointing it out again, as this is a big part of OAS, and definitely one that people need to know about.

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