In 2024, Canadian retirees will see increases in their Old Age Security (OAS) and Canada Pension Plan (CPP) benefits. These changes are aimed at helping seniors manage the rising cost of living. In this article, we will explain how much these benefits will increase, when the changes will take effect, and other important details.
OAS Increase 2024
Old Age Security (OAS) is a major pension plan run by the Canadian government. It provides monthly payments to eligible people aged 65 and older. To get OAS, you might need to apply manually if the government doesn’t have enough information about you. In 2024, the OAS Clawback limit will increase from $86,912 to $90,997. This limit affects how much of the OAS payment might be reduced based on your income.
OAS Expected Increase 2024
- Plan Name: Old Age Security
- Country: Canada
- Administered by: Government of Canada
- Type: Pension Plan
- Age Requirement: 65 or older
- Current Maximum Payment: $707.68 (age 65 to 74), $778.45 (age 75 or older)
- Payment Dates: November 28, 2023, December 20, 2023
For more details, visit the official Canadian Government website.
How Much Will CPP and OAS Increase in 2024?
On November 1, 2023, the Canada Revenue Agency announced new contribution rates and amounts for 2024. The maximum pensionable earnings under CPP will increase to $68,500 from the current $66,600. The basic exemption limit remains at $3,500. Additionally, a new earnings ceiling of $73,200 will be implemented, affecting CPP 2 contributions.
CPP Changes of Increase
The CPP is a retirement pension plan providing monthly payments to eligible Canadians. You need to be at least 60 years old and have made at least one CPP contribution to qualify. CPP payments depend on your lifetime average earnings, starting age, and contributions. Here are the changes for 2024:
- Contribution Rate for Employers and Workers: Remains at 5.95%
- Maximum Contribution Limit: Increases to $3,867.50 (from $3,754.45 in 2023)
- Contribution Rate for Self-Employed: Remains at 11.90%
- Maximum Contribution Limit for Self-Employed: Increases to $7,735 (from $7,508.90 in 2023)
- CPP 2 Contribution Rate: 4% for employers and workers, 8% for self-employed
- CPP 2 Maximum Contribution Limit: $188 for employers and workers, $376 for self-employed
Detailed Analysis of CPP and OAS Increase
The CPP and OAS increases are crucial for retirees as they help maintain the purchasing power of their benefits amid rising living costs. Starting in 2019, the CPP has been enhanced to provide more benefits to future retirees who contribute after 2019. The current maximum OAS payments and income thresholds (2023) are:
- Ages 65-74: $707.68 monthly, for incomes less than $134,626 annually
- Ages 75 and over: $778.45 monthly, for incomes less than $137,331 annually
OAS is reviewed four times a year to adjust for the cost of living, ensuring that benefits do not decrease even if living costs go down. Since July 2022, people over 75 receive a 10% increase in OAS.
The 2024 increases in OAS and CPP benefits are designed to help Canadian retirees cope with inflation and higher living costs. By understanding these changes, retirees can better plan their finances and ensure they receive the maximum benefits. These adjustments reflect the government’s commitment to supporting seniors in maintaining their quality of life.
What is the OAS Clawback limit for 2024?
The OAS Clawback limit will increase to $90,997 in 2024.
How much will CPP contributions increase in 2024?
The maximum contribution limit for employers and workers will increase to $3,867.50, and for self-employed individuals to $7,735.
When will the new CPP and OAS rates take effect?
The new rates will start in January 2024.
What is the new maximum pensionable earnings under CPP for 2024?
The maximum pensionable earnings will increase to $68,500.
Do I need to apply for OAS benefits?
Yes, you may need to apply manually if the government does not have enough information about you.