Last updated on April 3rd, 2020 at 08:26 am

The Old Age Security (OAS) program is the Canadian Government’s largest pension program. It is funded with the general tax revenues that the government earns. OAS pension is considered to be taxable income. It is paid monthly to seniors aged 65 and above who are legal residents in Canada.

Unlike the CPP, Old Age Security benefits do not depend on your employment history. You can be eligible to receive OAS if you have never worked a day in your life or even if you are still employed.

Old Age Security (OAS) pension program is one of the three retirement benefits by the Government of Canada and is funded out of Canada’s tax revenues. This means that you do not have to pay for the pension program directly. The other two retirement programs by the Canadian Government are – the Canadian Pension Plan (CPP) and Employment Pension Plan (EPP).

OAS payments are paid out monthly to all eligible Canadian Seniors aged 65 and above, who meet the Canadian legal status and residence requirements. You will have to apply for the OAS pension to receive it.

In this article, let’s talk about the Old Age Security Pension (OAS) program and learn more about it. Let’s get started. 

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What Is The Old Age Security (OAS) Pension? 

The Canadian Retirement System has 3 main components –

1. Old Age Security Pension (OAS)

2. Canada Pension Plan (CPP)

3. Employment Pension Plan (EPP)

The Old Age Security (OAS) program is considered one of the three main pillars of the Canadian retirement system. You’ll need to be 65 years and above to apply for it. OAS is a monthly payment and you need to meet the minimum residence requirement in order to apply and be eligible for it. 

Eligibility To Receive OAS Pension Payments

First of all, if you are 65+ Canadian Senior, living in Canada or have resided in Canada for the past 10+ years. You are eligible for the OAS payments.

But if you don’t meet the basic OAS requirement and looking for more information on the eligibility part of it? Or if you have been living abroad for a while, you are at the right place, let’s discuss eligibility norms here:

1. If you are currently living in Canada

  • you must be 65 years or above the age

  • should be a Canadian citizen or a legal resident at the time of applying for the OAS pension

  • you have resided in Canada for at least 10 years since the age of 18

2. If you are living outside Canada

  • you should be 65 years old or above the age

  • you have been a Canadian citizen or a legal resident of Canada on the day before you left Canada 

  • you must have resided in Canada for at least 20 years since the age of 18

3. If neither of the above two scenarios applies to you, you may still be eligible for the OAS                    pension

  • you should have lived in one of the countries with which Canada has established a social        security agreement or

  • you should have contributed to the social security system of one of the countries with which  Canada has established a social security agreement

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Types Of Old Age Security Benefits

Alright then, now that we know what OAS is all about. Let’s get a bit deeper into the topic here – What is the OAS Benefits? I mean to say, we know that the OAS is a monthly payment to eligible Seniors ages 65+ right? But is there anything else here to talk about. Let’s discuss that here.

In addition to OAS pension, there are three other benefits that low-income seniors may also qualify for. There are three main types of OAS Benefits:

1. Guaranteed Income Supplement (GIS)

If you are a Canadian resident and you have a low income, this non-tax-deductible benefit can be paid to you monthly together with your OAS pension. In addition to your OAS Pension amount, GIS is an add on income to all eligible seniors.

To be eligible for GIS, you need to currently live in Canada and have a low income.

The GIS amount you’ll receive is a non-taxable, monthly benefit that will be added to your OAS pension.

2. Allowance 

The second type of OAS benefit is called “Allowance”.

If you are 60 to 64 (including the month you turn 65) years of age and your spouse or common-law partner is receiving the OAS pension and is eligible for the Guaranteed Income Supplement (GIS), you might be eligible to receive this benefit.

Again the basic rule applies here – you need to be a Canadian Resident and must have resided in Canada for the past 10 years. Individuals aged 60 to 64 years and their spouses that receive the OAS pension and are eligible for the Guaranteed Income Supplement (GIS), might be considered to receive this benefit too.

3. Allowance For The Survivor 

The next and third OAS Benefit Type is called “Allowance For The Survivor”.

To be eligible for this payment – your age must be between 60 to 64 years of age and you are widowed. 

Again the basic thumb rule applies here too – you need to be a Canadian Resident and must have resided in Canada for the past 10 years. Widowed individuals between the ages of 60 and 64 are eligible to receive this benefit.

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How Do You Apply For The Old Age Security Pension? 

So you meet all the eligibility conditions outlined above. Now that’s great news.

Next, How do you apply for the OAS Pension? 

Remember, you need to apply for the OAS, to receive the pension amount every month.

To do so, you need to go to this link in and apply for the pension.

PRO TIP – If you wish to start receiving your OAS pension on time, you can send in your application the month after you turn 64.

Usually, Service Canada will enrol seniors automatically to OAS and will send out a confirmation notification letter.

In case you are not automatically enrolled, all you need to do is to complete and mail the application for the Old Age Security Pension Form from the above link. It’s better you do it as soon as possible to avoid delayed payments.

OAS & Canadian Retirement Income Calculator

Are you aware of the Retirement Calculator feature offered by The Government Of Canada? If not, then you have to check this out. It’s pretty cool is estimating the pension amounts per individual.

The calculator will provide you with an estimated retirement income detailed information. The calculations include the OAS pension amount and CPP retirement benefits.

To estimate your retirement incomes from various sources, you will need to work through a series of modules. You will then need to compare them to your goal income. It also allows you to see the impact of the changes you make in the amounts entered.

The retirement calculator will also help you better understand how each pillar of the retirement income system will contribute to your future financial security.

Starting in 2019, the CPP will be gradually enhanced. Click here to get started with the Income Calculator

How Can I Defer My OAS Payments? 

Before we begin, why do you want to defer your OAS payments? You are already 65 or above, looking for pension income along with other benefits off course. But why defer? Read on to know.

Since July 2013, you can defer receiving your OAS pension amount for up to 60 months (five years) in exchange for a higher monthly amount.

Mind you, you can only defer eligible OAS payments once you are eligible to receive your pension payments.

If you delay receiving your OAS pension, your monthly pension payment will be increased by 0.6 percent for every month you delay receiving it, up to a maximum of 36 percent at age 70.

If you choose to defer your OAS pension, you will not be eligible for the Guaranteed Income Supplement (GIS). Also, your spouse or common-law partner will not be eligible for the Allowance benefit for the period you are delaying your OAS pension.

Defer Old Age Security Pension – Examples

Since July 1, 2013, individuals can voluntarily defer their OAS pension for up to 5 years after the date they become eligible. This deferral will make them eligible for a higher monthly pension later.

Scenario 1 – OAS Payments Deferred For One Year

Michael turned 65 in July 2016. If he decides to delay receiving his OAS pension for one year, his monthly amount will increase by 7.2% (which is 0.6% x 12 months) for the 12-month deferral period from August 2013 to July 2017.

If Michael’s entitlement is $549.89 per month, his increased monthly payment would be $589.48.

Scenario 2 – OAS Payments Deferred For Five Years

Angel will be turning 65 in December 2017. If she decides to delay receiving her OAS pension for the maximum deferral period of 60 months, her monthly amount will increase by 36% at age 70 (as in 0.6% x 60 months).

If Angel’s entitlement is $549.89 per month, her monthly payment will be increased to $747.85 after five years.

Scenario 3 – Deferring OAS Payments before the Start Date Of The Application

Adam was eligible to receive his OAS pension in August 2014 and he decided to delay receiving it.

In December 2015, Adam applies for his OAS pension. He indicates on his application that he would like his OAS pension to be effective in October 2015, three months earlier than his application date.

His OAS pension monthly amount will then increase by 8.4% (which is 0.6% x 14 months) to account for the 14-month deferral period from August 2014 to September 2015. The monthly increase does not apply to the retroactive period from October 2015 to December 2015.

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How Is OAS Pension Amount Calculated?

The amount you will receive will depend on how long you have resided in Canada since you turned 18. To be eligible for a full OAS pension, you must have lived in Canada for at least 40 years after turning 18. You will, however, receive a partial pension benefit if you haven’t resided in Canada for the full 40 years. The partial pension benefit is 1/40th of the full pension amount for each complete year you lived in Canada after age 18.

OAS benefits are usually adjusted quarterly: in January, April, July, and October based on the prevailing Consumer Price Index.

Before we begin on the actual OAS calculation part, let me first tell you that there are two types of OAS Pension schemes available:

1. Full Pension

2. Partial Pension

Now, what’s the difference between the two and why the types?

1. Full Pension

You may qualify for a full pension in one of two scenarios:

a. You have resided in Canada for at least 40 years after turning 18

b. You were born on or before July 1, 1952

In addition, you must have resided in Canada continuously for 10 years before the approval of your OAS pension application date.

In case, you were absent from Canada during that 10 year period, you may still qualify for a full pension, provided you reside in Canada for at least one year immediately before the approval of your OAS pension, and you had periods of prior residence in Canada that were equal to at least three times the period of absence during the 10-year period. Pretty confusing at this point but you’ll get there. Just read it again to understand the terms fully.

2. Partial Pension

If you do not qualify for the full pension and do not want to wait until you do, you may qualify for a partial pension.

How Is The Partial Pension Calculated?

Partial pension is calculated at the rate of 1/40th of the full pension for each complete year of residence in Canada after age 18.

The minimum period of residence in Canada you need to qualify for a partial OAS pension is 10 years after your 18th birthday (as long as you reside in Canada when you receive your OAS pension).

For example, if you reside in Canada for 10 years after your 18th birthday, you may qualify to receive 10/40th or one-quarter of the full OAS pension.

After You’ve Applied For Old Age Security, Next Steps

Once you meet all the eligibility criteria and have applied for OAS, your application will usually be approved within a matter of days.

Depending on the partial or full pension you’ve applied for – Service Canada will inform you by mail whether your application was approved or not. Or if any additional information or documentation is required to make a decision on your application.

If you are dissatisfied with the decision of Service Canada concerning your application for the OAS pension benefit, you may request a reconsideration of your case. You must make your request for reconsideration in writing within 90 days after you are notified in writing of the decision.

In case you do not know, OAS Reconsideration is a fresh review of your application by Service Canada staff who were not involved in making the original decision.

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What Is OAS Clawback?

OAS Clawback is officially known as the OAS recovery tax.

Your Old Age Security benefit may be reduced by a clawback if your net income for the previous calendar year exceeds $77,580 for 2019.

If your net income exceeds this amount, you must pay back 15% on the excess income up to a maximum of the total OAS benefit received.

This deduction is like an additional 15% tax on top of your current tax rate.

How Is OAS Clawback Calculated?

If your net global income exceeds the threshold amount of $77,580 for 2019, you’ll have to repay part or your entire Old Age Security pension amount. Also, a part of your entire OAS pension is reduced as a monthly recovery tax.

You must pay the OAS Clawback if you meet either of the below two:

1. Your annual net world income is more than $77,580 for 2019, and

2. You live in a country where the non-resident tax on Canadian pension is 25% or more

Your repayment calculation is based on the difference between your net income and the OAS threshold amount for the year. The first step is to figure out how much higher your income is than the threshold. You must repay 15% of that amount.

OAS Clawback Example 

The OAS Clawback threshold amount for 2018 is $75,910.

If your income in 2018 was $86,000, then your repayment would be 15% of the difference between $86,000 and $75,910: $86,000 – $75,910 = $10,090

$10,090 x 0.15 = $1,513.50

You will also have to repay $1,513.50 for the July 2019 to June 2020 period.

Is OAS Taxable Income?

Simply put, yes it. OAS pension payments are considered to be taxable income.

If you wish to request that federal income tax be deducted each month from your OAS payment, visit the My Service Canada Account (MSCA) or complete the Request for Voluntary Federal Income Tax Deductions form (ISP 3520).

Do note that, If you do not request monthly tax deductions, you may have to pay your income tax in quarterly instalments.

How To Receive OAS Payments Outside Canada?

You can receive OAS pension payments outside of Canada. However, you’ll have to meet certain conditions in order to be eligible for the payments.

1. You should have resided in Canada for at least 20 years after turning 18 or

2. You have lived and worked in a country that has a social security agreement with Canada and you meet the 20-year residency requirement permit

If you do not meet either of the above requirements, Service Canada will only send your OAS pension payments outside Canada for the month you left and for six months after that.

Also, If you decide to return to Canada after an absence of more than six months, every additional year in Canada will be counted in order for you to reach your 20 years of residence needed to receive your OAS pension outside the country.

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OAS Payment Dates For 2020

You can refer to the OAS Benefits Calendar by the Government Of Canada by clicking here.

I’ve just provided the OAS pension payment dates here for a quick reference. Do note that on the below-mentioned dates you should also be receiving your Guaranteed Income Supplement (GIS), Allowance and Allowance for the Survivor payments too (if your eligible for)

OAS Payment Dates 2020:

  • January 29, 2020

  • February 26, 2020

  • March 27, 2020

  • April 28, 2020

  • May 27, 2020

  • June 26, 2020

  • July 29, 2020

  • August 27, 2020

  • September 28, 2020

  • October 28, 2020

  • November 26, 2020

  • December 22, 2020

CPP Payment Dates For 2020

Since you are reading about the OAS here, thought of quickly pointing out to the CPP payment dates as well for 2020.

  • January 29, 2020

  • February 26, 2020

  • March 27, 2020

  • April 28, 2020

  • May 27, 2020

  • June 26, 2020

  • July 29, 2020

  • August 27, 2020

  • September 28, 2020

  • October 28, 2020

  • November 26, 2020

  • December 22, 2020

Again, if you’re looking for the benefits payment dates be it – OAS, CPP, Child Benefits, Veteran disability pension, Goods and services tax / harmonized sales tax (GST/HST) credit, OTB, ATB etc please visit the official website by clicking here.

My Service Canada Account (MSCA) and OAS Benefits 

By registering online for The My Service Canada Account or MSCA you’ll get a ton of benefits related to the Old Age Security Pension.

You can find all the benefits of OAS and MSCA below:

  • You will be able to apply online for the Old Age Security pension. Information such as your Social Insurance Number (SIN) and that of your spouse, where you have lived since age 18, your banking information (to sign up for direct deposit), the date you would like your pension to start, would be required of you.

  • You can view the status of your application for OAS benefits

  • You can change your direct deposit or banking information

  • You can change your address and telephone number(s)

  • You can authorize a person to give information to and receive information from Service Canada on your behalf

  • As of July 2013, it became possible to defer OAS pension in exchange for a higher monthly payment for up to 60 months from the day you become eligible for payment. With My Service Canada Account, this can be done easily. It can also be used to delay OAS pension payment after receiving a notification letter of automatic enrollment.

  • You can voluntarily request that federal income tax be deducted each month from your OAS payment with a My Service Canada Account.

  • T4 tax information slips (for Canadian residents) and NR4 tax slip (for those who reside outside of Canada) that show the amount of OAS pension received the previous year can be printed online from MSCA as early as February 1st each year. This slip must be included whenever you file for annual income tax returns.

  • You can view, start, change or stop your federal voluntary tax deduction

    You will be able to view details and print an official proof of payment report of your OAS benefits

  • You should note that if you have authorized someone to act as power of attorney on your behalf, that person cannot use your My Service Canada Account. Also, If you have a registered trustee, guardian or other legal representative taking care of your financial affairs, neither you nor your representative can use a My Service Canada Account.

OAS Questions

If you have any questions or concerns about the OAS pension or anything related, you can directly get in touch with Service Canada at 1-800-255-4786.

Also, do visit a Service Canada nearby your location to get more details from one of the agents.

Conclusion

There you go, that was all about the Old Age Security (OAS) pension scheme by the Government Of Canada. Like I said, OAS is one of the three pillars in the Canadian Retirement Income along with Canada Pension Plan (CPP) and Employment Pension Plan (EPP).

If you have any further questions or need further information please visit the Government Of Canada’s website or Service Canada Center to speak to a representative. If found this article useful or helpful, please do share it on social media and help spread the word.

If you liked the content of this article and found it helpful, please share it on social and help spread the word. Also, let me know if you have any further questions, comments or queries in the comments section below. 

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Sagar Sridhar

Sagar Sridhar is a personal finance blogger and a computer engineer. He is agile certified and has a master's degree in Project Management. His writing has been featured or quoted in leading publications such as Credit Canada and many other personal finance publications. "Risk comes from not knowing what you're doing" - Warren Buffet

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Thanks for sharing such a fantastic blog and awesome pictures.