Questions and Answers regarding the changes to the Old Age Security Act

What are the changes to Old Age Security introduced in Budget 2012?

The Government of Canada, in Budget 2012, introduced measures to gradually change the eligibility age for the Old Age Security (OAS) program over six years, starting in April 2023. The eligibility age for the OAS pension and the Guaranteed Income Supplement (GIS) will increase from 65 to 67. The ages at which the Allowance and the Allowance for the Survivor are provided will also increase from 60-64 today to 62-66, starting in April 2023.

The Government of Canada also introduced a voluntary deferral of the OAS pension, starting in July 2013, to provide more flexibility and choice for Canadians so they can make decisions that are right for them when preparing for the transition from work to retirement.

Find out more about the voluntary deferral of the OAS pension.

When will the changes to the age of eligibility take effect?

The eleven-year advance notification and the subsequent six-year phase-in period will allow those affected by these changes time to make adjustments to their retirement plans.

The phase-in period will begin by gradually raising the eligibility age by one month every three months, starting on April 1, 2023. This will facilitate a smooth transition.

Find out more about the phase-in period.

By January 2029, the age of eligibility for the OAS and GIS will be 67 and the ages at which the Allowance and the Allowance for the Survivor are provided will be 62-66.

Who will be affected by the changes to the age of eligibility?

The changes to the age of eligibility for the OAS program introduced in Budget 2012 will not affect anyone currently receiving benefits.

OAS pension and the GIS:

Anyone aged 54 or older as of March 31, 2012 (born on or before March 31, 1958) will not be affected by the changes. If eligible, they will begin receiving their OAS pension and GIS at the age of 65.

If eligible, people born between April 1, 1958, and January 31, 1962, will begin receiving their OAS pension and GIS between the ages of 65 and 67, depending on their birth date. They will be part of the phase-in period. See the details for OAS/GIS eligibility based on your date of birth.

If eligible, anyone born on or after February 1, 1962, will begin receiving their OAS pension and GIS at the age of 67.

Allowance and the Allowance for the Survivor:

Anyone aged 49 or older as of March 31, 2012 (born on or before March 31, 1963) will not be affected by the changes. If eligible, they will begin receiving the Allowances or the Allowance for the Survivor at the age of 60.

If eligible, people born between April 1, 1963 and January 31, 1967, will begin receiving their Allowance or the Allowance for the Survivor between the ages of 60 and 62, depending on their birth date. They will be part of the phase-in period.

If eligible, anyone born on or after February 1, 1967, will begin receiving the Allowance or the Allowance for the Survivor at the age of 62.

See the details for eligibility of the allowances based on your date of birth.

Why are changes to the Old Age Security program necessary?

Changes to the Old Age Security (OAS) program are deemed necessary for the following reasons:

  • Canada's population is aging. The number of Canadians aged 65 and over will rise sharply over the next two decades due to the aging of the baby boomers and longer life expectancy. By 2030, seniors will represent close to 25 percent of our population, compared with about 14 percent in 2010. In that same time period, the working-age population will barely grow at all. This will create increased demands for programs and services for seniors supported by a working-age population that will remain relatively flat.
  • The OAS program, in its current form, is unsustainable. OAS annual expenditures are projected to increase from approximately $38 billion in 2011 to $108 billion by 2030. Today, 13 cents of every federal tax dollar is spent on OAS benefits. If no changes are made, by 2030-31, this spending is projected to increase to 21 cents of every federal tax dollar. Action is required now to ensure that the OAS program remains strong for future generations and those who need it most.
  • Changes are required to ensure fairness for taxpayers. Today, there are four working-age Canadians for every senior, by 2030, there will only be two. As a result, younger generations will be forced to carry a greater tax burden, which could hamper their ability to save as well as impact our country's economic future.
  • Canada's labour market and economy needs to adapt to an aging society to remain strong. Canada's labour force growth will slow due to the increase in the number of retirements. This may also slow Canada's economic growth.

See more details about why changes to the OAS program are necessary.

Are changes also being made to the eligibility requirements for the Canada Pension Plan?

The Government of Canada does not propose any changes to the eligibility requirements for the Canada Pension Plan (CPP). The CPP is funded through the contributions of employers, employees and the self-employed. The Old Age Security program is funded through general tax revenues. Unlike the CPP, the OAS has no reserve fund.

The CPP's financial state is reviewed every three years by federal, provincial and territorial finance ministers to determine whether changes to benefits or contribution rates are required. According to the 25th Actuarial Report on the Canada Pension Plan as at December 2009, the CPP is expected to meet its obligations and remain financially sustainable over the long term under the current contribution rate.

Find out more about the recent changes to the CPP.

Are changes being made to the way Old Age Security benefits are indexed?

The Government of Canada is not making any changes to the way Old Age Security (OAS) benefits are indexed. People who qualify receive a full or partial pension depending on how long they have lived in Canada after the age of 18. OAS pension, Guaranteed Income Supplement and Allowance payments are adjusted quarterly to reflect any increases in the cost of living as measured by the Consumer Price Index.

Find out more about the OAS.

What changes will be made to other federal programs?

The Minister of Human Resources and Skills Development will work with other federal departments to amend federal income support programs that end at age 65, including disability benefits for injured and ill veterans and low-income First Nations seniors on reserve, to ensure that there are no gaps in recipient coverage.

Find out more about Veterans Affairs Canada's financial benefits.

The Minister of Aboriginal Affairs and Northern Development will review the requirements of the Income Assistance Program. This will determine any required changes to ensure the provision of basic financial support to low-income First Nations seniors on reserve affected by the changes to the OAS program.

Find out more about Aboriginal Affairs and Northern Development Canada's Income Assistance program.

What programs does the Government of Canada have to help people plan for their retirement?

The shift in the age of OAS eligibility will be supported by measures the Government of Canada has taken to help individuals financially prepare for retirement, including Tax-Free Savings Accounts (TFSA) and the soon-to-be-implemented Pooled Registered Pension Plans (PRPPs). The Government of Canada is also implementing the recommendations of the Task Force on Financial Literacy, including the appointment of a financial literacy leader.

View the report from the Task Force on Financial Literacy.

Is the Government working with the provinces and territories to examine the effect of the changes on their social programs?

The substantial notice period will provide time for provinces and territories to consider any effects and make adjustments. The federal government will provide information to provincial and territorial governments on the changes.

The Government will discuss the impact of the changes to the OAS program on the Canada Pension Plan (CPP) disability and survivor benefits with provinces and territories, who are joint stewards of the CPP, in the course of the next triennial review.