Question Period Note: OLD AGE SECURITY – GUARANTEED INCOME SUPPLEMENT

How do the Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS) help ensure that the overall income of seniors does not fall below a specified threshold? In 2024–25, $80.2 billion was paid in Old Age Security (OAS) benefits to 7.5 million beneficiaries. This included:

$60.6 billion in OAS pension benefits to 7.4 million recipients;

$18.9 billion in Guaranteed Income Supplement (GIS) benefits to 2.5 million low-income OAS pensioners; and

$632 million in Allowance benefits to 68,700 near-seniors.

OAS expenditures in 2025 represented 2.78 percent of the Gross Domestic Product (GDP).

All OAS benefits are adjusted four times per year (in January, April, July and October) in accordance with changes in the Consumer Price Index (CPI). This allows OAS benefits to keep up with the rate of inflation. In addition, the Old Age Security Act contains a guarantee ensuring that benefits can never go down, even in the event of a decline in the CPI.

The Government of Canada has taken action to ensure seniors have the secure and dignified retirement they deserve, from restoring the age of eligibility for Old Age Security benefits to 65 years from 67 years, to increasing the maximum Guaranteed Income Supplement for single seniors by 10 per cent, enhancing the Guaranteed Income Supplement Earnings Exemption, and increasing the Old Age Security pension by 10 per cent for seniors 75 and over.

To ensure that they retain their value over time and to protect the purchasing power of beneficiaries, all Old Age Security benefits are indexed four times per year using the All-Items Consumer Price Index (CPI). In addition, the Old Age Security Act guarantees that benefits can never be reduced, even in the event of a decline in the CPI.

Since 2025, the Government is focused on bringing down costs, keeping communities safe, diversifying trade, and building one Canadian economy. It has already passed legislation to cut taxes for the middle class and first-time home buyers. The Government will continue to review measures to make life more affordable for Canadians.

If pressed on the GIS Earnings Exemption:

The Guaranteed Income Supplement is an income-tested benefit designed to target those seniors most in need. However, GIS recipients who wish to continue working can exempt a portion of their earnings from the calculation of their GIS benefits.

In July 2020, we enhanced this Earnings Exemption so that low-income seniors who work are able to keep even more of their benefits. Through this enhancement, low-income working seniors can now exempt up to $10,000 of their first $15,000 of earnings.

If pressed on platform commitment:

While the proposed temporary increase to the Guaranteed Income Supplement was not included in the 2025 Federal Budget, this remains a priority for the Government of Canada. Once final decisions have been made, details will be made public.

IF PRESSED (high-income seniors receiving the Old Age Security pension):

To ensure that the Old Age Security program remains viable and continues to provide for the financial needs of all seniors, higher-income seniors are required to repay some, or all, of their Old Age Security pension through the Old Age Security Recovery Tax.

This measure, which is part of the Income Tax Act, requires higher income pensioners to repay their pension at a rate of 15 per cent of their income above a certain threshold.

About 8 per cent of Old Age Security pensioners are subject to the Old Age Security Recovery Tax.

As this is a taxation measure governed by the Income Tax Act, [my honourable colleague, the Minister of Finance,] is best placed to respond to these questions.

IF PRESSED (how OAS totals are administered to provinces and territories):

Eligibility to Old Age Security benefits is in no way affected by a person’s province of residence. The Old Age Security program is a national program, paying benefits consistently across the country based on a person’s age, residence and legal status in Canada.

No matter what province or territory a senior may reside in, the Old Age Security program assesses eligibility using the same criteria, and issues benefits at same nationally established rates for all clients.

The Old Age Security (OAS) program plays a significant role in providing income security to Canadians in their senior years. The benefits under the OAS program include the basic OAS pension, which is paid to all persons aged 65 or over who meet the residence requirements, the Guaranteed Income Supplement (GIS) for low-income seniors, and the Allowances for low‑income Canadians aged 60 to 64 who are the spouses or common-law partners of GIS recipients, or who are widows or widowers.

OAS benefits are intended to provide partial income security for seniors in recognition of the contributions that they have made to Canadian society and the economy. These benefits provide a modest base upon which individuals can add income from other sources such as the Canada Pension Plan/Québec Pension Plan, employer-sponsored pension plans, personal registered retirement savings plans, tax-free savings accounts, as well as other personal savings and investments, to address their particular financial circumstances.

Eligibility for OAS benefits has no relation to a senior’s country of birth or citizenship, province of residence, or employment history. The amount of a person’s OAS pension is determined by how long they have lived in Canada. To qualify for a full OAS pension, a person must have lived in Canada for at least 40 years after the age of 18. A person is eligible for a partial pension if they have lived in Canada between 10 and 40 years after the age of 18. The partial pension is paid at the rate of 1/40 of the full amount for each year of residence in Canada after 18 years of age. Prorating the OAS pension based on the number of years of residence in Canada provides a good compromise between the contribution made to Canada’s society, and the right to a lifelong pension.

Since July 1, 2013, eligible individuals who have not begun to receive their OAS pension can choose to delay receiving it in exchange for a higher monthly amount. The voluntary deferral gives individuals the option of waiting as late as age 70 to start collecting their OAS pension and to increase their pension by 0.6 percent for each month they delay it, for a total of 7.2 percent for each full year of deferral. This means that individuals who applied late have the choice between receiving retroactive payments, or taking advantage of the pension deferral provision.

OAS pensioners who receive little or no income, other than the OAS pension, are eligible for additional assistance through the GIS. As this benefit is intended to assist those with low income, eligibility is tied to an annual income assessment.

An individual’s GIS entitlement is recalculated at the beginning of each payment cycle, which runs from July to June, based on the previous year’s income. Generally, the GIS is reduced by $1 for every $2 of net income as defined in the Income Tax Act until it is completely phased out when individual or combined income reaches a threshold. All sources of income are taken into account in assessing eligibility for the GIS with a few exceptions, such as the first $5,000 of annual earnings.

To ensure that they retain their value over time and to protect the purchasing power of beneficiaries, all OAS benefits are indexed four times per year in January, April, July and October, using the All-Items Consumer Price Index (CPI). Quarterly indexation allows for rapid adjustments of OAS benefit amounts following cost of living increases. The Old Age Security Act guarantees that benefits can never be reduced, even in the event of a decline in the CPI.

The OAS program has played a major role in reducing the incidence of low income among seniors, however there still remain some seniors who face financial hardship. In 2023, 5.5% of seniors (approximately 408,000) had incomes below Canada’s Official Poverty Line, i.e. the Market Basket Measure or MBM, under the MBM 2023-base.

That is why the Government has undertaken several measures to improve the financial security of low-income seniors. Since 2016, the Government has:

restored the age of eligibility for the OAS pension and the GIS to 65 from 67, preventing about 100,000 future seniors from falling into poverty;

increased the maximum GIS benefit for single seniors by 10%, helping close to 900,000 seniors who rely almost exclusively on the OAS pension and the GIS, and providing up to almost $1,150 in additional benefits in 2023, indexed to inflation every quarter;

increased the GIS earnings exemption from $3,500 to $5,000, extended the exemption to self‑employment income, and introduced an additional 50 percent exemption on employment and self‑employment income between $5,000 and $15,000, starting in July 2020. This measure enables working GIS recipients to earn up to $15,000 in employment and self‑employment income before the GIS benefit reduction applies to their full income; and,

introduced a permanent 10% increase to the OAS pension for seniors aged 75 and over, in July 2022, which provided over $800 more in benefits to full OAS pensioners in the first year.

As part of its 2025 Election Platform, the Government has committed to “give a temporary income boost to low-income seniors by increasing the GIS by 5%, providing up to an additional $652 in income per year, tax-free”. While the measure was not included in the 2025 Federal Budget, this remains a priority for the Government of Canada. Once final decisions have been made, details will be made public.

The Old Age Security (OAS) Recovery Tax was introduced in the Income Tax Act (ITA) in 1989. The measure was put in place help ensure that the OAS program would remain viable and continue to provide for the financial needs of seniors, particularly those with low and modest incomes.

The OAS Recovery Tax requires all higher-income pensioners to repay their OAS pension at a rate of 15 percent of their income above a certain threshold. Originally, the Recovery Tax was applied at tax time, and the amount paid back was based on income from the previous year. For this reason, the measure became known as a "claw back". However, since 1996, the Recovery Tax has been exclusively collected through monthly deductions from a person’s OAS pension payments. The Recovery Tax is recovered over a twelve-month period, from July to June, based on a person’s net world income from the previous calendar year.

The minimum income recovery threshold is indexed annually by the Department of Finance according to changes in the Consumer Price Index. The minimum threshold for 2025 income is $93,454. Seniors with income above this threshold will have their OAS pensions reduced at source over the July 2026 to June 2027 payment period. The OAS pension will be completely recovered at a 2025 income of $152,062 for seniors aged 65 to 74 and $157,923 for seniors aged 75 and over. The current threshold for the OAS Recovery Tax strikes a balance between providing a pension benefit that recognizes a senior’s contribution to Canadian society, the economy, and their community while ensuring that seniors with the greatest financial need receive the most OAS benefits.

It should be noted that about 8 percent of OAS pensioners are subject to the OAS Recovery Tax.

Seniors deserve a healthy and dignified retirement. The Government is focused on bringing down costs, keeping communities safe, diversifying trade, and building one Canadian economy. It has already passed legislation to cut taxes for the middle class and first-time home buyers. The Government will continue to review measures that make life more affordable for Canadians.

“The permanent increase to the OAS pension will help provide older seniors with greater financial security now and in the future. Younger seniors – and all Canadians – can enjoy greater piece of mind while planning their retirement finances, knowing they will be able to count on more support from the OAS pension in their later years.”

The Honourable Kamal Khera, Minister of Seniors, July 21, 2022, News Release, Increase to the Old Age Security pension for seniors aged 75 years and older begins next week - Canada.ca

“Canada’s social safety net delivers the promise of a safe and secure retirement for everyone. The government’s largest program, Old Age Security, is projected to deliver $80.6 billion to more than seven million seniors this year— significantly reducing seniors’ poverty. […] The government’s unprecedented support for seniors means that, of all age cohorts, seniors are the least likely to live in poverty today. But it wasn’t always this way. In 1976, seniors had the highest poverty rate of any age cohort at that time. To uphold this progress, we are protecting seniors’ benefits and strengthening their pensions.”

Budget 2024: “Fairness For Every Generation”, April 16, 2024, Page 127.