Three Big Changes to OAS (Old Age Security)

Updated June 21, 2017

On March 29th, the Conservative party released their 2012 budget and the big news is the announced changes to Old Age Security (OAS).  This change was one of the government’s worst secrets as Stephen Harper announced that changes needed to be made to OAS at the World Economic Forum earlier this year.

Note: The following change in eligibility from age 65 to 67 was cancelled by the Liberal party in 2016, so that the change never actually came into effect. The other two changes were implemented and remain in effect at this time. This article is retained though, for historical purposes.

What is not changing

There was some suggestions that the government should lower the OAS clawback threshold which would affect higher income retirees but there will be no changes to the OAS clawback.

CPP also underwent significant changes of it’s own so the current budget does not make any new changes to CPP

Changes to the age of eligibility

The biggest news is the gradual change in the age of eligibility from age 65 to 67.  This change will be implemented in 2023.

This means that this change will not affect those Canadians who are 54 or older as of March 31, 2012.  Canadians are effectively being given 11-year notice and then 6 years to gradually implement the change.

  • If you were born before March 31, 1958, you will not be affected
  • If you were born between April 1, 1958, and Jan. 31, 1962 will have an age of eligibility between age 65 and 67.  See the chart below for more details:

OAS/GIS Age of Eligibility by Date of Birth

Month of Birth 1958 1959 1960 1961 1962
Jan. 65 65 + 5 mo 65 + 11 mo 66 + 5 mo 66 + 11 mo
Feb. – Mar. 65 65 + 6 mo 66 66 + 6 mo 67
Apr. – May 65 + 1 mo 65 + 7 mo 66 + 1 mo 66 + 7 mo 67
June – July 65 + 2 mo 65 + 8 mo 66 + 2 mo 66 + 8 mo 67
Aug. – Sept. 65 + 3 mo 65 + 9 mo 66 + 3 mo 66 + 9 mo 67
Oct. – Nov. 65 + 4 mo 65 + 10 mo 66 + 4 mo 66 + 10 mo 67
Dec. 65 + 5 mo 65 + 11 mo 66 + 5 mo 66 + 11 mo 67

Option to defer OAS

Under the new OAS rules, Canadians will also have the option to defer OAS payments for up to 5 years starting July 1, 2013.  The increase is what the government calls actuarially neutral which means on average Canadians will receive the same lifetime OAS benefit whether they choose to take it at 65 or as late as 72 after the new eligibility rules are implemented.

This may be particularly important for those who intend to continue working past 65 who would otherwise be subject to recovery (or clawback) of OAS on total income and who wish to reduce their taxable income.

Proactive enrollment for OAS

The Government will also attempt to improve services for seniors by putting in place a proactive enrolment regime that will eliminate the need for many seniors to apply for OAS and GIS. This measure will reduce the burden on seniors of completing application processes and will reduce the Government’s administrative costs. Proactive enrolment will be implemented in a phased-in approach from 2013 to 2015.

What do you think of these new changes?  I’ll share my five cents tomorrow

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace. For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

42 Responses to Three Big Changes to OAS (Old Age Security)

  1. If I sell my house and move into a home of lesser value, is the difference considered as income? If it is, is there a way to move the profit at arms length so that my OAS will not be clawed back?

    • Hi Grady. According to our laws, the gain on the sale of one’s personal home is not considered taxable, so it will not be included in income. If you invest that money and it triggers income, then that income is considered taxable. Consider splitting income with a spouse if you have one.

  2. Grady, why are you paying the financial institution that holds your investments if you have to ask that question on this forum and have no clue what the f you are talking about?
    answer to your questions: no, no why? primary residence.

  3. My experience of the Canadian civil service has been always bad. The reason the Canadian economy is doing better than most is that Canadians dont take risks. Also, the government has a way of nickel and diming. It makes it difficult to claim for benefits, pensions etc. In other words, at the expense of the taxpayer, the government is hanging onto money that the taxpayers have a right to receive. You have to be prepared to fight, struggle and argue for anything that involves money from the government.

  4. OAS defferal deeply impacts most Canadians and benefits the elitists that support the Harper Govt. With tax revenue losses through allowing the rich to defer OAS clawback for seven years, these rich benefactors will be doubly rewarded with additional 40% plus write-0ff on OAS clawback 7 years later. Althought they will not receive the OAS due to higher income, they will benefit from the increased tax benefit writing off other income.

  5. It does not take a rocket scientist to figure out the that Post Retirement Benefit is nothing more than another Harper Govt tax grab that is clandisticly engineered to rip Canadians Off with the promise of increased CPP benefits when they choose to fall back on earlier promises of retirment and choosing to take CPP at 60. They are now forced to pay into CPP if they choose to continue working for a PRB benefit that will pay them an extra $285yr for making $2,357.00 contributions. At 65 they will have paid approx $12,000 in premiums, and at $285yr, that would take approx 42 years just to recover the premiums. Who’d a thought Canadians were even stupider than their neighbours to the south?

  6. I am receiving OAS and I want to sell my house and then rent a place after. Will the house $ affect my OAS. I like to keep the OAS same. Any advise?

    Thanks

    • Wilson

      The only way that selling your house could affect your OAS would be if you invested the proceeds and earned over the minimum income threshold for the OAS clawback (approx. $70,000).

      If you also have GIS however, any income at all generated by the proceeds might reduce your GIS, but only by about 50 cents on the dollar.

      • Thanks Doug! I am still not fully understand about that. I hope you can explain a bit more.

        Yes we both have OAS and GIS. If we sell our home for $400k, is all the $ consider as income?

        If we put all the $ in the bank and earn interest (e.g $400/year), then the interest will be income and GIS will be reduced ($200/year). Is that correct? Or we will not able to get GIS because we have $400k in the bank?

        Many Thanks

        • Wilson

          No, the $400k isn’t considered as income and won’t affect your OAS or GIS.

          Yes, if you earn interest of $400/year you would each lose approx. $100/year of your GIS.

  7. ….I am collecting a CPP pension as my husband passed away…does that affect my OAS when I go to collect?

  8. I am born Feb 1963. Been on CPP disability since Mar 1995.
    With OAS changed and now cut off till my age 67 and CPP disability turned to a small retirement benefit at Feb 2028 what happens to people like me? Two years of OAS was supposed to help me. The government said it would not hurt disabled. Did they consider or change this now as promised?
    Thanks

    • Jamie

      You ask a very good question, and I don’t have a good answer for you. I suspect that the government will have to do something to help people like yourself, but I’ve heard no rumblings at all on what that solution might be.

      The only consolation that I have for you is that the problem will become more obvious in 2023 when the OAS change begins to take effect and hopefully they will have found a solution before 2028 when you turn age 65.

        • James

          Nothing has changed yet, although both the NDP and the Liberals have talked about reversing the delay in OAS if they get elected.

  9. My benefits (OAS GIS CPP) was reduced without any explanatory letter.
    The application of my wife presented one year ago, was not processed when she turned 65, and his allowance was suspended without any explanatory letter, In the Service Canada Center
    they refused to sign and dated the reception of a letter demanding an explanation, Only by phone they said phone again next month to know how it goes.
    We live in subsidized Apt. rent geared to income, the office that administer the TCHC building refused to reduce the rent and refuse to date and reception of their Form for a review,asking for a letter of SC explaining the reductions .In personne Staff of SC tell us that is not business of TCHC know reasons , only make calculation with the amounts of benefits we receive. So I need to continue paying more rent against Ontario rules. What is the process in our case to correct this situation and What is happening in reality? The government have no money for benefits or they have too much applications to process or staffs are abusing Seniors, which are the rumours?

    • Enrique

      Unfortunately, it’s impossible for me to determine what’s going on with your pensions without more detail on amounts. It’s probably just your GIS that’s changed, but that could be due to the change in income year from 2014 to 2015 effective July 2015 and/or it could be due to your wife’s eligibility for the Allowance.

      My recommendation is that you keep asking Service Canada until they provide a satisfactory explanation to you.

  10. Thanks Doug for your comments. Effectively in July my wife reached 65., and obviously she now will receive as a senior OAS because we live here more than 25 years and not the Allowance as spouse she was receiving; and possibly GIS, for these she applied one year ago. The point and my question goes in the delays to process it, the reduction, followed of suspension without explanation and refuse to receive a letter asking about that, and asking only to phone in the future. and, TCHC my landlord, refuses to receive his own form, they send to me, for a revision, and I continue paying the same rent. They ask for a letter of Service Canada explaining
    reasons for the reductions. Service Canada refuse to receive a letter from us demanding these letter. In personne an official said that is not TCHC business to know reasons, and the regular letter with the amount receiving now is enough to calculate the rent. When I phoned to a legal free clinic for an appointment ,after many stops machine, they asks details, when I mentioned allowance, they said what is that. So my concerns is that Government staff have apparently instructions to evite any probe of the failure of their programms and don,t care abouth problems that cause, and some positions are in hands of people that are not qualified. And I liked to know if this abuse in our case is singular or is generalized according your experience in Ontario.

    • Enrique

      Service Canada has developed a very poor reputation for service recently, so I don’t think you’re being singled out. I also wrote a letter on behalf of another client, and it took 9 months for my letter to reach the top of the pile before it was even looked at. Who knows how much longer it will be before they make a decision in that case.

      I think they’re just under staffed versus under qualified, but whatever the reason, I agree that it’s very poor service.

  11. Again, thanks Doug.
    If an application for OAS was made on time at 64 years old and is approved 9 months after reaching 65 years old, the applicant loose benefits for the delay .No retroactive payments.?
    If these applicant was receiving OAS ALLOWANCE as spouse, at 65 years old automatically loose it, without letters or more staff at work, on grounds that now is entitled to regular OAS.
    The applicant is in limbo 9 months and SC saves 9 payments?

    • Enrique

      No, the OAS should have been paid retroactive to the month following the month that the person turned age 65. You said previously that your wife turned 65 in July 2015, so her first OAS payment should have been made at the end of August 2015.

  12. If I move out of Canada will i lose my CPP and old age benefits, im 67
    I can’t do any more winters because of flu like sickness, so I lock myself in. Don’t know where to turn but happy to find this site.

    • Ken

      CPP is always payable regardless where you live. OAS is also payable regardless where you live, as long as you have resided in Canada for at least 20 years after turning age 18. GIS is only payable if you reside in Canada, although you are allowed to have temporary absences of up to 6 months in duration.

  13. I am Canadian citizen 68 years old, living abroad and have applied for my retirement full package 3 years ago. In replay they asked me to provide all information about my departures and arrivals from & to Canada!! Frankly I don’t have the exact information to provide, therefore I didn’t answer then they kept my application pending till now!!

    I am old and unable to work anymore, separated 14 years ago from my wife and for surviving just traveling to the East Asian countries, teaching English part times enable to survive. Now I can’t do such works anymore unfortunately due to my sicknesses.

    I need advise how to handle this case? And is there any law office or lawyer can help enable to collect my pension retirement?? Kindly get back to my email address: [email protected], and it would be much appreciated indeed.

    • Mo – I suggest that you respond to their request for dates of arrivals and departures as accurately and honestly as you can.

  14. Hi Doug,
    I applied for OAS and GIS more than 9 months back. Recently, I was sent questionnare about my 4 absence periods after I got PR. Besides, they informed that they sent letter to concerned agency in India to confirm the coverage period of my pension there for my working and contributing to pension fund there. This is required to make up the gap for eligibility period as Canada India treaty has been in force now since August 2015. I am informed on my phone query that my application is kept on hold and no reason given.
    I am now thinking of visiting US for about 3-4 months. F I go out of Canada now, will my OAS application be affected for approval?
    Pl let me know aht we should do urgently as I need to buy air ticket with 2 days to avoid higher cost.
    Shall be obliged to get your advice.

    • Balasin – I’d need to know more details about your presence and residence in Canada, but in general terms I wouldn’t recommend a long absence from Canada while you’re trying to qualify for a benefit that is based on you residing in Canada.

  15. Question I am currently on Cpp and Oas and still working pt, my daughter wants me to help her buy a home. Will this affect my monthly payments? If I were in need to get supplement later on would i qualify? Would really appreciate your advice since she is looking to purchase within the next few weeks.

  16. Short question: How about for paupers with no intention of living in Canada, who contributed close to zero?

    ……………………

    Mr.Runchey,

    Thank you for your answers (even if they aren’t dated.) Most of your enquiries appear to be from middle class people who own property and had careers. I do not and I did not.

    Spoiler: I spent my youth on hookers and wandering, and the rest I just wasted. Now is time to pay the piper.

    Long story:

    I have been ‘off the radar’ for decades. Now, at 61, I am on welfare and living in Canada. My financial future looks bleak because few well-paying jobs prefer ‘mature’ people. And I have no capital to start a business. I enjoyed 35 years travelling off and on and lived hand to mouth mostly. Make $3000, travel, make $3K, travel. Repeat for 20 years of what are usually the most financially productive years of a man’s life. BTW, I recommend this for some, although it comes at a huge financial cost.

    No savings and no job currently. Thus, I am ‘looking forward’ to further poverty in my old age. My ‘plan’ was to get rich and never depend on the State. Er, that didn’t quite work out.

    My intention is to wait out my four remaining years (there is a major financial disincentive to work part-time in the system) then take my safety net retirement income from Canada (minimal CPP and basic OAS) and move to the third world to work part time as an old man ESL teacher. One can live cheaply in Vietnam for example. Under $600. I know because I have done so in four countries in the region, and working poor friends of mine do the same. It is impossible for a single man to live in Vancouver area for less than $800, $1500 more like it.

    How anyone can live on welfare amazes me–after paying rent there is not enough even for a bus pass and groceries. ‘Just get a job’ is the obvious suggestion. Well, I spend my time daily supplementing the care for my demented mother at an understaffed provincial residential care facility. Monitoring and advocating on her behalf too. Unlike a parent looking after a child, the reverse brings zero income. I cannot underestimate the amount of energy and time this takes.

    I haven’t contributed to anything in Canada since 1981, except sales taxes. So, for 35 years I have been working the casual and short-term economy:
    1) in a cash for service business (nothing illegal);
    2) as a technically self-employed salesman;
    3) overseas as an English teacher (5 years here and there;
    4) other contract work overseas for 1-5 months a year for five years.
    I also had a modest inheritance.

    Technically I have always remained a resident, although with one or two years exception I haven’t filed income taxes for 35 years nor contributed to CPP for 37. So, I contributed to CPP for only 11 years or so, at low-level jobs.

    In fact, my SIN was dormant but somehow I revived that. When I enquired over a year ago it sounded like a bureaucratic nightmare: ‘Prove where you have lived for the last five years’. I laughed out loud, that would be impossible. I don’t keep a diary! For some unknown reason it was easy this time.

    I am more than a little curious how complicated it is to get the ball rolling in order to secure a safety net while living overseas as a pauper for 6 (12?) months per year at 65+. In 2-4 years there will no need for me to live in Canada and I am not so fond of this cold place anyway. I consider my passport just a convenience.

    Does anyone actually care where you sleep for GIS? I mean, what with ATMs and all…

    BTW, my sentiments about living in Canada are the same even if I was financially successful. Most of all I loathe the monopoly health insurance and medical industry, where one must go on bended knee for referrals to see a specialist. Then wait months. It’s easier to find a drug dealer than a doctor in BC and I won’t put up with this. Drugs cost a fraction of Canadian price in India. Canada has a great medical system for life-threatening illnesses and accidents but for chronic conditions and any sort of buyer’s market I much prefer the marketplace model of other countries such as Thailand. In Singapore citizens have the option of getting medical treatment across the bridge in Malaysia. Yes, using the State health insurance. It saves the government and therefore tax payers’ money and saves patients time. I have never understood the ideological commitment to State-enforced medical insurance in Canada. Or the equivalent in auto insurance. But I am already on a tangent.

    Last person who leaves Canada, please turn out the lights…

  17. 1. our income for 2016 will be GROSS$31000. 2.LESS OAS 13920. 3.LESS WORK INCOME 1900. IF PAYMENT FROM RRIF IS TAKEN IN 2017 $11500 IF TAKEN IN JANUARY 2017 OR MONTHLY OR NOV 2017. THIS IS THE FIRST YEAR WE WILL BE ON GIS. WHEN SHOULD WE APPLY FOR GIS. PLEASE CALCULATE (APPROX) OR WILL RRIF AFFECT THE GIS. MY EMAIL [email protected]. THANK YOU.

  18. Hi Doug I have been living in Canada for over 40 years and my thought to move overseas for the next 5 years or more would i still be entitle to receive OAS.
    Thank you.
    ADG.

  19. Hi Doug,

    Wasn’t there a cancellation of the changes to the age of eligibility, by the current government?

    Thanks,
    Adrian

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