CPP, OAS, & GIS
Facts and a Few Thoughts
To Be Prepared, we should understand the sources of retirement income. This blog has a look at the primary Government of Canada retirement benefit programs.
Canada Pension Plan
CPP, started in 1966, is funded by employers and their employees. The employers put in on your behalf. This is your money. It does not come from taxation in any way. The government’s role is managing your money until you ask for it back.
CPP benefits received are based on income earned during your work life. They are adjusted for inflation, based on the consumer price index (CPI).
Current fund size is $778 billion. In 2023, contributions were $75 billion and benefit payments were $56 billion. This is one of the “Maple Eight” largest pension funds in Canada.
The Investment Board has actively managed this fund for the last 20 years, rising from 150 employees to now 2100 at an annual cost of $6 billion. The result? They have under-performed the general market since 2007. (1)
Old Age Security and Guaranteed Income Supplement
OAS started in 1952 and GIS in 1967. Unlike CPP, OAS & GIS are funded by the Government of Canada from general tax revenues. Most provinces provide additional, automatic benefits to those receiving GIS.
Again, unlike CPP, OAS and GIS are based on income during retirement. They too are adjusted for inflation based on CPI. Further, you do not need to receive CPP to receive these benefits. OAS will be paid to you then clawed back via tax filing if your income exceeds a preset level. GIS will only be paid to you based on the combination of marital status and maximum income level.
OAS and GIS benefit payments for 2025 are estimated to be $81 billion, or 17% of the total federal budget. The largest line item on the federal books.
Poverty in Retirement
The combination of CPP, OAS, GIS, provincial supplements and GST/HST credits help ensure that about 94% of Canadian seniors live above the poverty line. This figure is disputed by other measures, which place the number at 89%. (2) The largest portion of seniors living below the poverty line are living in an expensive community (Toronto, Vancouver, etc.), are single, &/or are new to Canada.
It is this 6-11% shortfall that becomes the responsibility of the family and the community – cities & towns, food banks, churches, additional non-profits. Should this be a family and community issue, or should we consider a form of universal basic income for seniors?
Population Change
Statistics Canada forecasts (3) the change from 2021 to 2051 to be:
· Working Age (25-64) 22% growth
· Seniors (65+) 69% growth, 3x working age
Will the working age taxpayers keep up to the faster growth in retired seniors and their need for OAS, GIS and related support? Plus, seniors’ need for increased health support as they age, and governments need to service an ever-growing debt.
The action I’d offer from this blog is to continue to educate yourself on this subject and all subjects related to your finances. Knowledge is power.
Further detail on these programs are available at Canada.ca.
1. https://pensionpulse.blogspot.com/2025/06/cpp-investments-responds-to-andrew.html
3. https://www.environicsinstitute.org/docs/default-source/default-document-library/read-the-report62091fc9-b2a5-4626-add0-ad3b575691ea.pdf?sfvrsn=8eb2f456_1