Canada Pension Plan (CPP) and Old Age Security (OAS) benefits are adjusted yearly to reflect changes in the cost of living or inflation.
Also referred to as the Consumer Price Index (CPI), the government increases pension benefits when the cost of living goes up.
How much will CPP and OAS increase in 2023? We cover this in detail below.
How Much Will CPP Increase in 2023?
CPP payments have increased by 6.5% in 2023 compared to 2022. This increase is much higher compared to what we have seen in recent years and is due to a significant rise in inflation over the last 12 months.
CPP benefits are adjusted once a year in January.
For 2023, the increase was calculated using the percentage change in average CPI between November 2021 to October 2022 and November 2020 to October 2021.
The average of 149.7 divided by 140.5 results in a rate increase of 6.5%.
What is the CPP Amount in February 2023?
Since the average CPI rate increase is up by 6.5%, the maximum monthly CPP payment in February 2023 increased to $1,306.57, compared to $1,203.75 in 2022.
Most seniors get less than the maximum CPP because how much you receive is determined by:
- The age you start collecting your pension
- How much you contributed, and for how long
- Your average earnings while working
The average monthly CPP payment in 2023 is $717.15.
Related: CPP Payment Dates.
How Much Will OAS Increase in 2023?
OAS payments have increased by 0.3% for the January to March 2023 quarter. Unlike CPP, OAS benefits are adjusted for cost of living increases in January, April, July, and October (quarterly).
To calculate the current 2023 increase in OAS, CPI numbers for two periods of 3 months each are used.
For example, for the January to March 2023 quarter, the difference between the average CPI for August-October 2022 and May-July 2022 equals 0.3% ((153.0-152.6)/152.6)).
What is the OAS Amount in February 2023?
With CPI up by 0.3%, monthly OAS payments increased to a maximum of $687.56 (age 65-74) and $756.32 (age 75 and over), respectively, for January to March 2023.
The next adjustment is expected in April.
Other OAS benefits also increased in 2023, including the Guaranteed Income Supplement (GIS), the Allowance, and Allowance for the Survivor.
How much OAS you qualify for depends on how long you have lived in Canada after turning 18. There is also a cap imposed by your taxable income. Income above a threshold amount could result in OAS clawback.
OAS Increase for Seniors Over 75
Seniors aged 75 or older as of July 2022 saw an automatic 10% permanent increase in benefits. This increase continues in 2023.
The current monthly maximum OAS amount of $687.56 for those aged 65 to 74 is 10% less than the $756.32 maximum for seniors over 75.
Will OAS and CPP Increase Again in 2023?
We have already seen the only CPP increase that will occur in 2023.
While the average amount paid to new beneficiaries will fluctuate, the maximum CPP this year will remain at $1,306.57.
OAS benefits will likely increase during the following quarters:
- April – June 2023
- July – September 2023
- October – December 2023
If the CPI indexing rate drops, monthly payments stay the same and do not decrease.
Other Ways to Increase CPP and OAS
You can increase CPP by collecting at a later age, up to age 70, for up to a 42% permanent increase.
This same strategy works for the OAS. Seniors can delay collecting OAS for up to 5 years for up to a 36% increase.
Frequently Asked Questions
Yes, seniors will get a 6.5% increase in CPP payments and a 0.30% increase in OAS payments.
You must have lived in Canada as an adult to receive OAS. Maximum OAS benefit is paid to seniors who have lived in Canada for at least 40 years since the age of 18.
No, OAS benefits can only start when you turn 65.
The CPP pension indexing rate in 2023 is 6.5%.
OAS is indexed to inflation every quarter in January, April, July and October.
The federal pension indexing rate in 2023 is 6.3%.