How Much Will CPP and OAS Increase in 2024?

The Canada Pension Plan (CPP) and Old Age Security (OAS) programs provide financial support to eligible individuals during retirement. Understanding how these benefits are adjusted annually helps current and future recipients plan their finances.

How CPP and OAS Benefits are Adjusted

The mechanisms for adjusting Canada Pension Plan and Old Age Security benefits are designed to preserve the purchasing power of recipients. Both programs utilize the Consumer Price Index (CPI) as a primary measure for these adjustments. The CPI tracks changes in the costs of essential goods and services, such as food, housing, and transportation, reflecting shifts in the overall cost of living.

Canada Pension Plan benefits are reviewed and adjusted once a year, with new rates typically coming into effect in January. This annual adjustment is based on the average CPI over a 12-month period ending in October of the preceding year. If the cost of living decreases, CPP payment amounts will not be reduced; they will remain at the previous year’s level.

Old Age Security benefits, in contrast, undergo more frequent adjustments, being reviewed and updated quarterly. These adjustments occur in January, April, July, and October, also based on changes in the Consumer Price Index. Similar to CPP, OAS benefit amounts are protected from decreases, meaning payments will not go down even if the CPI declines.

Beyond inflation indexing, the Canada Pension Plan has also undergone enhancements to increase future benefits. The second phase of these enhancements, known as CPP2, began in 2024 and continues into 2025. These changes introduce a new tier of earnings, called the Year’s Additional Maximum Pensionable Earnings (YAMPE), above the traditional Year’s Maximum Pensionable Earnings (YMPE). The goal of these enhancements is to gradually increase the CPP’s target replacement rate from 25% to 33.33% of a contributor’s average work earnings.

2024 Benefit Increases and Maximums

For 2024, both the Canada Pension Plan and Old Age Security saw adjustments reflecting economic conditions. The maximum monthly Canada Pension Plan retirement benefit for new recipients starting at age 65 was set at $1,364.60. The average monthly CPP benefit for new pensioners at age 65, as of January 2024, was approximately $831.92. This figure indicates that most recipients receive less than the maximum, highlighting the impact of individual contribution history on benefit amounts.

The overall increase in CPP payments for 2024 was approximately 4.8%, based on inflation indexing. This percentage applies to individual benefit amounts, so the dollar increase varies by current benefit level. To receive the maximum CPP, individuals must have contributed to the plan for at least 39 of the 47 years between ages 18 and 65, consistently contributing the maximum amount based on the Yearly Annual Pensionable Earnings (YMPE). For 2024, the YMPE was $68,500.

The Old Age Security pension experienced quarterly adjustments throughout 2024. For the first quarter (January to March 2024), the maximum monthly OAS payment for individuals aged 65 to 74 was $713.34, and for those aged 75 and over, it was $784.67. These amounts saw slight increases in the subsequent quarters. By the October to December 2024 period, the maximum monthly OAS payment reached $727.67 for those aged 65 to 74, and $800.44 for individuals aged 75 and over. The higher amount for those 75 and older reflects a permanent 10% increase implemented in July 2022 for this age group.

OAS benefits are subject to a recovery tax, often referred to as a “clawback,” if a recipient’s net annual income exceeds a certain threshold. For the 2024 income year, this threshold was $90,997. If income surpassed this amount, a portion of the OAS pension would need to be repaid. The OAS pension is entirely eliminated when an individual’s income reaches $148,451 for those aged 65 to 74, or $154,196 for those aged 75 and over. These income thresholds underscore the income-tested nature of the OAS program.

Receiving and Verifying Your Increased Benefits

Recipients of Canada Pension Plan and Old Age Security benefits can expect their increased payments to be reflected automatically. The adjustments for CPP typically take effect with the January payment, while OAS adjustments occur with the payments in January, April, July, and October. There is no need for beneficiaries to apply for these inflation-based increases, as they are processed by the government.

Payments for both CPP and OAS are generally issued on the second or third to last banking day of each month. For instance, in December, payments are often scheduled earlier to account for holiday periods. These payments can be received either through direct deposit into a bank account or via cheque.

To verify the new benefit amounts, individuals have several convenient options. The most common method is to access their My Service Canada Account (MSCA) online. This secure online portal allows recipients to view their payment information, including current and past benefit amounts, as well as upcoming payment dates. Accessing MSCA can be done using a GCKey, a Sign-In Partner (such as a bank), or a Provincial Digital ID. If there are discrepancies or questions, individuals can contact Service Canada directly for assistance, potentially after obtaining a Personal Access Code for identity verification.