Core factors influencing your Old Age Security (OAS)
The main component of Canada's old age pension is the Old Age Security (OAS) benefit, which is funded by general tax revenues. The amount you receive is influenced by several key factors.
Length of Canadian residency
Your years of residency in Canada after age 18 significantly impact your OAS amount. A full pension requires at least 40 years of residency. A partial pension may be available if you have between 10 and 40 years of residency, calculated as 1/40th of the full amount for each year in Canada after age 18. Residency rules differ if you live outside Canada.
Age at which you start collecting
You can start OAS at age 65, but delaying payments can increase your benefit. Each month of delay after age 65 can increase your pension by 0.6%, up to a 36% maximum at age 70. Those 75 and older receive a 10% increase.
Income and the OAS recovery tax
Your previous year's net income can lead to an OAS reduction known as the "clawback". For income above a certain threshold, your OAS is reduced. High earners may see their benefit eliminated.
Additional benefits: Guaranteed Income Supplement (GIS)
Low-income seniors receiving OAS may qualify for the non-taxable Guaranteed Income Supplement (GIS). Eligibility and the amount are based on marital status and previous year's income, excluding OAS. Lower income generally means a higher GIS benefit.
The role of inflation
OAS and GIS amounts are reviewed and adjusted quarterly based on the Consumer Price Index (CPI) to align with the cost of living. Benefits increase with the cost of living but do not decrease if it falls.
Comparison of OAS and GIS factors
Here is a comparison of the factors that determine OAS and GIS benefits:
| Factor | Old Age Security (OAS) | Guaranteed Income Supplement (GIS) |
|---|---|---|
| Funding Source | Funded by general government tax revenues. | Also funded by general government revenues. |
| Eligibility | Age 65+ with at least 10 years of Canadian residency after age 18. | Must be receiving OAS and have an income below a set threshold. |
| Calculation Basis | Years of residency, age at start, and annual net income for clawback. | Annual income and marital status. |
| Tax Status | Considered taxable income. | Non-taxable income. |
| Indexing | Adjusted quarterly based on the Consumer Price Index (CPI). | Also adjusted quarterly based on the CPI. |
| Delay Option | Can be delayed up to age 70 for higher payments. | Cannot be received while delaying OAS. |
Conclusion
The amount of your Canadian old age pension is influenced by residency history, age when benefits start, and income. The base OAS amount depends on years of residency and may be reduced for high earners. GIS offers additional non-taxable support for low-income seniors. Both are adjusted quarterly for inflation. For personal estimates, consult official government resources. For more information, visit {Link: Canada.ca https://www.canada.ca/en/services/benefits/publicpensions/old-age-security/benefit-amount.html}.
