Do seniors in Canada get social security? Understanding Canada's Public Pensions

While Canada does not use the term "Social Security" like the U.S., it does provide a comprehensive system of public pensions for its seniors. Seniors in Canada get social security through a three-tiered system that includes the Canada Pension Plan (CPP), Old Age Security (OAS), and the income-tested Guaranteed Income Supplement (GIS).

Quick Summary

Canada's public pension system for seniors includes the contributory Canada Pension Plan (CPP) and the residency-based Old Age Security (OAS), supplemented by the income-tested Guaranteed Income Supplement (GIS) for low-income retirees. Eligibility and benefit amounts vary for each program.

Key Points

• Canadian pensions differ from US Social Security: Canada’s system includes the contributory Canada Pension Plan (CPP) and the residency-based Old Age Security (OAS), differing from the U.S. model.

• OAS is based on residency, not work history: Eligibility for Old Age Security requires a minimum number of years residing in Canada and is not tied to employment contributions.

• CPP is based on contributions: The Canada Pension Plan is a contributory program, meaning the amount of your benefit is based on how much and how long you contributed during your working years.

• Low-income seniors may qualify for GIS: The Guaranteed Income Supplement (GIS) provides a non-taxable monthly payment for low-income seniors who receive OAS.

• Delaying retirement can increase benefits: You can defer both OAS and CPP payments past the standard start age to receive a permanently increased monthly amount.

• You must apply for most benefits: While OAS can be automatic for some, both CPP and OAS require an application. They are not paid out automatically upon reaching retirement age.

• Canadian residency requirements apply: To receive the full OAS pension, you must have lived in Canada for at least 40 years after age 18, though a partial pension may be available with less residency.

• Some benefits are income-tested: OAS is subject to a recovery tax for high-income earners, and GIS is only available to those with low income.

Canada's approach to retirement income is structured through a combination of universal and earnings-related programs, which collectively serve a similar function to the U.S. Social Security system. The primary components are Old Age Security (OAS) and the Canada Pension Plan (CPP), supported by the Guaranteed Income Supplement (GIS) for those with low income. Understanding each element is key to navigating retirement benefits as a Canadian senior.

Old Age Security (OAS)

OAS is a monthly, taxable pension for most Canadian residents aged 65 and older, based on residency rather than work history.

OAS Eligibility Requirements

Eligibility for OAS requires being 65 or older, a Canadian citizen or legal resident when applying, and meeting residency requirements: at least 10 years in Canada after age 18 if living in Canada, or 20 years if living outside Canada. High-income earners may see their OAS reduced by a recovery tax.

How to Apply for OAS

Service Canada may automatically enroll eligible individuals. If not automatically enrolled, you can apply online or by mail, ideally about six months before turning 65.

Canada Pension Plan (CPP)

The CPP is an earnings-related plan where nearly all Canadian workers contribute. Benefits depend on contributions, average earnings, and the age you start receiving payments.

CPP Eligibility Requirements

You need to be at least 60 years old and have made at least one valid contribution to the CPP. Applying is required as it is not automatic.

How to Apply for CPP

Applications for CPP can be submitted online or via paper form. Applying early is recommended due to processing times.

Guaranteed Income Supplement (GIS)

GIS is a non-taxable monthly benefit for low-income OAS recipients living in Canada, funded by general revenues. The amount depends on income and marital status.

GIS Eligibility and Application

GIS eligibility requires receiving OAS and meeting income thresholds. While often automatic for OAS recipients, those with recent income drops may need to provide an income estimate.

Comparing Canada Pension Plan (CPP) and Old Age Security (OAS)

Feature	Canada Pension Plan (CPP)	Old Age Security (OAS)
Basis for Benefit	Contributory; based on your earnings and how much you contributed.	Residency-based; requires you to have lived in Canada for a certain number of years after age 18.
Funding	Funded by mandatory contributions from employees, employers, and self-employed individuals.	Funded through the government's general tax revenues.
Start Age	As early as 60 (reduced benefit) or as late as 70 (increased benefit).	Standard age is 65, but can be deferred up to age 70 for a higher monthly amount.
Application	Requires a separate application.	Often automatic, but manual application is sometimes necessary.
Income Test	Not subject to an income clawback, regardless of how much other income you have.	Subject to a recovery tax if your annual income exceeds a certain amount.
Purpose	To replace a portion of employment income in retirement.	To provide a basic, universal pension.

Conclusion

Seniors in Canada receive public pensions through the Canada Pension Plan (CPP), Old Age Security (OAS), and the Guaranteed Income Supplement (GIS), which function similarly to the U.S. Social Security system. Each program has distinct eligibility, application processes, and benefit structures, which are important for retirees to understand for maximizing their retirement income.

Visit the official Canada.ca website for more information on the Old Age Security program

Frequently Asked Questions

What is the equivalent of Social Security in Canada?

In Canada, the equivalent of the U.S. Social Security system is the combination of the Canada Pension Plan (CPP) and Old Age Security (OAS). The CPP is an earnings-related benefit based on your contributions, while the OAS is a universal pension based on residency.

What is the difference between Old Age Security (OAS) and Canada Pension Plan (CPP)?

The main difference is their basis for eligibility. OAS is a residency-based pension funded by general tax revenue, available to Canadians 65 or older who have lived in the country for at least 10 years. The CPP is an earnings-based benefit funded by contributions from workers and employers.

Do I have to apply for CPP and OAS, or is it automatic?

You must apply to receive the CPP retirement pension; it is not automatic. For OAS, Service Canada may automatically enroll you, but it is best to confirm your enrollment status and apply if necessary.

What is the Guaranteed Income Supplement (GIS)?

The Guaranteed Income Supplement (GIS) is a non-taxable monthly payment for low-income seniors who receive the Old Age Security (OAS) pension. It is designed to provide additional financial support for those who need it most.

Can I receive OAS if I have never worked in Canada?

Yes, you can. Eligibility for Old Age Security (OAS) is based on your residency in Canada, not your employment history or contributions. However, the amount you receive will be based on the number of years you have lived in Canada.

How can I increase my CPP and OAS payments?

You can increase your payments by deferring them. For each month you delay your CPP or OAS pension after age 65 (up to age 70), your monthly payment will increase.

Will my OAS be reduced if I have a high income?

Yes, your OAS pension is subject to a recovery tax if your annual income exceeds a certain threshold. This can result in a partial or full clawback of your OAS benefit.