In 2025, Canada’s pension programs are getting a much-needed boost. Both the Canada Pension Plan (CPP) and Old Age Security (OAS) will see increases designed to help seniors manage rising living costs and improve financial security in retirement. If you’re nearing retirement or already receiving payments, knowing these changes can help you make informed decisions about your future income.
Here’s a breakdown of what’s changing, who qualifies, and how you can benefit from these updates.
Overview
Canada is gradually increasing pension payouts as part of a long-term plan to strengthen retirement income. In 2025, the CPP will continue its enhancement phase, while OAS will deliver a notable 10 percent increase for seniors aged 75 and older.
| Program | 2025 Change | Eligibility Details |
|---|---|---|
| CPP | Gradual increase up to 33% replacement income | Workers who contributed throughout their career |
| OAS | 10% boost for seniors aged 75+ | Canadian residents aged 65+, with full increase after age 75 |
| CPP Earnings Cap | Rises 14% to $79,400 | Higher earnings mean larger future payouts |
| OAS Clawback | Begins at $90,997 income | Full clawback if income exceeds $148,605 for seniors aged 75+ |
These updates reflect the government’s focus on providing meaningful retirement support while ensuring fairness and sustainability.
Canada Pension Plan
The Canada Pension Plan is a contributory public retirement plan. Employees and employers both contribute a percentage of earnings into the fund, which pays out monthly income starting at age 60 or later. The amount you receive depends on how much and how long you contributed.
Key CPP Features:
- Contributions are deducted from employment income
- Maximum contributions apply to earnings up to $79,400 in 2025
- The new maximum monthly payout at age 65 will be $1,306.57
- The plan replaces up to 33 percent of pre-retirement income for full contributors
You can begin CPP as early as age 60, but payments will be lower. If you wait until age 70, you can receive up to 42 percent more each month than if you had started at 65.
CPP Enhancements in 2025
The increase in CPP benefits is part of a multi-year enhancement that began in 2019. By 2025, Canadians contributing the maximum amount over their careers will see more generous retirement income.
Here’s what the enhancements include:
- Higher contribution rates for workers and employers
- An expanded earnings ceiling to allow for larger pension accrual
- Regular cost-of-living adjustments to protect against inflation
This means your retirement income from CPP will better reflect your actual career earnings and protect your purchasing power.
Old Age Security
Old Age Security is a monthly benefit available to most Canadian seniors starting at age 65. Unlike CPP, it is funded from general tax revenues and not based on work history. Eligibility is primarily based on residency.
OAS Details for 2025:
- Basic maximum monthly payment at age 65–74: $727.67
- Maximum monthly payment at age 75+: $800.44
- The 10 percent boost for seniors 75+ is automatic in 2025
- Payments are adjusted every quarter based on inflation
To receive the full OAS benefit, you must have lived in Canada for at least 40 years after age 18. Partial benefits are available for those with less time.
OAS Clawback
The OAS recovery tax, or clawback, begins when your income exceeds $90,997 in 2025. For every dollar over that amount, your OAS is reduced by 15 cents. Once income reaches $148,605, the benefit is fully clawed back for those aged 75 and older.
You can reduce or avoid clawbacks by managing your taxable income using strategies like income splitting, TFSA withdrawals, or RRSP contributions.
How These Changes Affect You
If you are retired or planning to retire soon, these increases can make a noticeable difference in your monthly income. Seniors aged 75 and older will see an OAS boost automatically added to their payments. Meanwhile, anyone retiring in 2025 with full CPP contributions will be eligible for up to $1,306.57 per month.
Here’s an example of combined monthly benefits in 2025 for a retiree aged 75:
| Source | Monthly Amount |
|---|---|
| CPP (max) | $1,306.57 |
| OAS (75+) | $800.44 |
| Total | $2,107.01 |
Add in other income sources like personal savings or pensions, and your total monthly retirement income could provide a comfortable base for living expenses.
How to Maximize Your Pension
Delaying CPP past age 65 increases your monthly benefit by 0.7 percent for each month of deferral. Waiting until age 70 results in 42 percent higher payments.
Monitor Income for OAS Clawback
Plan ahead to avoid hitting the income threshold that triggers a clawback. Use tax-free income sources where possible to manage your taxable income.
Review Your Contribution History
Check your CPP Statement of Contributions through your My Service Canada Account to ensure your earnings and contributions are accurate. Mistakes could affect your future benefits.
Combine with Other Benefits
If your income is modest, you may also qualify for the Guaranteed Income Supplement (GIS), which adds to your monthly support and is non-taxable.
In 2025, Canada’s pension increases aim to deliver more predictable, secure income for retirees. Whether you are just starting your retirement planning or already collecting benefits, these changes offer meaningful improvements that reflect the realities of modern living costs.
FAQs
What is the new CPP max payment in 2025?
The maximum monthly CPP is $1,306.57 at age 65.
Who gets the OAS 10% increase?
Seniors aged 75 and older automatically receive the boost.
When does OAS clawback begin?
At $90,997 in income for 2025.
Is CPP income adjusted for inflation?
Yes, CPP payments rise annually with inflation.
Can I delay CPP for higher income?
Yes, delaying up to age 70 increases your monthly CPP.
