In Canada, the retirement system is about to face a large shift. By October 2025, the traditional retirement age of 65 will start to be phased out, with the new rule being that anyone born after 1960 needs to wait until age 67 to collect Old Age Security and CPP benefits. This move is considered an attempt by the government to save pension programs in a sustainable manner while thankfully considering that the fact that life expectancies are actually stretching longer.
Why is the Age Now Increasing?
Of course, the main impetus behind this change is Canadian aging. Canadians live longer nowadays; thus, these pension schemes funded by the state start to bear more pressure. By increasing the eligibility age, the government aims to reduce the financial strain on OAS and CPP while encouraging a culture of longer work life and personal saving. Officials see this as a prudent step that accounts for both the fiscal discipline to be able to secure the pension schemes for the future.
Key Changes to OAS and CPP
According to the new rules, between 2013 and 2019, workers under age 67 would not be eligible for OAS and CPP benefits payable in cash. This change does not affect persons who are retired or who are already receiving pension benefits. They will also have the opportunity to begin receiving their CPP benefits at age 60 or delay receiving them until age 70. Early claim reduces monthly payments, whereas a late claim increases them.
Impact on Future Retirees
This means, for a good number of Canadians, one has to continue working longer in order to avail him/her the public pension. If one plans on claiming an early retirement, his or her benefits are most likely going to be reduced, and if they cannot, one will need to save more for themselves to help cover the gap in between. On the other hand, working longer would at least mean more years of income and support for savings. For those with health problems or with low income, however, such a delay may translate into more financial pressure. Hence, planning for retirement will be even more stressed.
Who Are Affected? When?
Because of these changes, certain people will be affected, and their entering into effect is scheduled for October 2025. Basically, these new rules concern persons born after 1960. Those already entitled to OAS or CPP under the existing system will be unaffected by any reduction under that system. Canadians close to retirement should consider following official announcements from the Canada Revenue Agency and the federal government at canada.ca to stay abreast with the transition.
Also Read: Canada Pension Plan 2.0 Changes 2025: Payment Schedule And Benefit Increases