iAtoday

Last year, the federal government officially announced a permanent 10% increase in the Old Age Security (OAS) pension for people aged 75 and over. The increase applies starting in July 2022, benefiting more than 3 million seniors eligible for additional retirement income. The people eligible for the July 2022 increase are those who have reached age 75 in June 2022 or before. For OAS beneficiaries who are not yet eligible, the increase will apply the month following the one in which they reach their 75th birthday.

For retirees aged 75 or over who started to receive the OAS at age 65, the maximum monthly amount of OAS for the 3rd quarter of 2022 was $666.83 before the increase. The 10% increase represents a monthly supplement of $66.68 for this quarter, bringing the maximum monthly amount to $733.51, an additional amount of more than $800 per year.

For retirees who deferred the start of the OAS after age 65, this increase is even more significant. For example, a retiree who deferred the OAS to age 70 (maximum deferral age) and who receives the maximum OAS will have their payment increased by 0.6% per month of deferral, which is a 36% increase for a deferral from age 65 to 70. The OAS paid to this retiree before the increase at age 75 being $906.89 for the 3rd quarter of 2022, the 10% increase at age 75 represents an additional amount of $90.69 for this quarter, or over $1080 per year.

Remember that deferring the OAS can be a good strategy to increase the guaranteed portion of income that a person receives at retirement, depending on their financial situation. Moreover, since the OAS is increased every three months to take into account the increase in the cost of living, this guaranteed portion of income follows the increase in the consumer price index, allowing retirees to maintain their purchasing power.

For more specific information on retirement planning, we remind you that our My Retirement website contains valuable advice and a number of tools to help prepare for retirement.