You know you’re getting older when, instead of BYOB and TGIF, your friends are talking about CPP and OAS. But unlike your twenties, you can’t afford to wing this stage. Here’s what you need to know now so you can make confident choices about your future.
Canadian Pension Plan (CPP)
What is it?
The Canada Pension Plan, or CPP, is a government pension plan. It gives Canadians a steady income when they retire.
Who can get it?
Anyone who has contributed to the plan for at least one month while working in Canada.
Where does the money come from?
Contributions you and your employers have made over the course of your working life, plus (since 1997) investment income managed by the Canada Pension Plan Investment Board.
How much does it pay?
The amount you receive depends on how long you worked and how much you paid in. The more money you earn and the longer you work, the more CPP you will receive.
Most people do not pay enough to receive the maximum payment. As of 2025, the maximum monthly CPP payment at age 65 is approximately $1,364.60.
Is it taxable?
Yes. It’s treated and taxed as income. If it’s most of your retirement income, you’ll pay little or no tax.
Can you count on it?
Yes, this is because of two sets of reforms.
In 1997, the issue was demographics. As the Canadian population aged, the ratio of workers to retirees was declining. To prevent the plan from running out of money, the government doubled the contribution rate to create a reserve. They also set up the Canada Pension Plan Investment Board to manage and invest the reserve fund.
In 2016, the main issue was about benefits. Fewer Canadians had company pensions, and the concern was that CPP benefits weren’t enough. The federal and provincial governments agreed to slowly raise contributions. This will increase the maximum annual pension.
What other benefits does it provide?
It also provides a disability pension. It offers a survivor’s pension for widows, widowers, and children. A small death benefit also exists.
When can you start getting it?
Any time after reaching age 60. If you begin receiving CPP at age 65, you will receive the complete payment you qualify for. For every month before 65 that you start, your payment will be 0.6% less. For every month you wait after 65 but before 70 to start, your payment will be 0.7% more.
How long can you get it?
Once you start getting CPP payments, they will continue for the rest of your life.
How do you apply for it?
You can apply online for two to three months before your payments should start. You will need a My Service Canada Account (MSCA). It takes about one to two weeks to process your application. You can also apply on paper, but that may take up to four months to process.
Old Age Security (OAS)
What is it?
Old Age Security is a federal government benefit program. It is based on your years of residency in Canada, not your employment history.
Who can get it?
Canadian citizens or legal residents age 65 or older, who have lived in Canada for at least 10 years at any time after turning 18.
Where does the money come from?
General tax revenue – this means it is funded by taxed paid by Canadians currently working and living in Canada.
How much does it pay?
The amount you get depends on how long you’ve lived in Canada beyond age 18.
As of 2025, For those who have lived in Canada for 40 years after turning 18, the maximum OAS amounts are:
- Ages 65 to 74: Up to $727.67 per month.
- Ages 75 and older: Up to $800.44 per month.
- For those with fewer than 40 years of residency in Canada after age 18, the amount is pro-rated.
Is it taxable?
Yes. OAS payments are taxed as income. People with higher incomes must return some or all of their payments. This is often called the “claw back.” The official name is the OAS pension recovery tax.
If you get the highest payment, you will receive $642.25 each month or $7,707 each year. The Canada Revenue Agency says you must pay back 15% of this amount. This is on the amount over the repayment threshold of $81,761 in 2022. You must pay this from your net income that goes above this limit.
The actual amount you repay increases along with your income. If your net income is high enough ($133,141 in 2022), that 15% will take back your entire OAS payment.
Here’s the math:
$133,141 - $81,761 = $51,380
$51,380 x 15% = $7,707
$7,707 - $7,707 = $0
Can you count on it?
Yes, you can count on it if you:
- Are a Canadian citizen or legal resident
- Are age 65 or older
- Have lived in Canada for at least 10 years since the minimum age of 18
What other benefits does it provide?
If you get OAS payments but your annual income is still very low, you could be eligible for the tax-free Guaranteed Income Supplement.
When can you start getting it
Age 65. You can’t take it early, but you can push it out as far as age 70 to get a higher monthly payment. For each month past 65 that you delay starting OAS, your monthly payment will increase by 0.6%.
How long can you get it?
Like CPP, OAS payments will continue for the rest of your life
How do you apply for it?
If Service Canada has your details on file, they will automatically enroll you at age 65. When you turn 64, they’ll notify you about enrolment and ask you for more information if they need it. To defer your payments past age 65, make a note in the automatic enrollment letter and send it back to Service Canada. Didn’t get a letter? You can apply online or by mail.
Frequently asked questions
1. When should you start taking CPP?
There’s no one-size-fits-all answer — it depends on factors like:
- Your other sources of income (e.g., pension, savings)
- Your expected life span, based on health and family history
- When you need the money
- Your “break-even point” the point where delaying payments catches up financially with starting early
Tip: If you live well beyond the break-even point, delaying CPP might pay off. But if you need the money sooner or have health concerns, starting early might make more sense.
2. How do you avoid the OAS claw back?
The OAS claw back (OAS Recovery Tax) starts if your net annual income goes over $93,454 (2025 figure – updated annually).
To avoid or minimize it:
- Monitor your total retirement income, including RRSP/RRIF withdrawals, pensions, CPP, and investment income.
- Consider income-splitting with a spouse to reduce taxable income.
- Work with a financial advisor to time your withdrawals and manage taxable income across retirement.
3. Can I receive CPP and OAS at the same time?
Yes. You can receive both CPP and OAS benefits simultaneously. CPP is based on your work history and contributions, while OAS is based on your residency in Canada. They’re separate programs, and eligibility for one does not affect the other.
4. What is the maximum CPP and OAS payment in 2025?
As of 2025, the maximum monthly CPP payment at age 65 is approximately $1,364.60, and the maximum OAS is about $727.64 per month.
Note: Actual amounts depend on your contribution history (CPP) and years of residency (OAS).
5. When should I apply for CPP and OAS?
CPP: You can apply anytime between age 60 and 70.
OAS: You are eligible at age 65, but you can delay it up to age 70 for higher monthly payments.
6. How does working after retirement affect CPP and OAS?
CPP: if you’re under 70 and still working, you’ll continue contributing to CPP and can increase your future benefits through the Post-Retirement Benefit (PRB).
OAS: Additional Income outside OAS could push you over the claw back threshold, reducing your monthly benefit.
7. How does working after retirement affect CPP and OAS?
CPP: Yes, payments are available worldwide if you qualify through your contributions. Your place of residence doesn't affect eligibility
OAS: Yes, if you were a Canadian citizen of legal resident when you left and have lived in Canada for at least 20 years after turning 19. Otherwise, OAS can only be paid for up to 6 months outside Canada
8. Where can I get help deciding when to start CPP and OAS?
Financial planning for retirement is personal and complex. Talk to a Meridian Wealth Advisor to:
- Understand your break-even point
- Create a tax-smart income withdrawal plan
- Minimize your risk of OAS claw back
Learn more about retirement finances
Should you downsize when you retire?
4 tips for working after retirement
The 3 rules of your retirement plan
A version of this article was originally published on March 14, 2022.
