Luis asks when his Old Age Security (OAS) payments will increase now that he is 75. The answer is that the increase will begin the month after he turns 75. Luis can expect to see an increase in his June payment as he turned 75 in mid-May.
In July 2022, a change was made to the OAS benefit, allowing pensioners aged 75 and older to receive a 10% increase in their payments. This 10% boost is permanent, not a one-time increase. For the second quarter of 2025, the maximum monthly OAS payment for those aged 75 and older is $800.44, provided the person began their pension at age 65 and their net world income for the 2023 tax year was less than $148,179.
When you first apply to begin your OAS or Canada Pension Plan (CPP) payments, Service Canada offers guidelines for processing. Online applications generally take less than two weeks to process. Mailed applications can take up to four months.
OAS pensions can start as early as age 65, while CPP pensions can start as early as age 60. If you apply to begin your pension as soon as possible, your OAS will begin the month after you turn 65, and your CPP will begin the month after you turn 60. There are potential advantages to delaying the start of these pensions, including the possibility of retroactive payments for delayed applications.
In both OAS and CPP cases, you can receive up to 11 months of retroactive payments from the date Service Canada receives your application.
OAS increase for Luis in June
This option allows for a lump sum payment that is calculated based on the retroactive start date.
OAS and CPP benefits are adjusted based on inflation calculations by Statistics Canada. OAS is adjusted quarterly in January, April, July, and October, while CPP is adjusted annually each January. For instance, the last CPP adjustment was a 2.6% increase from December 2024 to January 2025.
It’s noteworthy that payments will not decrease even if the cost of living goes down. If your net income is high, you might face a clawback, known as the OAS pension recovery tax. For 2025, the minimum recovery threshold is $93,454.
This adjustment is applied from June to July based on income from the previous year and is re-evaluated annually. If you continue to work while receiving CPP and are under the age of 70, your ongoing contributions will lead to a CPP post-retirement benefit (PRB), which increases your pension. This benefit requires no additional application, and your pension will be adjusted each January.
For those reaching milestones such as their 75th birthday, it’s essential to understand when and how benefits like OAS and CPP will adjust. These pensions are designed to support Canadians in their retirement, with various opportunities for increased payouts through deferrals and sustained contributions. By staying informed about these adjustments and planning your applications strategically, you can optimize your benefits and achieve a stable financial future.
