What is the Canada Pension Plan (CPP), Old Age Security (OAS), and the Guaranteed Income Supplement (GIS)?

When it comes to retirement income in Canada, there’s a trio of programs that many people rely on: Canada Pension Plan (CPP), Old Age Security (OAS), and for lower-income seniors, the Guaranteed Income Supplement (GIS). These aren’t savings accounts like RRSPs or TFSAs, but public programs you may be entitled to after a lifetime of work and contributions.

This post helps you understand what each program offers, when you can apply, and how to get the most from them.

🧱 What These Programs Are, and Aren’t

CPP and OAS are not meant to replace your entire income in retirement.

Together, they’re designed to replace about 30% to 40% of the average Canadian’s pre-retirement earnings. This means that if you were earning $60,000 annually while working, you could expect around $18,000 to $24,000 per year from government benefits like CPP and OAS (combined).

For many people, especially those without a workplace pension or substantial personal savings, this gap can come as a shock.

🔍 Why the gap?

These programs are universal and modest by design, so they remain sustainable for future generations. They aim to prevent poverty, not necessarily maintain your working lifestyle.

That's why your own retirement savings (RRSPs, TFSAs, workplace pensions, home equity, or even part-time work) play such a big role in bridging the gap.

1. Canada Pension Plan (CPP): Your Work-Based Pension

If you’ve worked in Canada outside of Quebec and earned more than the minimum annual threshold (currently just under $3,500), you’ve been contributing to CPP through payroll deductions.

✅ Who qualifies?

• Anyone who has worked in Canada and made at least one valid CPP contribution.
• You can apply as early as age 60 or delay until age 70.

💰 How much do you get?

• The average monthly CPP payment in 2024 at age 65 is about $758.32.
• The maximum you could get is $1,364.60 per month (2024).
• Your amount depends on how much and how long you contributed.

👉 See current CPP payment amounts

🕒 When should you apply?

• Age 65 is the standard, but:
• Apply as early as 60: You get less (0.6% deducted per month early = 36% less at 60).
• Delay until 70: You get more (0.7% added per month = 42% more at 70).
• If you need income earlier, it may make sense to take it at 60. But if you're healthy, expect to live longer, or don't need the money right away, delaying can pay off. I applied at age 60, and used the money to invest in other retirement savings programs. I think I made up more than the 36% I lost by applying early. But I was lucky and not everyone is willing to take bigger risks.

📌 Tip: You must apply for CPP, it’s not automatic. Apply online through your CRA My Service Canada Account. A friend of mine did not apply as he thought he would receive this pension automatically. He finally realized he had to apply but it took him over a year.

2. Old Age Security (OAS): Your Citizenship-Based Benefit

OAS is not based on your work history. It’s a federal pension for seniors 65+ who have lived in Canada for at least 10 years after age 18.

✅ Who qualifies?

• Legal residents or citizens of Canada.
• Must have lived in Canada for at least 10 years to receive a partial pension.
• 40 years of Canadian residency = maximum benefit.

💰 How much do you get?

• The maximum OAS benefit (as of April 2024) is about $713.34/month.
• If you’re 75 or older, you may receive slightly more.

👉 Current OAS payment amounts

🕒 When should you apply?

• Many people are automatically enrolled at 65.
• You can delay up to age 70 for a 0.6% monthly increase (7.2% per year, up to 36% more at age 70).

3. Guaranteed Income Supplement (GIS): Extra Help for Low-Income Seniors

If your income in retirement is low, the GIS can provide tax-free monthly payments in addition to OAS.

✅ Who qualifies?

• Must be receiving OAS.
• Must meet low-income thresholds.

In 2024, if you are single and your annual income (excluding OAS) is below $21,624, you may qualify. For couples, the combined threshold is higher.

💰 How much can you get?

• GIS payments vary based on income and marital status.
• For a single senior, the maximum monthly GIS payment is about $1,065.47 (as of 2024).

👉 Use the GIS calculator to estimate your benefit.

Stacking the Benefits: What You Might Expect

Let’s say you’re a 65-year-old with a moderate work history:

• CPP: $758/month
• OAS: $713/month
• GIS (if eligible): $500–$1,065/month

Combined, that’s between $1,971 and $2,536/month. If you’ve saved in an RRSP, TFSA, or have a workplace pension, this supplements your retirement lifestyle further.

What About Quebec?

If you worked in Quebec, you contributed to the Quebec Pension Plan (QPP) instead of CPP. It’s similar but administered separately. Learn more at Retraite Québec.

Tips for Navigating These Programs

1.   Apply early: It can take time to process applications. Apply about 6 months before you want benefits to begin.

2.   Register for “My Service Canada”: It’s your online portal to check eligibility, apply for benefits, and view statements.
👉 Register here

3.   Keep your address and banking up to date so payments arrive on time.

4.   Reapply for GIS annually: It’s income-tested and based on your previous year's tax return.

5.   Talk to someone: If you’re unsure, call Service Canada or visit a local Service Canada Centre. The staff are trained to help you.

Takeaway

CPP, OAS, and GIS form the foundation of retirement income for Canadians. Knowing how and when to access these benefits can make a big difference, especially if you're relying on fixed income in retirement. Even if you have savings, understanding these programs is key to making your money last.