Deferring your Old Age Security pension
As of July 2013, you can defer receiving your Old Age Security (OAS) pension for up to 60 months (5 years) after the date you become eligible for an OAS pension in exchange for a higher monthly amount. If you delay receiving your OAS pension, your monthly pension payment will be increased by 0.6% for every month you delay receiving it, up to a maximum of 36% at age 70.
If you choose to defer receipt of your OAS pension, you will not be eligible for the Guaranteed Income Supplement, and your spouse or common-law partner will not be eligible for the Allowance benefit for the period you are delaying your OAS pension.
In deciding when to start receiving your OAS pension, you should consider your personal situation, taking into account such things as:
- current and future sources of income
- employment status now and in the future
- health, and
- plans for retirement
There is no financial advantage in deferring your OAS pension after age 70. In fact, you risk losing benefits. If you are over the age of 70, apply now.
Who will benefit from deferring their Old Age Security pension?
People who are able to continue working and those who can afford to wait to receive an Old Age Security (OAS) pension.
People who earn more than the maximum annual income allowed for a given year will have to repay part or their entire OAS pension. If they are able to delay receiving it until they have a lower income, they will be able to keep more of the OAS pension, and their OAS pension amount will be higher because of the increases for every month they delayed receiving it.
In what situations am I not entitled to the monthly increases?
If you decide to defer receiving your Old Age Security pension, you will not be entitled to monthly increases during your deferral period if:
- you are incarcerated in a federal penitentiary for two years or longer (except for the first month of incarceration).
- you are outside Canada, have less than 20 years of residence and do not qualify under an international social security agreement.
If I want to defer my Old Age Security pension, when should I apply?
You can apply for your Old Age Security (OAS) pension up to 11 months before you want your OAS pension to start.
Your deferred OAS pension will start on the date you indicate in writing on the Application for the Old Age Security pension form. This date can be up to 11 months earlier than your application date. Note that monthly increases will not apply to the retroactive period before your application date.
If I am eligible for my Old Age Security pension before July 2013, can I still defer my pension?
Yes. If you turned 65 before July 2013, you may choose to delay receiving your Old Age Security (OAS) pension up to age 70 in exchange for a higher monthly amount. However, the increased monthly amount will be calculated only from July 2013 up to the month before your chosen effective date or the month of your 70th birthday, whichever is earlier.
Can I cancel my Old Age Security pension to benefit from deferral?
Yes, effective March 1, 2013, you may request to cancel your Old Age Security (OAS) pension if you have been receiving your OAS pension for less than six months. To cancel your OAS pension, you must provide a written request to Service Canada within six months of receiving your first payment. You will also be required to repay, within six months from the day your cancellation request is granted, the full amount of your OAS pension and any related benefits you or your spouse or common-law partner received. You will be able to re-apply at a later date and receive an increased OAS pension.
Examples of deferring an Old Age Security pension
Deferring for one year
Michael turned 65 in July 2013. If he decides to delay receiving his Old Age Security (OAS) pension for one year, his monthly amount will increase by 7.2% (0.6% x 12 months) to account for the 12-month deferral period from August 2013 to July 2014.
If Michael's entitlement is $549.89 per month, his increased monthly payment would be $589.48.
Deferring for five years
Rita will be turning 65 in December 2013. If she decides to delay receiving her Old Age Security (OAS) pension for the maximum deferral period of 60 months, her monthly amount will increase by 36% at age 70 (0.6% x 60 months).
If Rita's entitlement is $549.89 per month, her increased monthly payment would be $747.85.
Deferring with an earlier start date than the date of application
John was eligible to receive his Old Age Security (OAS) pension effective August 2013 and he decided to delay receiving it. In December 2014, John applies for his OAS pension. He indicates on his application that he would like his OAS pension to be effective in October 2014, three months earlier than his application date. His OAS pension monthly amount will then increase by 8.4% (0.6% x 14 months) to account for the 14-month deferral period from August 2013 to September 2014. The monthly increase does not apply to the retroactive period from October 2014 to December 2014.
If John's entitlement is $549.89 per month, his increased monthly payment would be $596.08.
The amounts provided in the above examples are based on the Old Age Security Pension and Benefits Monthly Payment Amounts and Maximum Annual Incomes Chart for the period of April 1 to June 30, 2013. Consult the table of Old Age Security payment amounts for current benefit rates.
Does the increase also apply to my Old Age Security benefits?
No. The increase applies only to your Old Age Security (OAS) pension, and not to the OAS benefits (Guaranteed Income Supplement, Allowance and Allowance for the Survivor).
How will this work when the eligibility age for the Old Age Security pension increases?
When the age of eligibility for the Old Age Security (OAS) pension is gradually increased from 65 to 67, starting in April 2023, the period during which you can defer your OAS pension will also be gradually increased, from the current 65 to 70 years of age, to 67 to 72 years of age.
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