Major Pension Hike in Canada for 2025

With 2025 on the horizon, Canadian seniors are keeping a close eye on updates to their CPP and OAS payments. These government pensions are foundational to retirement income, and planned increases will help offset the rising cost of living.

If you’re retired or planning for retirement, this guide breaks down what’s changing, who qualifies, how to apply, and how to get the most out of your pension benefits.

Let’s look into what to expect in 2025—and how to make sure you’re not leaving money on the table.

Overview

In 2025, both the Canada Pension Plan (CPP) and Old Age Security (OAS) benefits are set to increase. These increases are designed to keep pace with inflation and help Canadian seniors maintain purchasing power.

CPP

CPP is a monthly taxable benefit paid to retired individuals who contributed to the plan during their working years. Contributions come from both the employee and employer and are based on employment income.

Benefits

• Contributions: The more you contribute, and the longer you contribute, the higher your benefits.
• Start Age: Early claims (as early as 60) reduce payments; delaying past 65 increases them.
• Earnings History: The benefit is based on average earnings over your best years.

Increase

CPP is adjusted annually in January to reflect inflation using the Consumer Price Index.

• Estimated Increase: Around 3 percent
• Example: A retiree receiving $1,200 monthly would see an increase to approximately $1,236

OAS

OAS is a non-contributory pension funded by general tax revenue. It’s paid to Canadians aged 65 and older based on residency, not employment history.

Benefits

• Full OAS: Requires 40 years of Canadian residency after age 18
• Partial OAS: Available after 10 years of residency, with payments scaled accordingly

Quarterly Adjustments

OAS is reviewed and adjusted every quarter—January, April, July, and October.

• Why It Matters: Retirees receive more timely increases based on CPI trends
• Example: A 2 percent CPI increase in Q1 would result in a corresponding OAS bump in Q2

Eligibility

• You must be at least 60 years old
• You must have made at least one valid contribution to the CPP
• You can apply up to 12 months before you want to begin receiving benefits

OAS

• You must be at least 65 years old
• You must have lived in Canada for at least 10 years after age 18
• Full benefits require 40 years of residency in Canada

Application

• When to Apply: Up to 12 months before your desired start date
• How to Apply:
  • Online via your My Service Canada Account
  • By mailing the CPP retirement application form

OAS

• Automatic Enrollment: Most seniors are automatically enrolled and notified
• Manual Application: If not enrolled, apply six months before your 65th birthday
  • Online via My Service Canada Account
  • By mail using the OAS application form

Maximizing

1. Delay Your Claim
   CPP: Increases by 0.7 percent monthly (8.4 percent per year) if delayed past 65, up to age 70
   OAS: Increases by 0.6 percent monthly (7.2 percent per year) if delayed, also up to age 70
2. Verify Your Records
   Check your CPP Statement of Contributions to ensure all contributions are accurate
   Confirm your residency history for OAS eligibility and benefits calculation
3. Additional Support
   Low-income seniors may also qualify for the Guaranteed Income Supplement (GIS)
   GIS is added to OAS and provides additional financial help for those with limited income

Final Thoughts

The anticipated 2025 increases in CPP and OAS are more than just numbers—they represent real financial stability for retirees. As inflation continues to challenge budgets, these boosts ensure pensions maintain their value.

Whether you’re approaching retirement or already collecting benefits, it pays to know how to maximize your payments and stay informed about upcoming changes.

Plan ahead, review your records, and use all available tools to make the most of your golden years.

FAQs