Retirement Benefits – Old Age Security Pension (OAS) In Canada (2020)

Old Age Security (OAS) pension program is one of the 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.

Also, OAS is a monthly payment available to 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 Retirement Benefits. Let’s get started. 

What Is Old Age Security (OAS) Pension? 

The Canadian retirement system has three main pillars – Old Age Security Pension (OAS), Canada Pension Plan (CPP) and Employment Pension Plan (EPP). 

The Old Age Security (OAS) program is often considered as one of the three main pillars in the Canadian retirement system. You’ll need to be 65 years and above to apply for it. 

Also, OAS is a monthly payment and you need to meet the minimum residence requirement in order to apply and be eligible for it. 

Related – My Service Canada Account – Complete And In-Depth Guide (2020)

Retirees

Types Of Old Age Security Benefits

In addition to the Old Age Security pension, there are three main types of OAS benefits:

1. Guaranteed Income Supplement 

If you live in Canada and you have a low income, this monthly non-taxable benefit can be added to your OAS pension.

2. Allowance 

If you are 60 to 64 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.

3. Allowance for the Survivor 

If you are 60 to 64 years of age and you are widowed, you might be eligible to receive this benefit.

Related – RRIF vs. Annuity Review: Top 5 Features & Comparison

Eligibility For The Old Age Security Pension (OAS)

In this section, let’s talk about the eligibility for the Old Age Pension (OAS)

1. If you are living in Canada

2. If you are living outside Canada

  • 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 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 qualify for the OAS pension

  • 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.

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? 

You’ll need to go to this link in-order to starting receiving your old-age pension – 

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

Service Canada will also enrol seniors automatically and send a confirmation notification letter.

If you are not automatically enrolled, 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

The Canadian Retirement Income Calculator will provide you with retirement income information.

This includes the Old Age Security (OAS) pension and Canada Pension Plan (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 how you save.

The calculator will 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? 

Since July 2013, you can defer receiving your Old Age Security (OAS) pension for up to 60 months (five years) after the date you become eligible for an OAS pension in exchange for a higher monthly amount.

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. Also, your spouse or common-law partner will not be eligible for the Allowance benefit for the period you are delaying your OAS pension.

Related – RRIF vs. Annuity Review: Top 5 Features & Comparison

Retirees-3

Examples Of Deferring Old Age Security Pension

1. Deferring For One Year

Michael turned 65 in July 2013. If he decides to delay receiving his OAS pension for one year, his monthly amount will increase by 7.2% (0.6% x 12 months) for the 12-month deferral period from August 2013 to July 2014.

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

2. Deferring For Five Years

Angel will be turning 65 in December 2013. 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 (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.

Deferring OAS To An Earlier Start Date Than The Date Of The  Application

Adam was eligible to receive his OAS pension in August 2013 and he decided to delay receiving it.

In December 2014, Adam applies for his OAS pension. He indicates on his application that he would like his OAS pension to be effective in October 2014, three months earlier than his application date. His OAS pension monthly amount will then increase by 8.4% (0.6% x 14 months) to account for the 14-month deferral period from August 2013 to September 2014.

The monthly increase does not apply to the retroactive period from October 2014 to December 2014.

If John’s entitlement is $549.89 per month, his increased monthly payment would be $596.08.

How Is The Old Age Security Pension Calculated?

Full OAS Pension

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

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

2. 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.

If you were absent from Canada during that 10 year period, you may still qualify for a full pension 

  • If 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 

Partial Old Age Security Pension

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

A partial OAS pension is calculated at the rate of 1/40th of the full OAS 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

Once you meet all the eligibility criteria you will usually be approved for the Old Age Security Pension. 

Depending on partial or full OAS Benefit you’ve applied for – Service Canada will inform you by mail whether your application was approved or not. Or whether 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 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.

OAS Reconsideration is a fresh review of your application by Service Canada staff who were not involved in making the original decision.

Related – How To Use A My Service Canada Account In 2020

What Is Old Age Security (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.

What Is Old Age Security Clawback? 

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 or 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:

  • your annual net world income is more than $77,580 for 2019, and

  • you live in a country where the non-resident tax on Canadian pension is 25% or more

Retirees-1

How Do I Calculate The OAS Clawback?

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.

Example:

The threshold 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 The Old Age Security Pension Income Taxable?

Old Age Security (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 Benefits Outside Canada?

You can receive your Old Age Security pension benefit payments outside Canada if you have:

  • resided in Canada for at least 20 years after turning 18 or

  • lived and worked in a country that has a social security agreement with Canada and you meet the 20-year residency requirement

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.

Old Age Security Payment Dates For 2019

  • January 29, 2019

  • February 26, 2019

  • March 27, 2019

  • April 26, 2019

  • May 29, 2019

  • June 26, 2019

  • July 29, 2019

  • August 28, 2019

  • September 26, 2019

  • October 29, 2019

  • November 27, 2019

  • December 20, 2019

Canada Pension Plan Payment Dates For 2019

  • December 20, 2018

  • January 29, 2019

  • February 26, 2019

  • March 27, 2019

  • April 26, 2019

  • May 29, 2019

  • June 26, 2019

  • July 29, 2019

  • August 28, 2019

  • September 26, 2019

  • October 29, 2019

  • November 27, 2019

  • December 20, 2019

Veterans Affairs – Disability Pension Payment Dates For 2019

  • December 21, 2018

  • January 30, 2019

  • February 27, 2019

  • March 28, 2019

  • April 29, 2019

  • May 30, 2019

  • June 27, 2019

  • July 30, 2019

  • August 29, 2019

  • September 27, 2019

  • October 30, 2019

  • November 28, 2019

  • December 23, 2019

Questions or Concerns About The Old Age Security Pension?

If you have questions or concerns about the Old Age Security pension, you can directly get in touch with Service Canada at the phone number 1-800-255-4786.

Also, do visit a Service Canada nearby your location to get more details. 

Conclusion

I hope I’ve given you a good insight on the Old Age Security Pension program. 

If you have any questions or need further information please visit the Government Of Canada’s website or Service Canada Center to speak to a representative. 

I’ll also update this post as I find more useful information. 

Please share the content, if you liked it. Also, let me know your thoughts and comments below. 

Top 10 Latest & Popular Posts

Old Age Security Pension

4.95

Value For Money

5.0/5

Benefits

5.0/5

Rewards

5.0/5

Pros

  • Government Of Canada Initiative For Old Age Pensioners
  • Fantastic Income Supplement For Retirees
  • Good Pension Rate

Cons

  • OAS Recovery Tax
  • Benefit amount can be more, compared with present inflation rate

Sagar Sridhar

Sagar Sridhar Is a Personal Finance Blogger from Toronto, Canada. He is a Computer Science Engineer by profession and works in IT Industry. What started as a hobby, quickly turned into serious blogging and income. In this blog, Sagar passionately writes articles about Personal Finance, DIY Investing, Retirement, Stocks & ETFs, Frugal Living and much more. Do visit about page to know more about him. If you would like to get in touch, you can do so by emailing him at [email protected] and he'll get back to you at the earliest.

2 thoughts on “Retirement Benefits – Old Age Security Pension (OAS) In Canada (2020)

Leave a Reply

Your email address will not be published. Required fields are marked *