• Arthur Salzer

2012 Federal Budget Special Report: Old Age Security Eligibility


The 2012 budget is proposing changes to the OAS system to ensure that it continues to be sustainable. The OAS program is financed from the government’s general revenues and provides a monthly pension to nearly all Canadians age 65 years of age or over. The 2012 federal budget proposes to change the age of eligibility for OAS benefits, to be phased in gradually, starting in 2023. As well, the budget introduced the option to defer the OAS pension and receive an actuarially adjusted pension, beginning July 1, 2013.

OAS is the single largest government program. It was put into place when Canadians were not living as long. For example, in 1970, life expectancy was 69 years of age for men and 76 for women – today, it’s 79 for men and 83 for women. The government therefore estimates that the cost of the OAS program will grow from $38 billion in 2011 to $108 billion by 2030. In addition, in the 1970s, there were seven workers for each person over the age of 65. Today, there are four workers per senior, and in 20 years, based on estimates of Canada’s declining birth rate, the government projects that there will be only two workers for every 65-year old.

OAS Age of Eligibility: It’s proposed that the age of eligibility for OAS and the Guaranteed Income Supplement (GIS) will be gradually increased from 65 to 67, starting in April 2023, with full implementation by January 2029. This 11-year notification period, followed by a six-year phase-in period, will provide individuals with significant advance notification to plan their retirement and make adjustments to their savings plans. In other words, the proposed legislative change to the age of OAS/GIS eligibility won’t affect anyone born on or before March 31, 1958. If you were born on or after February 1, 1962, your OAS/GIS eligibility age will be 67. Canadians born between April 1, 1958 and January 31, 1962 will have an age of eligibility between 65 and 67, as indicated by the chart above.

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 retirement benefits similar to CPP.

Proactive Enrolment for OAS and GIS Benefits: In the 2012 budget, the government announced that it would be putting in place a “proactive enrolment regime” that would eliminate the need for many seniors to apply for OAS/GIS. This will be done in a phased-in approach from 2013 to 2015.

Although the 2012 Budget proposal effectively reduces an individual’s potential retirement income by 2 years, it has also provided Canadians with more options when it comes to retirement income planning.

Understanding your retirement income sources and options is paramount . A Northland Wealth Plan provides you with not only a thorough understanding of your retirement income sources, but also insight to strategies to maximize that income.


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