Still Wondering About Old Age Security In Canada! Here Is All You Need To Know

How often do you worry about your old age security? As we grow older we all need some fixed amount in the form of security that can help us take care of ourselves without depending on someone else. Every country has certain plans for their senior citizens to assist them financially.

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What if you live in Canada or were a Canadian resident in past years? Don’t worry the Canadian Government has a scheme for its residents- The Old Age Security.

For those who don’t know about it and are now wondering about old-age security in Canada? You are at the right place. In this blog, you will get answers to all your related queries. What’s the eligibility requirement? How to apply? How do I receive it? What are the taxes included? And much more…

So, first of all, you must know about Old Age Security in Canada.

Old Age Security(OAS) or the Old Age Pension is a financial assistance given to senior citizens of Canada by the Government. The system is among the primary income sources for retired citizens of Canada after the age of 65.

It is a retirement income of a monthly payment that is given to most seniors and low-income residents of Canada. There are two ways of receiving Old Age Security.

The Canadian government automatically enrolls you for this benefit.
You need to apply to receive it.

In most cases, people are automatically enrolled and notified. However, if the Canadian Government doesn’t have your detailed information, you won’t be enrolled and will have to apply for it.

But, Who is Eligible for Old Age Security in Canada?

Yeah, it’s very essential to know if you meet the eligibility standards of OAS. Your eligibility for OAS doesn’t depend on your employment history. Even if you haven’t worked in Canada or have been working there all your life, you can receive Old Age Security pension income as a monthly benefit. You are eligible for OAS in the following cases:

Living in Canada

If you have been living in Canada, you must

Be 65 years or older.
Be legally a resident or citizen of Canada at the time of approval for OAS.
Been living in Canada for a minimum of 10 years after turning 18.

Not Living in Canada

If you are not living in Canada, then you must be:

Of age 65 years or above.
Legally, you are a resident or citizen of Canada till you stay in Canada.
A resident in Canada for a minimum of 20 years after the age of 18.

Working Outside Canada

Suppose you are a Canadian and have worked outside for any Canadian employer in the Armed Forces, bank, etc. In that case, your working period will be counted as a residence period in Canada if

You come back to Canada within six months after your employment term ends.
You were employed and maintained your residential status in Canada while working outside when you turned 65.

You must provide proof of employment from the employer. You also need proof of your physical return to Canada if you did not turn 65 while working outside it.

Other Factors

Some other factors can also make you eligible for the OAS scheme. Canada has established a social security agreement with a few countries. If you have lived in or contributed to the social security system in any of these countries, you can get old-age security in Canada.

What’s the Procedure for Applying for OAS?

You must know the right time and procedure to apply for OAS in Canada. Generally, Service Canada sends mail to people in beige or white envelopes to inform them that they will receive an OAS pension now. You will have to apply in any of these two cases:

If they ask you to use it.
If the information present in the letter is incorrect.

If you don’t receive such a letter after reaching 64 years of age, you can contact them at this link to find out the next step. It is your decision when to start your OAS pension scheme. You have two options:

Start your OAS from the date you turn 65.
Choose a desired date to start the Old age security pension.

I know what’s there in your mind! You all want to know how to apply for OAS. You can apply for this old-age security payment online or by mailing the application form. While applying for it, you must

not already be a recipient of an OAS pension.
Have completed 64 years of your age.
Currently living in Canada.
Not a prior applicant for old-age security in Canada.
Do not have any third authorized party on your behalf.

If applying online, you must have a My Service Canada Account. If you don’t have it, register for it first. But if you are applying on paper, you only need to get the printout of the OAS application form and fill it out. Then mail or send yourself the application to the Service Canada office with certified copies of all essential documents.

Note: In both cases, if you have any doubts, you can seek assistance. But you must prove your consent for assistance to the Service Canada Office.

You will then receive a mail from the Canadian Government requesting more information or a decision on the application. In the former case, you will provide all the details they requested. In the latter case, you will receive a decision letter including the monthly amount to be received, the date to start your payment, and any past payments owed.

If you disagree with the decision, you can also request a review. However, this must be sent in written form within 90 days of receiving the decision letter. Please provide all the personal details, including your signature and ID, your OAS application details, and the reason you want to change the decision in your request. Submit it online using the My Service Canada Account or submit the Request for Reconsideration of OAS Decision form (ISP-3134). You can also mail a written request on paper to the return address or submit it to the Service Canada Office.

After your request is considered, you will receive a new decision. However, if you continue to disagree with that, contact the Social Security Tribunal. You can ask them to change or cancel your representative.

The Canada Hustle team talked to Abid Salahi, Co-founder and CEO of FinlyWealth, about the impact of the Old Age Security pension on Canada’s elderly. Here is what he said:

“As a CEO in the tech industry, I view programs like the Old Age Security pension akin to the ‘hardware’ underpinning a reliable computer system for our seniors in Canada.

They provide a stable base, ensuring basic needs like housing and health care are met, much like a computer’s hardware ensures its fundamental functions.

This safety net allows seniors to maintain their independence and dignity and reduces their vulnerability to financial fluctuations. The well-being of our seniors is a fundamental measure of our society’s health and compassion.”

When You’ll Receive Your First OAS Payment?

You start receiving your first payment as you reach 65 years of age. The longer your residency period in Canada, the more OAS benefits you receive. However, you can also defer your payments by request. If you delay the payments, you receive higher amounts as OAS. Your OAS payments increase by 0.6% every month you defer them. You can delay or defer OAS payments for up to 5 years. That means if you can defer your payments for five years, your monthly OAS benefits will rise by 36%. Then, you receive a much higher OAS payment after five years at 70.

Is OAS a Taxable Income?

Though an Old age Pension (OAS) is a guaranteed income supplement, it is taxable income. You need to include it in your annual tax report. You can also have the tax deducted regularly from your OAS payments to avoid the tax burden.

OAS Clawback

Are you above 65 and still working and earning? You may experience the OAS clawback. The OAS pension recovery tax, also known as OAS clawback, applies to Canadians with higher incomes if their annual income exceeds the OAS amount they receive in a year. In such cases, even if you are eligible for OAS benefits, your entire payments get clawed back.

So, the OAS clawback or the OAS pension recovery tax equals 15% of the difference between your income and the minimum threshold you get. The minimum income threshold set by the Government may vary in different years. If your income exceeds the maximum threshold income set by the government, you pay back the OAS payments you received that year.

However, there are some ways to escape from the OAS pension recovery tax or OAS clawback:

If you postpone your CPP benefits, your annual income will be reduced.
You can also defer your OAS benefits up to the age of 70. At 70, you receive higher OAS payments that might exceed your annual income.
Transferring 50% of your pension income to your spouse also helps in reducing your annual income.

Note- If you are already receiving other benefits, including CPP and Social Assistance, it is advised to delay your OAS payments to avoid OAS clawback.

What is the Canada Pension Plan (CPP)?

People often get confused between the CPP and OAS but both are quite different. The Canada Pension Plan is a monthly retirement income that you contribute from your income while working in Canada. The plan applies to people who work in Canada and contribute a part of their income to the pension plan. It is a taxable benefit and depends on how long and how much you contributed to it. The contributions need to be valid- they could be from your work in Canada or the credits you receive from your ex-spouse or former common-law partner on ending a relationship.

Unlike the OAS benefit plan, CPP is not funded by the Government. To start your Canada pension plan, apply for it around 7 to 14 days before you want to start it. The age for applying could be from 60 to 70 years. But, the later you use, the higher your pension amount.

Though Old Age Security in Canada and the Canada pension plan both are retirement income, there are still specific differences between them:

OAS is a basic income for aged Canadians, whereas CPP is a pension plan.
You must have resided in Canada for more than ten years to receive OAS benefits. To get CPP, you must work in Canada and contribute to the pension plan.
You can receive OAS at the age of 65, whereas for CPP, you become eligible after 60 years.
OAS is subjected to clawback, but that’s not the case in CPP.

In short, Old Age Security in Canada is a monthly payment program by the Government of Canada for its senior residents. You need to reside in Canada for a longer period to get a good amount of OAS. You are not eligible if your residential period is less than ten years. Hopefully, the article will answer all your queries about old-age security in Canada.

We interviewed Staci Anderson, Director of Marketing at Raynor Garage Doors, and talked to her about the impact of the Old Age Security pension on Canada’s elderly. Here is what she had to say:

Staci Anderson - Featured — Staci Anderson

“This income security, from the OAS pension, is the first pillar of poverty alleviation for seniors. Being non-contributory, it helps guarantee that every eligible senior receives a minimum level of income and is a lifesaver for several of those who have kind of dropped the ball on being disciplined savers for other retirement plans.

By providing seniors with this financial assistance, it not only helps pay the bills (housing welfare) but also reduces the risk of poverty (monetary minimum income) because it may still be possible to divide seniors into old departments relative to monetary and health care minimums.

Beyond the OAS pension, additional programs provide support for low-income seniors, such as the Guaranteed Income Supplement (GIS). Those with little or no other income receive more financial assistance; this is in addition to receiving GIS, which helps them achieve a minimum standard of living.

This additional income is important to the elderly, as it helps to reduce economic differences between the rich and the poor and makes retirement healthier and more dignified.

This also has the side effect of contributing to a feeling of better mental and physical health in these seniors. It reduces the stress and worry of financing life in retirement so that seniors can enjoy a steady income.

Alongside that, they can worry about other things that affect their well-being, such as staying healthy, going out with their friends, and when they need to see a doctor.

Having money set aside can help them with their health in many ways, from prescription medication to preventative medical care.”

FAQs

When can I expect my first OAS payment?

After you turn 65, you become eligible to receive your first OAS payment.

Are OAS and CPP the same?

No, OAS is a basic plan for anyone who has resided in Canada for ten years. However, for CPP, you pay while working in Canada to receive it in the future.