Question Period Note: OLD AGE SECURITY

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?

• Our Government is committed to strengthening public pensions and improving the lives of Canada’s seniors.

• In 2016, our Government restored the age of eligibility for the Old Age Security pension and the Guaranteed Income Supplement to 65, preventing an estimated 100,000 future 65- and 66-years olds from falling into poverty.

• Our Government also increased the maximum Guaranteed Income Supplement benefit for single seniors by 10 per cent, providing up to almost $1,150 in additional benefits in 2023, indexed to inflation every quarter, and we enhanced the GIS Earnings Exemption to further assist low-income seniors who work.

• In July 2022, we increased the Old Age Security pension by 10 per cent for seniors aged 75 and over to provide additional support to seniors as they age.

• Most recently, we have committed to protect seniors by temporarily increasing the Guaranteed Income Supplement by 5%. This temporary income boost will provide up to an additional $652, tax-free.

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, or to a senior’s 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 date, 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 protect seniors by temporarily increasing the GIS by 5%. This temporary income boost could provide up to an additional $652, tax-free. Once final decisions have been made on the timing and the manner in which the Government will implement this commitment, details will be made public.

“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.