Canadians receiving Canada Pension Plan (CPP) and Old Age Security (OAS) benefits are set to see a significant increase in their monthly payments starting in December 2024. This boost is designed to help retirees and workers manage rising living costs caused by inflation. Here’s a detailed look at what these increases mean for you.
Overview of the 2024 CPP & OAS Increase
| Program | Increase Percentage | New Maximum Monthly Payment |
|---|---|---|
| CPP (Canada Pension Plan) | 6-7% | $1,306.57 (at age 65) |
| OAS (Old Age Security) | 6-7% | $1,025 (at age 65 and older) |
Eligibility Requirements
- CPP Eligibility: You must have contributed to the Canada Pension Plan during your working years. Payments are based on your contributions.
- OAS Eligibility: You must be a Canadian citizen or legal resident, with at least 10 years of residency in Canada after the age of 18.
- OAS Clawback: Seniors earning over $81,761 annually will see a reduction in their OAS benefits, with payments fully phased out above $134,000.
Breakdown of CPP and OAS Increases
- CPP Payment Increase: With a 6-7% boost, the maximum monthly CPP payment at age 65 rises to $1,306.57. For example, if you received $1,200 per month in 2023, your new payment will be approximately $1,272 per month.
- OAS Payment Increase: The maximum OAS payment increases to $1,025. For seniors receiving $950 monthly, a 6% rise adds about $57, totaling $1,007.
Understanding the OAS Clawback
The OAS clawback affects seniors with higher incomes:
- Threshold: Reductions begin if your income exceeds $81,761.
- Complete Phase-Out: OAS payments cease entirely for incomes above $134,000.
- Tax Planning Tip: Minimize clawback impacts by using strategies like RRSP contributions to lower taxable income.
CPP and OAS Eligibility Criteria
- CPP: Contributions during your career determine your benefits. You can start receiving payments as early as age 60 (with a reduction) or delay up to age 70 (with an increase).
- OAS: Eligibility requires a minimum of 10 years of Canadian residency after age 18, with full benefits available after 40 years.
How to Maximize Your CPP and OAS Benefits
- Delay CPP Payments: Waiting until age 70 increases your monthly payments by 0.7% per month, up to 42% more than starting at age 65.
- Boost CPP Contributions: Higher contributions lead to greater retirement benefits.
- Manage OAS Clawback: Use tax-efficient strategies, such as RRSPs or TFSAs, to reduce taxable income.
- Diversify Retirement Savings: Supplement CPP and OAS with savings plans like RRSPs, TFSAs, or private pensions.
Frequently Asked Questions
- When will the CPP and OAS increases start?
The increases take effect in December 2024 and will be reflected in the January 2025 payments. - How can I apply for OAS?
Apply online through your My Service Canada Account. It’s best to apply six months before your 65th birthday. - How much more OAS will I receive?
With a 6-7% increase, a monthly OAS payment of $950 will rise by about $57 to approximately $1,007. - What is the OAS clawback threshold?
Seniors earning more than $81,761 annually will face reduced OAS payments, with full elimination above $134,000.
By staying informed about these changes, you can better prepare for your retirement and maximize your benefits under the Canada Pension Plan and Old Age Security programs.
