Federal Budget 2012 – Changes to OAS

Federal Budget 2012 and changes to Old Age Security

As expected, the government is moving forward with a plan to delay the age at which Canadians can start receiving Old Age Security and Guaranteed Income Supplement payments from 65 to 67.  The change will be phased in so that anyone over 54 years old today will not be affected, and Canadians under 50 will not see OAS payments until they turn 67.  Those between 50 and 54 can start collection between age 65 and 67.

                                                 Year of Birth

 

1958

1959

1960

1961

1962

Month of Birth

 

 

OAS/GIS Eligibility Age

January

65

65+5 months

65+11 months

66+5 months

66+11 months

February to March

65

65+6 months

66

66+6 months

67

April to May

65+1 month

65+7 months

66+1 month

66+7 months

67

June to July

65+2 months

65+8 months

66+2 months

66+8 months

67

August to September

65+3 months

65+9 months

66+3 months

66+9 months

67

October to November

65+4 months

65+10 months

66+4 months

66+10 months

67

December

65+5 months

65+11 months

66+5 months

66+11 months

67

Source: Government of Canada, Economic Action Plan 2012

Option to Defer the OAS Pension

The budget papers state that Canadians are living longer and may prefer to work longer and as a result, the government believes that the OAS program should reflect this new reality and provide the option for individuals to work longer, defer OAS and receive higher retirements benefits.

As a result, beginning on July 1, 2013, the changes provide that you will be allowed to voluntarily defer taking your OAS pension, for up to five years, and receive a higher, actuarially adjusted, annual pension as a result.  The adjusted pension will be calculated on an actuarially neutral basis, just like it is with CPP, which means earliest age of eligibility or defer it to a later year.

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