In 2025, Canadian retirees can expect significant changes to the Canada Pension Plan (CPP) and Old Age Security (OAS) programs.
These modifications aim to enhance financial security for seniors, reflecting the government’s commitment to adapting social programs to evolving economic conditions.
1. Enhancements to the Canada Pension Plan (CPP)
Increase in Maximum Pensionable Earnings
The CPP is undergoing a phased enhancement that began in 2019. By 2025, the Year’s Maximum Pensionable Earnings (YMPE) will rise to $71,300, up from $66,600 in 2024.
Additionally, the Year’s Additional Maximum Pensionable Earnings (YAMPE) will be introduced, covering earnings up to $81,200. This means higher-income earners will contribute more to the CPP, leading to increased benefits upon retirement.
Increased Contribution Rates
To support the enhancement, contribution rates have been adjusted. In 2025, employees and employers will each contribute 5.95% on earnings up to the YMPE, with an additional 4% on earnings between the YMPE and YAMPE.
Self-employed individuals will contribute at combined rates of 11.9% and 8% for these earnings ranges, respectively.
Introduction of New Benefits
Several new benefits have been introduced to the CPP:
- Child’s Benefits for Part-Time Students: Dependent children aged 18–24 of disabled or deceased contributors attending a recognized educational institution part-time are now eligible for benefits. These students receive 50% of the amount provided to full-time students, equating to a monthly flat rate of $150.89 in 2025.
- Enhanced Death Benefit: The estates of contributors who pass away before claiming a retirement or disability pension and leave no spouse or common-law partner will receive a top-up of $2,500 to the existing death benefit, totaling $5,000.2
- Extended Eligibility for Disabled Contributor’s Child’s Benefit (DCCB): Children remain eligible for the DCCB even after their parent reaches age 65, ensuring continued support.
2. Adjustments to Old Age Security (OAS)
Regular Inflation Adjustments
The OAS program continues to adjust benefits quarterly to reflect changes in the Consumer Price Index (CPI), ensuring that payments keep pace with inflation.
For the January to March 2025 period, the maximum monthly OAS benefit for individuals aged 65 to 74 is $727.67, while those aged 75 and over receive $800.44.
Income Thresholds for OAS Clawback
The OAS pension recovery tax, commonly known as the “clawback,” affects higher-income seniors. In 2025, the repayment range for individuals aged 65 to 74 is for net world income between $93,454 and $151,668.
For those aged 75 and over, the upper threshold is $157,490. Seniors with income within these ranges will see a reduction in their OAS benefits.
3. Annual Inflation Adjustments for CPP and OAS
Both CPP and OAS benefits are indexed to inflation to preserve retirees’ purchasing power. The CPP benefits are adjusted annually based on the CPI, while OAS benefits are adjusted quarterly.
These adjustments ensure that the benefits reflect the cost of living, providing financial stability to seniors.
Summary of Key Changes
| Change | CPP | OAS |
|---|---|---|
| Maximum Monthly Benefit (2025) | $1,433.00 (at age 65) | $727.67 (ages 65–74); $800.44 (age 75 and over) |
| Contribution Rates (2025) | Employees/Employers: 5.95% up to YMPE; additional 4% between YMPE and YAMPE<br>Self-employed: 11.9% up to YMPE; additional 8% between YMPE and YAMPE | N/A |
| New Benefits | Child’s benefits for part-time students<br>- Enhanced death benefit<br>- Extended DCCB eligibility | N/A |
| Inflation Adjustment | Annual | Quarterly |
| Clawback Threshold (2025) | N/A | $93,454 to $151,668 (ages 65–74)<br>$93,454 to $157,490 (age 75 and over) |
FAQs
What is the maximum CPP benefit in 2025?
The maximum monthly CPP benefit for new beneficiaries at age 65 is $1,433.00 in 2025.
How are OAS benefits adjusted for inflation?
OAS benefits are adjusted quarterly based on changes in the Consumer Price Index (CPI) to ensure they keep pace with inflation.
What is the OAS clawback threshold for 2025?
In 2025, the OAS clawback applies to individuals aged 65 to 74 with net world income between $93,454 and $151,668, and for those aged 75 and over, between $93,454 and $157,490.
Re CPP contribution and distribution;
It highly unfair that an immigrant coming to Canada never is untitled to max. payout, versus a Canadian born here. It needs to be adjusted in some way. On that note it is possible the Government can make life way more affordable for pensioners relying on CPP and OAS.
One suggestion is if you start your pension life, no more taxes unless the pensioner has an income of more than $500000. Than it is justified to tax. Another mover the government could do is to let pensioners roll over any RRSP into TSFA savings. You can set a max. There are many more issues re pensioners but this would be a start to make a difference.
I will believe it when I see it. These promises have been made before and I saw no change in my pensions or extra money’s put in my bank. So good luck seniors.
Owe 12k this year.
Pension money! i put in rrsp
Because govt told me and RBC
We have to…
God
Should have kept working.
Payed tax on money that was taxed, only to have it taxed when I withdraw, it!
And becomes an income, which i pay tax again on again if I withdraw to much to live comfy.
God
I lost my leg and have a clot in my Braine and I am 64 in mat but I get 944.00 a month to live off and my meds cost 100.00 a month . This is the way our government looks after the seniors