New option for Old Age Security now available
OTTAWA, July 1, 2013 /CNW/ - Effective today, Canadian seniors can choose to delay receiving their Old Age Security (OAS) pension for up to five years, allowing them to receive a higher monthly amount in the future. The announcement was made by the Honourable Diane Finley, Minister of Human Resources and Skills Development.
"People today are taking many different paths to retirement, and some seniors are choosing to work longer," said Minister Finley. "Canadians now have the option to voluntarily defer their OAS pension for up to five years in exchange for a higher monthly amount."
As part of Budget 2012, the Government announced the new voluntary deferral option for the OAS, which will give more flexibility and choice in retirement planning to Canadians.
The OAS is funded through general tax revenues and is indexed to the Consumer Price Index. It enhances the quality of life of Canadian seniors by providing a modest base upon which to build additional income for retirement. In 2012-2013, it provided 5.2 million seniors with an estimated $40.4 billion in benefits.
As many factors can influence a person's retirement plans, it is important to consider one's personal situation when deciding whether to delay receiving the OAS pension.
For further information, visit the Service Canada website at www.servicecanada.gc.ca/oaschanges.
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The Old Age Security (OAS) program is the cornerstone of Canada's
retirement income system, providing benefits to most Canadians 65 years
of age and over. The program consists of the basic pension, the
Guaranteed Income Supplement (GIS) and monthly allowances for eligible
low-income people 60 to 64 years of age.
Canadians are living longer and healthier lives; there will be nearly twice as many seniors in 2030 as there were in 2011, growing from 5 million to 9.4 million. This will place significant pressures on the OAS program.
In recognition of this, the Government introduced changes to the OAS program in Budget 2012, as outlined below, to ensure the program's sustainability and to improve flexibility and choice.
The Government of Canada has introduced a voluntary deferral of the OAS pension giving people the option to defer receipt of it by up to five years in exchange for a higher monthly amount.
For every month people delay receipt of their OAS pension, they will receive an increased monthly benefit of 0.6 percent, up to a maximum of 36 percent at age 70. For example, for Canadians turning 65 today who decide to delay receiving their pension for one year, their monthly amount would increase by 7.2 percent (0.6 percent x 12 months).
Canadians should consider their personal situation when deciding when to start receiving their OAS pension. It is important to note that people who delay their OAS pension will not be eligible to receive the GIS, and their spouse or common-law partner will not be eligible to receive the Allowance until that person's OAS pension begins.
To improve services for seniors and reduce administrative costs, the Government of Canada has started an automatic enrolment process that will remove the need for many seniors to apply for the OAS pension.
Automatic enrolment is being phased in over the coming years. People who are eligible for automatic enrolment will be notified personally by mail. Seniors who are not notified need to apply. Service Canada will continue to send applications to those who cannot be automatically enrolled. Applications are also available on the Service Canada website.
Learn more about changes to the OAS program.
SOURCE Human Resources and Skills Development Canada