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Understanding the Old Age Security Pension (OAS)

It is being said that when you retire, you start your second inning of life. You have a lot of free time and can fulfill your lifelong dreams. Whether it’s pursuing a hobby or traveling places from your bucket list. But, the tricky part is having financial stability after you leave your work. The best way to have financial stability in the latter part of life is to have a pension plan. In Canada, the government provides citizens with Old Age Security Pension to help them live a respectful and comforting lifestyle while aging.

Old Age Security (OAS) Pension plan is said to be a backbone of Canada’s retirement system along with other two plans namely, Canada Pension Plan (CPP) and Individual Retirement Savings or Employment Pension Plans. In addition to that, families having lower income can also take advantage of the “Guaranteed Income Supplement”, “Allowances” and lastly of “Allowance for the Survivor”, if they are eligible.

Old Age Security Pension is not linked to the employment history of the applicant, which makes the process smooth. It means that even you have never worked in your life, you are still qualified to get your OAS pension.

A Little Bit About Old Age Security Pension (OAS)

OAS pension is a monthly payment given to senior citizens above the age of 65 to help them live a better lifestyle and fulfill their day’s needs. The payment received however is taxable. The pension plan is monitored in the months of January, April, July, and October to adjust it with the increased cost of living due to inflation. Though, the good part is, even if Consumer Price Index (CPI) aka inflation curbs, you will not see any reduction in your monthly payments of OAS.

OAS pension is sent via cheque or is directly credited to your linked bank account known as Direct Deposit. Though you will have to register for the same.

One important thing to note here is that, if your income is more than $77,580 (year-2019), you may require to repay your OAS in part of full.

Are You Eligible for OAS?

The following is the requirement to qualify for receiving OAS pension.

  1. Your age should be more than 65.
  2. You need to be a citizen of Canada or a legal resident and are required to be in Canada for at least a period of 10 years from the time you turned 18 years of age.
  3. If in case, you do not live in Canada anymore, but you were a legal resident or a Canadian citizen for a minimum period of 20 years from the time you turned 18, you are eligible for OAS pension.
  4. One exception for qualifying for OAS is if your country has any legal ties for the Social Security Agreement with Canada. In that case, you may also receive the Old Age Security Pension.
  5. In order to receive the full OAS payment annually, you need to have lived in Canada for more than or at least 40 years after the age of 18. If you have spent fewer years in Canada, your payments would be deducted. For an instance, if you have lived 15 years in Canada after you turned 18, the OAS payment you would receive will be 15/40.

What are the 2021 Dates for Getting Old Age Security Pension?

Following are the dates on which you can expect to receive your OAS pension.

January 27, 2021

February 24, 2021

March 29, 2021

April 28, 2021

May 27, 2021

June 28, 2021

July 28, 2021

August 27, 2021

September 28, 2021

October 27, 2021

November 26, 2021

December 22, 2021

For the period of April to June 2021, the maximum monthly payment amount is $618.45. Also, your annual income has to be less than $129,260 for the same period.

Method to Apply for OAS Pension

In order to start receiving the OAS pension at the age of 65, you need to submit your OAS application in the succeeding month when you turn 64. Most of the time, Service Canada registers your application automatically and notifies the same, but if you are already eligible to get an OAS pension and are yet to enroll for it, you can register online by signing in or by logging in to My Service Canada Account (MSCA). Kindly make sure the following while doing so.

  1. Use the suggested web browser.
  • Safari – version 13.1.2 or newer
  • Google Chrome – version 84 or newer
  • Mozilla Firefox – version 68 or newer
  • Microsoft Edge – version 85 or newer
  1. You need to enable JavaScript and Cookies in the browser to access MSCA.
  2. Do not bookmark any of the secured MSCA pages (after login pages).

In case you have any doubts, you can get in touch with Service Canada by calling the following numbers from Monday to Friday between 8:30 am to 4:30 pm EST.

  • 1-800-277-9914 – For individuals living in Canada or the U.S.
  • 1-613-957-1954 – For individuals living outside Canada and the U.S.

Keep in mind to have your Social Insurance Number accessible.

Deferring to Receive Old Age Security Pension Payments

If you think, you don’t need the pension right after you turn 65, you have the option to delay your monthly payments. You can delay payments for a maximum of 60 months/5 years after you turn 65. Note that, you will have a larger payment sum the longer you postpone getting it. Though once you turn 70, you need to start having OAS, or you may lose your benefits.

In addition to that, individuals qualified for the Guaranteed Income Supplement do not enjoy any benefit of delaying the OAS first payment.

If You Defer for 1 Year:

It will increase your monthly payment by 0.6 percent, meaning an annual hike of 7.2 percent.

If You Defer for 5 Years:

It would increase your monthly payment at the age of 70 by a maximum of 36 percent, which is simply 0.6 percent into 60 months.

You need to know that if you delay your OAS payment, it would also impact your Guaranteed Income Supplement payments and allowances paid to your partner. They would stop, too. And there is no increase in any of them for delaying Old Age Security Pension.

The Clawbacks 

The clawbacks are also referred to as OAS recovery tax. It applies to the net income of the previous years, which is $77,580, $79,054, and $79,845 respectively for the period of 2019 to 2021. If in any case, your net income surpasses these amounts, you have to pay an additional 15 percent tax on the exceeding amount. Also, this tax is in addition to the already existing tax rate you are paying.

For the period of April to June of this year, if your net income is more than $129,260, you will get nothing in OAS pension payments.

Can You Minimize the Impact of Clawbacks?

The answer is yes, you can. By planning strategically, you can reduce the impact of clawbacks. Have a look at the following.

Deferring OAS pension or CPP:

Individuals can choose the option to delay the payment for 60 months. This will postpone the clawbacks, but a higher pay rate later may trigger it back as well.

Contribute to TFSA:

When you make an investment in TFSA, it is not taxable, and by doing so you can get rid of some of the clawback impacts.

Contribute to Your RRSP:

Till you reach the age of 71, you can make a contribution to your RRSP. It would lower your income while calculating OAS. You can do the same for your legal partner and witness a reduction in your net income for OAS calculations.

Divide Your Income:

This includes contributing some of your income to various funds like employee pension, RRSP, or RRIF. It would reduce your income and eventually lead to lower levels of clawbacks.

Invest Your Money Well:

A lot of investments like Guaranteed Income Certificates are taxable. Also, when you earn dividends, it increases your threshold income. Thus, choose your options to invest wisely so you can benefit from savings as well as have to bear lower clawbacks. Because just 50 percent of your capital gains are added to your taxable income.

I hope this article will help you understand the OAS pension plan and clear your doubts. Stay tuned with us for more insightful posts.


Devanshee Dave

Devanshee is a staff writer at YourFirst.ca. She is a finance enthusiast and has completed her Master’s degree in Mass Communication & Journalism. She is currently pursuing CFA (Chartered Financial Analyst) and has worked as a journalist in a local business newspaper, multiple start-ups as well as finance and economy-related online media houses.

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