The Canadian government recently announced the set of enormous changes as far as the Old Age Security (OAS) eligibility criteria are concerned, along with the Canada Pension Plan (CPP), all to be effective from October 2024. All these are focused on helping aging Canadians and supporting the sustainability of these programs.
New Eligibility for OAS
In a move designed to mirror the increase in life expectancy of Canadians with the trend of improvement realized in other developed countries, the OAS will be payable monthly to Canadian residents aged 65 years and older. Reforms adopted lately will see the eligible age increased gradually to 67 years beginning October 2024.
Currently, individuals qualify for OAS at 65 years of age, provided they have been living in Canada for at least 10 years since reaching age 18. There will be no change in the residency requirement of 10 years, but their age will be gradually aged, and those born after 1960 will be subject to this adjustment.
Eligibility Changes for CPP
The other is the CPP, the country’s main retirement income plan. Again, the CPP increases in October 2024. Whereas a person’s eligibility age for the CPP remains unchanged, as discussed above, the amount he or she will be able to receive will be quite different from one another depending on when that person chooses to take his or her pension.
The new rules encourage more people to delay the receipt of CPP beyond age 65. For the earlier retirees, however, a greater penalty will be imposed. This compels Canadian workers to retire as late as possible and might eventually help increase lifelong pension income.
Conclusion
Qualification changes for OAS and CPP would aim at the enhancement of the financial security of pensioners and the sustainability of pension over the long term. Canadians preparing for retirement therefore need to adjust with consideration of how such qualification changes would shift their present retirement income.
