Question Period Note: INDEXATION OF OLD AGE SECURITY BENEFITS IN JULY 2022

Given the recent rise in inflation, does the increase in Old Age Security (OAS) benefits keep up with this trend, allowing seniors to cope with the rising cost of living?

• The government is committed to ensuring that Old Age Security benefits keep pace with the cost of living increases faced by seniors.

• To ensure that they retain their value over time and to protect the purchasing power of seniors, Old Age Security benefits are adjusted four times per year in accordance with changes in the Consumer Price Index.

• In July 2022, Old Age Security benefits will increase by 2.8%, for a total increase of 6.4% over the past year.

• Moreover, the Old Age Security pension for seniors aged 75 and over will be increased by a further 10% starting in July 2022.

• The next inflationary increase will be in September 2022.

The indexation of Old Age Security (OAS) is legislated under the Old Age Security Act. Increases are made to all benefits under the OAS program, including the OAS pension, the Guaranteed Income Supplement (GIS) and the Allowances. They are calculated 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 CPI measures the price of a typical “basket” of goods and services commonly purchased by Canadian households. The basket contains approximately 600 items and is the most accurate reflection of the national cost of living. Statistics Canada is currently using 2002 as the base year, in which the CPI was equal to 100. This means that the basket of goods in 2002 cost Canadians $100.

The OAS rate increase is the percentage change between the average of the most recent three month CPI period and that of the last three-month CPI period in which OAS amounts increased.

The average CPI for November 2021, December 2021 and January 2022 was equal to 144.5. The average CPI for February, March and April 2022 was equal to 148.5. In July 2022, OAS benefits will increase by 2.8%. The maximum monthly OAS pension will increase by $18.16, from $648.67 to $666.83. Maximum GIS and Allowance benefits will also increase by 2.8%.

By the July to September 2022 quarter, OAS benefits will have increased by 6.4% over the past year. The most recent sharp increases in inflation will be reflected in the September 2022 benefit rates, based on the CPI for May, June and July 2022.

The Old Age Security Act contains a guarantee ensuring that benefits can never be reduced, even in the event of a decline in the CPI. Should the average cost of living decrease, OAS benefit amounts stay at the same level as during the previous three-month period.

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