The Old Age Security (OAS) program is the corner stone of Canada's retirement income system and is financed from federal tax revenues.
Benefits are paid monthly to persons aged 65 or over who meet specified residency requirements.
It includes the OAS pension, the Guaranteed Income Supplement (GIS) and the Allowance.
The GIS is a monthly income supplement paid to low income pension recipients.
The Allowance is paid to 60 to 64 year old spouses of OAS and GIS pension recipients and to survivors (widows and widowers). To receive it they must, individually or combined, earn less than a specified amount.
If you are 65 and older, have lived in Canada for at least 10 years after turning 18, and are a Canadian citizen or a legal resident in Canada, you can apply for Old Age Security pension (although it may not be the full amount).
How is the OAS benefit calculated?
The Old Age Security pension is like a large pie divided into 40 equal portions; if you qualify for the 'full pension', you are entitled to receive all 40 portions each month.
Normally, you will qualify for a full pension if you lived in Canada for at least 40 years after turning 18.
If you lived in Canada 10 years before your OAS approval, it’s also possible to qualify for a full pension if you meet the conditions below:
You were 25 on or before July 1, 1977 and at that time:
You lived in Canada,
You didn’t but had resided in Canada after age 18,
You had a valid Canadian Immigration Visa.
If you did not live in Canada continuously for the 10 years immediately before the approval of your application you may still qualify for a full pension if you meet both conditions below:
You lived in Canada for a year immediately before OAS approval
You lived in Canada since age 18 at least 3 years for every 1 year of absence from Canada during these last 10 years.
Partial pensions are calculated on the basis that you earn 1 of the 40 portions for each complete year of residency in Canada after age 18.
As of Apr. 2020, the maximum OAS monthly benefit is $613.53. This benefit is indexed to the Consumer Price Index and increases four times a year; January, April, July and October.
These increases are legislated under the Old Age Security Act so that benefits keep up with the cost of living. If the CPI is negative, the OAS benefit will not decrease but remain the same until the next quarter.
How to Apply
To ensure that you receive your benefits as soon as you qualify, apply for the Old Age Security pension six months before you turn 65.
You can print an application form by going to the following link where you'll find a PDF for a form and a fact sheet Forms
Taxes and OAS
Your benefits are taxable and income tested. In 2020, if your total income exceeds $79,054 you will have to repay some of your benefits. The full OAS pension is eliminated when your net income reaches $128,137 or above.
To calculate your repayment amount, subtract $79,054 from your net income, multiply the difference by 15%. The answer is the amount you have to repay to the government.
If you apply after age 65, you can receive a back payment to cover up to 11 months plus the month in which your application is received.
Payments usually arrive in the last three banking days of each month. If you live in Canada or the United States, your pension payments can be directly deposited into your bank account.
For a quick reference fact sheet click here: OAS basics
For OAS benefit amounts click here: OAS benefit amounts 2020
For questions and answers on Old Age Security Pension click on the Canadian Government link here:- OAS - common questions