All the Numbers

Old Age Security

From the All the Numbers wiki · Retirement and benefits

Old Age Security (OAS) is a monthly pension paid by the federal government. Unlike the Canada Pension Plan it does not depend on earnings or contributions; it depends on age and years of residence in Canada. It is taxable income.

The rules

  • Eligibility: age 65 or older,[1] with at least 10 years of residence in Canada after 18 (20 when applying from outside Canada).[2]

  • Amount: the full pension needs 40 years of residence after 18.[3] Fewer years give a partial pension of years ÷ 40, fixed once granted. For October to December 2026 the full amount is $762.50 a month at ages 65 to 74.[4]

  • Deferral: the pension can start later than 65.[5] It rises by 0.6% for each month deferred,[6] for at most 60 months,[7] so 36% at 70, and the increase is permanent.

  • At 75: the pension is 10% higher;[8] see OAS at 75.

  • Recovery tax: 15%[9] of net income above a threshold ($95,323 for the 2026 income year)[10] is repaid out of the pension; see the OAS recovery tax.

  • It is indexed to prices each quarter.[11] The deferral and age-75 increases are not counted when the Guaranteed Income Supplement is calculated.[12]

    monthly OAS = full pension × (years ÷ 40) × (1 + 0.006 × months deferred) × 1.10 if 75 or older

What the engine does

  • Takes the full pension at 40 years of residence unless the years are entered,[13] and a start at 65 unless another age is given. A start after 65 earns the deferral increase.
  • Applies the partial-pension fraction, the deferral increase and the 75 increase to the October to December 2026 amount, and grows it once each January at the plan's inflation rate rather than quarterly.
  • Subtracts the recovery tax from the cash received and counts OAS as taxable income.
  • Declines to estimate OAS for fewer than 10 years of residence, which would need a social security agreement.

What it deliberately does not

  • Residence outside Canada, and partial pensions under agreements with other countries, are not modelled.
  • The OAS Allowance for spouses aged 60 to 64[14] and the survivor's allowance are not modelled; see the Guaranteed Income Supplement.
  • Quarterly indexation is replaced by one projected increase a year; see inflation and today's dollars.

See also

  • Income tax brackets and your marginal rate · Federal and Ontario tax are each charged in slices of income at rising rates, then reduced by credits, with an Ontario surtax and health premium on top. The marginal rate is what the next dollar costs; the average rate is total tax over income.
  • Inflation and today's dollars · The default inflation rate is 2.5% a year. A future dollar amount can be shown as is, or divided by (1 + inflation) for each year to show what it would buy today.
  • Net worth, as the plan counts it · Net worth is everything the plan holds (cash, investment and registered accounts, homes at market value) minus mortgages, credit lines, debts and tax owing. It is not reduced for selling costs or for tax on money still in an RRSP.
  • OAS at 75 · Old Age Security is 10% higher from the month after the 75th birthday. The plan takes every birthday as January 1, so in the projection the increase starts each February of the year a person turns 75.
  • Retirement age · The age at which a person's pay stops in the plan, 65 unless you give another. Their monthly contributions stop then, and an RRSP becomes a RRIF at 71.
  • RRIFs and the wind-up at 71 · An RRSP must become a RRIF by the end of the year you turn 71, after which a prescribed minimum comes out and is taxed every year. Give a birth year and the plan models it; leave it blank and a plan running past 71 looks better than it is.
  • The Guaranteed Income Supplement · A tax-free top-up to Old Age Security for pensioners with little other income. It falls by 50 cents for every dollar of other income (75 cents through part of the range); RRSP and RRIF withdrawals count against it, TFSA withdrawals do not. The projection estimates it on the previous year's income.
  • The OAS recovery tax · Years where net income clears the threshold repay 15% of the excess out of Old Age Security. The projection adds it to the year's return and pays it with the April balance; Service Canada takes it from the OAS payments from the next July instead, so only the timing differs.
  • Who the plan is about · A plan covers one person or two. Where a birth year is missing the plan assumes the person is 40 and born on 1 January, says so on the page, and uses that age for tax, pension and account rules until the real one is entered.
  • Workplace pensions · A defined-benefit pension from an employer pays a set amount each month for life, sometimes with a bridge benefit that stops at 65. Enter the yearly pension you expect when it starts, with the years you will still work, under each person's workplace pension; the plan does not add one you have not entered.

References

  1. ↑Service Canada — OAS eligibility · OAS pension eligibility age: 65 · 65 years · effective 1970-01-01
  2. ↑Service Canada — OAS eligibility; OAS Act s.3(2) · Partial OAS pension requires at least 10 years of residence after 18 (20 years when residing outside Canada) · 10 years · effective 1977-07-01
  3. ↑Old Age Security Act, s.3(1)(c), s.3(3) ("bears to 40 years") · Full OAS pension requires 40 years of residence in Canada after age 18; a partial pension is years/40 (s.3(3)), fixed once granted · 40 years · effective 1977-07-01
  4. ↑Service Canada — Old Age Security payment amounts (quarterly-indexed) · OAS maximum monthly, age 65–74 (set each quarter) · $762.50 · effective 2026-10-01
  5. ↑Service Canada — OAS deferral · OAS deferral bonus: +0.6%/month deferred after 65, max 60 months (+36% at 70); eligibility 65 with 10yr/20yr residency (partial pension = residency/40ths) · See the source · effective 2013-07-01
  6. ↑Old Age Security Act, s.7.1(1) ("0.6% for each month") · Voluntary OAS deferral: pension increase for each month deferred after eligibility · 0.6% · effective 2013-07-01
  7. ↑Old Age Security Act, s.7.1(2) · Months of deferral after which the OAS increase stops accruing (age 70) · 60 · effective 2013-07-01
  8. ↑Service Canada — Old Age Security payment amounts · OAS pension increase from the month after the pensioner turns 75 · 10% · effective 2022-07-01
  9. ↑CRA — Old Age Security recovery tax · OAS recovery tax rate on net income above the threshold · 15% · effective 1989-01-01
  10. ↑CRA — Old Age Security recovery tax (threshold for 2026 payments; 2026 INCOME year threshold is $95,323 — swap when modelling future years) · OAS clawback (recovery tax) threshold: net world income above it is taxed at the recovery rate (assessed on that year's return; recovered from July of the next year to June of the year after). Indexed annually; the plan scales it by its inflation rate like the brackets · $95,323 · effective 2026-01-01
  11. ↑Service Canada — OAS payment amounts (quarterly CPI review); CPP Act s.45 (annual) · Projected CPP (January) and OAS/GIS (quarterly) indexation is applied once each January at the plan's tax indexation assumption; published quarter amounts are the base · See the source · effective 2026-09-18
  12. ↑Old Age Security Act, s.2.1(1)–(2) · The deferral increase and the age-75 increase are not part of the "full monthly pension" or "pensioner's monthly pension" used in the GIS formulas (s.12(5), s.12(6)(b)) · See the source · effective 2022-07-01
  13. ↑Service Canada — OAS eligibility (40 years after 18 for a full pension; partial pensions in 40ths) · OAS is estimated at the full pension — 40 years of residence in Canada after 18 — until the years are entered; fewer years give a partial pension (years ÷ 40), and under 10 none · 40 years · effective 2026-09-25
  14. ↑Old Age Security Act s.19(1)(b): "has attained sixty years of age but has not attained sixty-five years of age" · OAS Allowance: paid to the spouse or common-law partner of a GIS recipient from the 60th birthday until 65 (not modelled; the age bounds when a couple meets it) · 60 years · effective 1975-10-01