Old Age Security (OAS) is a federal government program providing a monthly pension to eligible Canadians aged 65 and older. It is a taxable benefit designed to offer a basic income in retirement, independent of an individual's work history. Eligibility is based primarily on Canadian residency after age 18, and the pension amount can be affected by income and the age at which one starts receiving it. Understanding OAS is crucial for retirement planning, as it forms a foundational part of the public retirement income system alongside the Canada Pension Plan.
What Is Old Age Security?
Old Age Security is a monthly pension payment provided by the Government of Canada to qualifying seniors. Launched in 1927, the program's purpose is to furnish a modest, basic income to help cover living expenses in retirement. Unlike the Canada Pension Plan, OAS is not tied to an individual's employment history or contributions. It is solely a federal program administered by Service Canada, and the benefits are paid from general government revenues. The pension is a taxable benefit, meaning it must be reported as income on a recipient's annual tax return.
Eligibility and Residency Rules
To qualify for an OAS pension, an individual must be 65 years of age or older and meet specific legal status and residency requirements. The applicant must be a Canadian citizen or a legal resident at the time their application is approved. The core eligibility requirement is based on years of residency in Canada after turning 18. For individuals currently living in Canada, they must have resided in the country for at least 10 years after age 18. For those living outside Canada, the requirement is stricter, requiring at least 20 years of Canadian residency after age 18. Canadian citizens working abroad for a Canadian employer may have that time counted as residence if they return to Canada within six months of ending employment or if they turned 65 while still employed abroad. Canada also has social security agreements with other countries, which can affect eligibility for Canadians who have lived or contributed to pension systems in those nations.
Payment Amounts and Indexation
The amount of an OAS pension depends on how long an individual has lived in Canada after age 18 and their annual net income. Payments are adjusted quarterly in January, April, July, and October to reflect increases in the cost of living, as measured by the Consumer Price Index. The maximum monthly amounts for the 2026 benefit year illustrate the age-based increase. For recipients aged 65 to 74, the maximum monthly payment is $742.31. For those aged 75 and over, the maximum monthly payment is higher, at $816.54. These figures represent the amounts before any potential reduction due to the OAS recovery tax, commonly known as the clawback.
The OAS Recovery Tax (Clawback)
The Old Age Security recovery tax reduces the pension benefit for higher-income retirees. This clawback applies if an individual's annual net income exceeds a government-set threshold. The recovery tax rate is 15 percent, meaning for every dollar of income above the threshold, 15 cents of the OAS pension is withheld. The threshold and the income level at which the benefit is fully eliminated are updated annually. For the payment period from July 2026 to June 2027, the clawback begins if the individual's 2025 income exceeds $93,454. The benefit is completely phased out if 2025 income reaches $152,062 for recipients aged 65 to 74, or $157,923 for those aged 75 and over. It is important to note that these thresholds are based on the previous year's income, creating a one-year lag between earning the income and seeing its effect on the OAS pension.
The OAS recovery tax reduces your Old Age Security pension benefit if your annual income exceeds a specific threshold. This tax applies a 15 percent reduction to your benefit for every dollar of income above the threshold. For the period from July 2026 to June 2027, the clawback begins if your 2025 income is over $93,454. Your benefit is completely eliminated if your income reaches $152,062 for those aged 65 to 74 or $157,923 for those aged 75 and over.
- The tax recovery rate is a fixed 15%.
- The income threshold for the 2025 to 2026 period (July 2025 to June 2026) is $90,997 based on 2024 income.
- For the 2025 to 2026 period, the benefit is fully clawed back at $148,451 (age 65-74) or $154,196 (age 75+).
- The income threshold for the 2026 to 2027 period (July 2026 to June 2027) is $93,454 based on 2025 income.
- For the 2026 to 2027 period, the benefit is fully clawed back at $152,062 (age 65-74) or $157,923 (age 75+).
Deferral and Payment Start Dates
While OAS payments can begin the month after an individual turns 65, there is an option to defer the start of the pension for up to five years, until age 70. By deferring, the monthly pension amount increases by 0.6 percent for each month of delay, which equates to a 7.2 percent annual increase. The maximum increase achievable by deferring to age 70 is 36 percent. There is no financial advantage to deferring past age 70. The decision of when to start receiving OAS involves personal considerations, including current cash flow needs, life expectancy, other sources of retirement income, and the impact of the clawback. Monthly OAS payments are typically deposited in the last week of each month, with specific dates published annually by Service Canada.
You can defer receiving your Old Age Security pension for up to five years after you turn 65. By delaying your first payment, your monthly pension amount will increase by 0.6 percent for each month you defer. This results in a maximum increase of 36 percent if you start receiving payments at age 70. There is no advantage to waiting beyond age 70 to begin receiving your pension.
- Current financial need for the income.
- Other sources of retirement income available.
- Personal health and life expectancy.
- The potential impact of the OAS recovery tax on future payments.
- The guaranteed, inflation-indexed return provided by the deferral increase.
Many Canadians are automatically enrolled for Old Age Security payments when they turn 65. Service Canada typically sends an enrolment letter the month after an individual turns 64. If you are automatically enrolled but wish to defer your payments, you can request this deferment through your My Service Canada account. Alternatively, you can complete and return the automatic enrolment letter you received from Service Canada.
Application and Automatic Enrolment
Many Canadians do not need to apply for OAS, as Service Canada will automatically enrol them based on information available from their tax returns and other government programs. Individuals should receive an automatic enrolment letter from Service Canada in the month after they turn 64. If a person does not receive this letter or Service Canada does not have enough information for automatic enrolment, they must submit an application. Applications can be completed online through a My Service Canada account or by mailing a paper application. Situations that typically require an application include choosing to defer the pension start date past age 65, having complex residency history, or living outside Canada. For those who are automatically enrolled but wish to defer, they can request the deferment through their My Service Canada account or by returning their automatic enrolment letter with instructions.
You must apply for Old Age Security if Service Canada does not have enough information to enroll you automatically. You also need to apply if you have elected to start your OAS payments later than age 65. Applications can be completed online through your My Service Canada account. Paper applications can also be mailed to Service Canada.
- You did not receive an automatic enrolment letter from Service Canada.
- You are choosing to defer your pension start date past age 65.
- You have a complex residency history outside Canada.
- You currently live outside Canada.
- Service Canada does not have sufficient information to enrol you automatically.
Related Benefits and Important Rules
Several other benefits are closely associated with the Old Age Security program. The Guaranteed Income Supplement (GIS) is a tax-free monthly benefit for low-income OAS recipients. Eligibility for the GIS is based on income and marital status, and some are automatically enrolled for it alongside OAS. The Allowance and the Allowance for the Survivor are benefits for individuals aged 60 to 64 who are the spouses or common-law partners of GIS recipients or who are survivors themselves. It is crucial to understand that the OAS pension itself does not include a survivor benefit. Payments are made for the month in which the recipient dies, but any benefits received after that must be repaid, and the pension must be cancelled by contacting Service Canada. Furthermore, the OAS pension is not eligible for pension income splitting with a spouse or common-law partner for tax purposes. Surviving spouses and common-law partners of OAS recipients may be entitled to a separate survivor pension, but this benefit can also be offset by recovery tax based on the survivor's income.
Historical and Financial Context
The Old Age Security program has been a pillar of Canada's retirement income system since its inception in 1927. It was created to provide a basic level of financial security for seniors. The program is funded from the federal government's general revenues, not from a dedicated fund like the Canada Pension Plan. This means its sustainability is directly tied to federal fiscal policy and demographics. The increasing number of retirees relative to the working-age population presents a long-term consideration for the program's funding. The figures for the 2026 benefit year provide a snapshot of the program's current value. These amounts, combined with the GIS and CPP, form the core of the publicly funded retirement income system in Canada.
Frequently asked questions
Who is eligible for OAS in Canada?
You are eligible for OAS if you are 65 or older, a Canadian citizen or legal resident, and meet residency requirements. If you live in Canada, you need at least 10 years of residency after age 18. If you live outside Canada, you need at least 20 years of Canadian residency after age 18. Eligibility is not based on your work history or whether you are retired.
Is OAS the same as the Canada Pension Plan (CPP)?
No, OAS and CPP are separate programs. OAS is a residence-based pension funded from general government revenues and is available to most seniors regardless of work history. The Canada Pension Plan is an earnings-related pension funded by contributions from employees, employers, and self-employed individuals. You can receive both OAS and CPP benefits in retirement.
Do I need to apply for OAS?
Not always. Service Canada automatically enrols many Canadians and sends a notification letter the month after they turn 64. If you do not receive this letter, or if you choose to defer your pension start date, you will need to apply. Applications can be submitted online through My Service Canada or by mail.
How much is the old age pension in Canada?
The maximum monthly Old Age Security pension in 2026 is $742.31 for recipients aged 65 to 74 and $816.54 for those aged 75 and over. This amount is a taxable benefit designed to provide a modest pension for basic living expenses. The actual payment an individual receives depends on how long they have lived in Canada after the age of 18. Furthermore, your benefit may be reduced or eliminated by the OAS recovery tax if your annual net income exceeds specific thresholds.
What is the OAS clawback?
The OAS clawback, officially called the OAS recovery tax, is a reduction of your pension benefit if your annual net income exceeds a set threshold. For the period from July 2026 to June 2027, this clawback begins if your 2025 income is over $93,454. The recovery tax reduces your benefit by 15 cents for every dollar of income above that threshold. The benefit is completely phased out if your income reaches $152,062 for those aged 65 to 74 or $157,923 for recipients aged 75 and over. This mechanism ensures the benefit is targeted based on financial need.
Can I delay receiving my OAS pension?
Yes, you can delay receiving your Old Age Security pension for up to five years after you turn 65, with a maximum start age of 70. If you choose to defer, your monthly payment will increase by 0.6 percent for each month you delay. This results in a maximum increase of 36 percent if you begin receiving the pension at age 70. There is no financial advantage to deferring your pension start date beyond age 70. You can request this deferment through your My Service Canada account or by returning your automatic enrolment letter.
Sources and further reading
- How much will your OAS payments be? qtrade.ca
- Top 10 questions we are asked about: Old Age Security ... edwardjones.ca
This article explains how things work and is not financial, tax or legal advice. Rules, limits and rates change, so check the current figures with the Canada Revenue Agency, your province or your financial institution before you act.