Old Age Security (OAS) and its supplements are an important source of retirement income for Seniors in Canada.
Canada’s seniors are the fastest growing age group in the country and projected to reach one quarter of the population by 2030.
And they are more likely to face higher health and housing costs while living on low to medium income. (Currently, about 84% of OAS beneficiaries have income of $50,000 and below)
Therefore, the OAS program was setup to guarantee that seniors will earn a minimum income, while reducing the rate of seniors with low income.
The objective is achieved through the base monthly OAS pension with extra benefits paid to those with low-income, their spouses and those who are widowed.
This post covers the OAS payment dates for 2021, the benefit amounts or how much you can receive, its eligibility, how to apply, OAS increases in 2021 and beyond, and more.
What is Old Age Security (OAS)?
Old Age Security (OAS) is a taxable monthly benefit that is paid to Canadians aged 65 and older.
Eligible Canadians can receive the monthly OAS pension and also qualify for one of the OAS supplements that include Guaranteed Income Supplement (GIS), allowance for spouses or common-law partner of GIS recipients and allowance for survivor.
The first public old age pension plan in Canada was introduced in 1927. But the plan has gone through a lot of changes and amendments to arrive at the current version.
There are now more than 6.7 million beneficiaries who receive OAS benefits.
OAS Payment Dates 2021
All OAS benefits including the OAS pension, Guaranteed Income Supplements and allowances are paid on the same date. The Old Age Security (OAS) payment dates for 2021 are:
|Benefit Month||OAS Payment Dates|
|January 2021||January 27, 2021|
|February 2021||February 24, 2021|
|March 2021||March 29, 2021|
|April 2021||April 28, 2021|
|May 2021||May 27, 2021|
|June 2021||June 28, 2021|
|July 2021||July 28, 2021|
|August 2021||August 27, 2021|
|September 2021||September 27, 2021|
|October 2021||October 27, 2021|
|November 2021||November 26, 2021|
|December 2021||December 22, 2021|
The payments are made on the third to the last business/banking date of the month, with the exception of December when it is paid much earlier before Christmas.
Payments can be received as direct deposit or through cheque. But the preferred option is direct deposit.
It is fast, convenient and easy to set up, and ensures you’ll receive your OAS payments on the OAS dates above.
If you’re already enrolled for CPP and setup for direct deposit, your monthly OAS benefit will be deposited to the same account.
Eligibility for OAS
Eligibility for Old Age Security Pension (OAS) is determined using two main factors: age and years of residency in Canada.
Age: You must be 65 years or older to be eligible for OAS
Residency in Canada: The residency requirement is a minimum of 10 years spent in Canada since the age of 18 for those living in the country or 20 years for those outside Canada.
Your time outside Canada may still be considered in some cases such as:
- Time spent working outside Canada for a Canadian employer
- If working for an international organization, time spent abroad may also be counted in some scenarios
- Lived in a country with a social security agreement with Canada or contributed to their social security
Employment history is not considered when assessing your eligibility for OAS Pension. So you can still qualify for the monthly payments whether you’ve worked or not.
In summary, to be eligible for OAS, you must be:
- At least 65 years old
- If you’re living in Canada – be a legal resident or Canadian citizen when you apply and lived in the country for at least 10 years after you turned 18 years.
- If you’re living outside Canada – legal resident or Canadian citizen when you left the county and lived in the country for at least 20 years after you turned 18 years.
How to Apply for OAS
You may be automatically enrolled for OAS pension by Service Canada if enough information is available in their records for you.
If this is the case, you’ll receive a letter a month after you turned 64 to let you know you’ve been enrolled.
However, you’ll have to apply if the information in the letter is incorrect, or you got a letter asking you to apply because of insufficient information to process the automatic enrollment.
There are two options to apply for OAS pension:
- Paper application
With the paper application, you can download the OAS pension application form, complete it and include certified true copies of all the required documents.
The completed form can be dropped at any Service Canada office or mailed to the nearest office to you.
To apply online, you’ll need to login to your My Service Canada Account (MSCA) or create one.
You can easily create a new account using your existing GCKey, bank account or your provincial government account for BC and Alberta residents.
A personal access code will be sent via mail to complete the registration and activate the account.
Note: You must be living in Canada, not receiving OAS pension currently and not started an application with Service Canada to use the online application option.
When to apply for OAS?
The earliest date to apply for OAS pension is 11 months before the pension start date.
That means, you can start an application the month after you turned 64 if you want to start receiving your OAS pension by age 65. This applies for both the online and paper application options.
You can also choose to defer your OAS pension to receive more money in the future. More on that below
OAS Retroactive application
You can apply for OAS pension retroactively and be paid for up to 12 months.
When you apply for OAS, you can choose a pension start date that is 12 months before the application date or the month you turned 65, whichever one is later.
For example: If you applied in the month you turned 66, you can still choose a pension start date of the month you turned 65.
On the other hand, the earliest start date will be age 66 if you applied in the month you turned 67.
Deferring OAS Pension
For each month after age 65 that you delay or defer OAS, your monthly pension payment will increase by 0.6 percent up to a limit of 36 percent or at age 70 years.
The longer you wait to start receiving your OAS payments, the more your monthly payment will be.
See the table below showing the increase in OAS pension amounts for each year of deferral.
|OAS Start Age||No of months||Increase in OAS Pension|
For example: if you delayed your pension by 24 months till the month you turned 67, you’ll get 14.4% (24 months * 0.6%) more.
Delaying OAS could be wise if your income is currently high and you expect it to be lower in the future.
But before you decide to take the OAS deferral option, you should consult with your financial advisor and consider its other implications.
For instance, you won’t be able to apply and receive the Guaranteed Income Supplement (GIS) during the OAS deferral period. Your spouse or common-law partner will also be ineligible to receive the Allowance for GIS recipients’ partners.
You should also consider how it affect your income now and in the future – that is, your retirement plans, whether you plan to continue working or not and so on.
Again, your financial advisor can help you decide by considering your specific circumstances.
How long does it take to start receiving OAS after application?
You should start receiving your OAS payments the month after your application processing is fully processed and approved.
OAS applications typically take between 60 to 90 days but can be significantly longer in some cases. This is one of the reasons why it is important to take advantage of the 11 months application window.
If you want to start receiving your OAS pension by age 66, apply a month after you turned 65. Don’t wait till it’s a few months to your desired pension start date.
OAS Amounts 2021: How much OAS will I get?
The monthly OAS pension amounts change every 3 months to adjust for inflation. For July 2021 to September 2021, you can receive up to $626.49 per month as OAS pension.
But how much OAS you’ll receive depends on how long you lived in Canada after age 18 and your annual income from the previous year.
You’ll receive the OAS full pension if you’ve lived in Canada for 40 years after your 18th birthday. A partial pension will be paid for lesser periods.
Check the OAS clawback section below to learn about how OAS pension is affected by income.
So how is OAS calculated?
The first step is to calculate how long you’ve lived in Canada to determine if you’ll get the full pension or a partial pension.
If you’ve lived in Canada for 30 years for instance, you can get 75% (30/40) of the maximum monthly OAS pension.
Next, the pension is reduced by the OAS monthly recovery tax, otherwise known as OAS claw back, if your income exceeds the threshold.
This is a quick way to estimate how much you can expect to receive. You’ll receive a letter stating how much to expect when you apply.
OAS recipients can receive the maximum benefit of $626.49 if their income from the previous year is below the clawback threshold.
The OAS clawback threshold for the July 2021 to June 2022 period is a 2020 net income of $79,054. It is $79,845 for 2021 but the threshold will be used for the July 2022 to June 2023 period.
Beyond this threshold, OAS pension will be reduced by 15% until it is completely eliminated. Meaning the maximum income to receive OAS pension is $128,149 for the period starting July 2021.
Note that OAS benefit period starts in July and ends in June of the following year. And like many other benefits in Canada, the income from the preceding year is used to calculate how much you will get.
Here’s an illustration of how OAS clawback works:
Imagine an OAS recipient with total income of $90,000 in 2020. This exceeds the minimum income threshold by $15,946.
That works out to a recovery tax of $2,391.9 (i.e. $15,946 * 15 percent) for the July 2021 to June 2022 OAS period. Effectively, the monthly OAS pension will be reduced by $199.33.
In summary, here’s how OAS clawback or recovery tax works:
- Your income is compared to the minimum income threshold to determine your OAS pension for the following year
- A 15 percent recovery tax is applied on the excess, if applicable, to get the annual repayment amount
- The monthly repayment amount is calculated by dividing the annual figure by 12
- Your monthly OAS pension is reduced by the figure from the step above
Note: If you think your income in the current year will be lower than the previous year, you can request for a waiver of the monthly clawback.
Simply complete Form T1213OAS Request to Reduce Old Age Security Recovery Tax at Source and send to one of the tax offices listed in the form.
How to minimize OAS Clawback
Fortunately, there are some strategies you can use to minimize OAS clawback. It includes:
- Take advantage of RRSP deduction if you’re still aged below 71
- Split your pension income with a lower-income spouse
- Generate investment income using Tax Free Savings Account (TFSA)
- Consider withdrawing from your RRSP before you reach age 65
- Defer OAS if you expect a lower income in the future
The right one will depend on your individual circumstances and your retirement plans. And you may have to combine several strategies.
If you’re not sure where to start, get in touch with a financial advisor to work out the numbers for you.
A fee-only financial planner or advisor would be great for this.
Is OAS Taxable?
Old Age Security Pension is taxable because it is retirement income.
So all the monthly OAS payment you receive are added to your income at the end of the year and taxed.
You’ll receive a T4A (OAS) tax slip if you live in Canada (or NR4-OAS slip for non-resident) when it’s time to file taxes.
You can expect to get the forms by the end of February every year.
If you don’t want to wait till tax time to pay the taxes, you can request for the taxes to be deducted from each pay.
Login to the My Service Canada Account to make the voluntary request or send Form ISP3520CPP to a tax office close to you.
OAS Increase 2021
So how much will OAS increase in 2021?
OAS Pension monthly payments are indexed to inflation. The indexation is done quarterly so you’ll usually expect to see some increases.
For the July 2021 to September 2021 OAS period, the OAS benefits increased by 1.30% to bring the maximum monthly amount to $626.49 from $618.45.
In addition, the government also announced a one-time tax-free top-up or increase of $500 for eligible seniors.
One-time Top-up for Seniors 2021
The extra payment of $500 will be paid to seniors who are eligible for OAS in June 2021 and aged 74 years or older (i.e. born on or before June 30, 1947).
This one-time payment is tax-free and eligible OAS recipients will be automatically paid in the week starting August 16, 2021.
About 3.3 million seniors will receive the payment for an estimated cost of $1.7 billion.
OAS Increase 2022
Starting July 2022, OAS pension will be permanently increased by 10% for recipients that are 75 years old and above.
The increase means eligible seniors will get up to an extra $766 in pension per year.
Outside of the quarterly indexation, this would be the first permanent increase to OAS benefits since 1973.
Unfortunately, it is not available to all seniors.
OAS for those Living Outside Canada
Canada has social security agreement with several countries around the world.
This means you can continue to receive your monthly pension even while living abroad, and the time spent abroad can be considered when assessing your eligibility for OAS.
Depending on the country, you may be able to receive your OAS and CPP payments as direct deposits and in the local currency.
Learn more about OAS for those living outside Canada here.
In addition to the main monthly OAS pension, seniors can also receive the following supplements depending on their income:
Guaranteed Income Supplement: is for lower income OAS beneficiaries. You can receive up to a maximum of between $563.27 and $935.72 depending on your marital status. The actual amount is calculated using your income.
The maximum income to qualify for GIS is $18,984 if you’re single or a family net income of $45,504 if the spouse does not receive OAS pension.
Allowance for spouses: is for spouses of GIS recipients that are aged 60 to 64 if the combined family income is $34,704 or less.
For the April to June 2021 period, they can receive up to a maximum of $1,174.49. The amount will slightly increase with the July indexation of 1.30%.
Allowance for the Survivor: is available to those aged 60 – 64 whose spouses have died if they earn less than $25,272.
In other words, it is an OAS death benefit. They can receive up to a maximum of $1,400.05 per month for the April to June 2021 period.
Note: Unlike the OAS pension, these supplements are not taxable.
CPP vs OAS
Both Canada Pension Plan (CPP) and Old Age Security (OAS) are important source of retirement income for seniors in Canada.
But the programs are substantially different.
CPP is a contributory pension scheme, meaning you’re required to contribute a portion of your employment income to the plan. On the hand, you can receive OAS even if you’ve never worked.
You can also apply for, and start receiving, CPP at age 60 but the minimum age to start receiving OAS is 65.
The amounts you can receive are also different. More importantly, how the amounts are calculated are quite different.
CPP is based on how long and how much you’ve contributed to the plan, while OAS only considers how long you’ve lived in Canada after age 18.
There are similarities between the 2 pension plans too. For example, both CPP and OAS pension are taxable, and payments are indexed against inflation – though CPP is annually and OAS quarterly.
CPP Payment Dates
Another similarity between the CPP and OAS are the monthly payment dates. Both payments are deposited on the same date by CRA.
Therefore, the CPP payment dates for 2021 are:
- 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
Some FAQs: OAS Payment Dates
OAS pension payments start at age 65 but you can apply the month after you turned 64. Allowances for spouses and survivors are also available from age 60 to 64.
Both CPP and OAS are deposited in your bank account on the third to the last banking date of each month. Enroll for direct deposit to ensure your pension dates are received on time. Check above for the CPP & OAS payment dates for 2021.
Cheques are sent out towards the end of the month but the cheque dates or the dates on the cheque are the same as the ones for direct deposit. However, depending on the mail service in your area, you may not get your cheques on the date.
The maximum OAS benefit for period starting July 2021 is $626.49 if your 2020 income does not exceed $79,054.
OAS pension starts getting clawed back once your income reaches $79,054 and is reduced to zero with an income of $128,149.
Your tax slips are available in your My Service Canada Account by February 1. But if you’re not signed up for online access, then the T4 tax slips are mailed out towards the end of February for the previous tax years. If you don’t receive your tax slips, please contact Service Canada.
You can expect OAS applications to take between 60-90 days and longer in many cases. You are allowed to apply up to 11 months earlier than your pension start date. So take advantage of this window to avoid any delays in your payment.
For the current period, the maximum income to qualify for GIS is $18,984 if you’re single and up to a family income $45,504 if you have a spouse or common-law partner and they’re not receiving OAS.
OAS pension amounts and the supplements will be going up in July 2021 due to the quarterly indexation. Also, a one-time payment of $500 will be paid to eligible seniors by August 2021.