As of January 2024, Canada Pension Plan (CCP) payments have been raised 4.4% and Old Age Security (OAS) payments went up by 0.8% for the first quarter, from January to March.
OAS payments rose by 0.7% for the third quarter, from July to September, and are expected to increase by 1.3% in the fourth quarter, from October to December 2024.
Both CPP and OAS payments are adjusted regularly to account for the increased cost of living caused by inflation, as measured by the Consumer Price Index (CPI). CPP is adjusted every January and occasionally as part of ongoing enhancements to the program, while OAS is adjusted quarterly.
Key Takeaways
- 2024 CPP payments are 4.4% higher than the 2023 amounts.
- The CPP enhancement program is a 2-phase plan that began in 2019 and concludes in 2025, implementing changes to earning limits and payment amounts.
- CPP and OAS payment increases are based on the CPI, cost of living, and inflation.
CPP increases in 2024
It was announced in January that CPP payments would be raised by 4.4%, a calculation determined by comparing the recent 12-month average CPI to the previous 12-month average CPI.
The formula used to determine this change looks like this:
Average CPI from November 2022 to October 2023 / Average CPI from November 2021 to October 2022 = Rate increase
This calculation is completed every January to help your payments keep up with increases in cost of living.
Enhancements to CPP
You could also see some increased CPP payments if you've contributed to CPP since January 1, 2019. The CPP enhancement program started rolling out on that date, which boosts how much Canadian workers contribute to CPP, and therefore how much they'll receive in benefits in retirement.
This enhancement rolls out in several phases, as illustrated below:
| Phase | Implementation period | Details |
|---|---|---|
| Phase 1 | 2019 - 2023 | * The contribution rate for employees is phased in by 1 percentage point (from 4.95% to 5.95%) * This applies to earnings between $3,500 and the original earnings limit |
| Phase 2 | 2024 - 2025 | * A higher earnings limit – an additional maximum pensionable earnings limit – was introduced in early 2024 * There are now 2 ranges of earnings protected by CPP: the original range and the additional range * The original earnings limit will be around $71,200 in 2025 * The new/additional earnings limit will be around $81,100 in 2025 * This new/additional limit will increase each year to reflect wage growth * Making these higher contributions means you'll get higher benefit amounts in the future |
How much to expect in CPP payments in 2024
With the 4.4% increase introduced in early 2024, the average monthly CPP payment in 2024 is $815.00, and the maximum amount possible to receive is $1,364.60 per month.
The specific CPP amount you receive depends on these factors:
- The extra CPP benefits you qualify for
- How much you contributed to the program throughout your career
- The age when you began receiving CPP payments
- Your average annual earnings throughout your career
How much will CPP increase in 2025?
As of October 2024, the Government of Canada has not announced how much the CPP increase will be. Some estimates peg CPP’s 2025 increase at about 3%, but we won’t know for sure until there’s an official announcement.
OAS increases in 2024
OAS payments increased by 0.7% for the July to September 2024 quarter. These payment amounts have gone up by a total of 2.8% since July of 2023. OAS increased by 1.3% for the October to December 2024 quarter, an increase of 2.8% over the same period in 2023.
OAS payment increases are calculated quarterly, based on the average CPI of the last three months compared to the average CPI of the previous quarter. This means the changes for third quarter of 2024 is adjusted based on the following time periods:
- February, March and April 2024 (the most recent quarter with available data)
- August, September, and October 2023 (the last period where an increased CPI led to an OAS increase)
The CPI during the Feb-April 2024 period was 159.7, and during the Aug-Oct 2023 period it was 158.6. There also was a 1.1% increase in payments in the July to September quarter in 2023
The resulting equation looks like this:
(159.7 - 158.6) / 158.6 = 0.0069
Therefore, the next quarter's OAS payment (Jul-Sept) will be increased by 0.7%.
How much to expect in OAS payments in 2024
Here's a look at the maximum OAS amounts you can receive in 2024:
- Age 65 - 74: $727.67 per month
- Age 75+: $800.44 per month
The exact amount you receive as OAS payments depends on a few of factors:
- Net income
- Age
- Legal status
- Residence history
- Marital status
Tax credits and deductions for the 2024 CPP increase
Yes, these CPP increases mean that the take-home amount of your paycheque will be less than usual, but you'll get some relief at tax time.
You can claim a 15% income tax credit on CPP contributions and get a tax deduction on the enhanced amount, as long as your income exceeds the year’s maximum pensionable earnings.
The maximum contribution amount that an employee (and employer) must each pay into CPP in 2024 is 5.95% of their earnings.
Do CPP and OAS go up with inflation?
Yes, increases in CPP and OAS payments are based on the Consumer Price Index (CPI), and CPI is calculated by comparing the price consumers pay for a basket of goods over time.
By tracking CPI, the Government of Canada can objectively look at how much the cost of living has increased or decreased in Canada.
Canadians have seen significant cost of living increases during recent years, which is why both CPP and OAS payments have gone up. However, if CPI shrinks or stays the same, CPP and OAS payments won’t decrease.
During inflationary years, the amount that Canada Pension Plan recipients receive is increased in January. This adjustment is based on the percentage cost of living increase from one 12-month period to the next.
Old Age Security also increases with inflation, but is adjusted each quarter. It’s based on the difference in average CPI between 2 sets of 3-month periods.
FAQ
Will seniors get a raise in 2024 in Canada?
Yes, CPP payments and OAS payments for seniors have consistently increased in 2024 alongside inflation and CPI. The second component of the CPP enhancement program is being phased in as well and will continue into 2025.
How much will CPP payments increase in 2024?
The CPP benefit payments in 2024 increased by 4.4% over 2023 amounts. It's unclear exactly how much the CPP enhancement plan will increase payments in 2024, but the goal is to replace 33.33% of average work earnings (post-2019).
Are CPP and OAS payments adjusted based on inflation?
Yes, both CPP and OAS payments are adjusted to account for increases in the cost of living, which is based on the consumer price index (CPI). CPP payments are calculated in January, and OAS are calculated on a quarterly basis.
What is the CPP enhancement?
The CPP enhancement is a top-up to the base CPP payment, paid to those who contributed to the enhancement in or after 2019. The implementation began in 2019, the second phase began in 2024, and it will continue through 2025.
What is the maximum CPP benefit increase for 2025?
While inflation's impact is uncertain, we know that the CPP enhancement will replace 33.33% of average work earnings (post-2019). Plus, payments will rise by 50%+ for those who contributed to CPP for 40 years.
How much will CPP and OAS increase in 2025?
As of October 2024, CPP is estimated to increase by 3% in 2025, but the Government of Canada has yet to officially announce what the increase will be. The federal government has also not yet published OAS increases for 2025.
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