In 2024, Canadian retirees will see a significant boost in their Old Age Security (OAS) and Canada Pension Plan (CPP) benefits. The federal government has announced an increase aimed at adjusting for inflation and rising living costs. This adjustment will impact monthly payments, providing much-needed financial support for seniors across the country. The changes reflect ongoing efforts to ensure that pensioners can maintain their standard of living amidst economic shifts. This article will detail the specific increases, how they affect Canadians, and what to expect moving forward.
CPP Pension Increase Expected in 2024
Starting in January 2024, CPP benefits will increase by 4.4% due to last year’s high inflation rates.
What’s Changing:
- Maximum Monthly CPP Payout: The highest monthly CPP benefit will go up to $1,364.60 from $1,306.57 in 2023.
- Average Monthly CPP Payout: The typical monthly CPP benefit will be $758.32.
- Income Cap Adjustment: The limit for CPP contributions will rise from $66,000 to $68,500.
- New CPP2 Contribution: A new tier called CPP2 will be added for those earning above the highest pensionable income, giving retirees a small extra benefit.
Key changes OAS Pension Increase in 2024
| Category | Amount |
|---|---|
| OAS Benefits Increase | 0.80% |
| Adjustment Period | January to July 2024 |
| Payment for Seniors Aged 65-74 | $713.34 |
| Payment for Seniors Aged 75 and Older | $784.67 |
| Additional Increase for Seniors 75+ | 10% (since July 2022) |
| For more information | canada.ca |
How Much will CPP and OAS Increase in 2024?
On November 1, 2023, the Canada Revenue Agency (CRA) announced updated contribution rates and amounts for 2024. The maximum pensionable earnings under CPP will rise to $68,500 from the current limit of $66,600 in 2023.
The basic exemption limit will remain unchanged at $3,500. Additionally, a second earnings ceiling of $73,200 will be introduced for determining CPP 2 Contributions.
As a result of this change, earnings between $68,500 and $73,200 will now be subject to CPP 2 contributions. The adjustment to the ceiling aligns with CPP legislation.
CPP is a retirement pension plan that offers monthly payments to eligible Canadians. To qualify, individuals must be at least 60 years old and have made at least one CPP contribution. Unlike OAS, application is required to receive CPP benefits.
The CPP pension amount is calculated based on lifetime average earnings, starting age, and contributions made to CPP. Every Canadian aged 18 and above who works is obligated to make CPP contributions. These contributions enable eligibility for disability benefits, pensions, post-retirement benefits, and survivor benefits.
Contributions to the CPP cease once a person reaches 70 years of age, regardless of whether they are employed or not. The contribution amount is based on income and is calculated on annual earnings within specified maximum and minimum thresholds.
In 2024, the contribution rate for both employers and employees will remain at 5.95%. However, the maximum contribution limit for each will increase to $3,867.50, up from $3,754.45 in 2023.
Likewise, self-employed individuals will continue to contribute at a rate of 11.90%. Their maximum contribution limit will rise to $7,735, compared to $7,508.90 in 2023. It’s important to note that contributions cannot be made on pensionable income exceeding $73,300.
Employers and employees will contribute 4% each towards CPP 2 contributions, with a maximum contribution limit of $188 for each party. Self-employed individuals will contribute 8% towards CPP 2, with their maximum contribution limit set at $376.
Breakdown of CPP and OAS Pension Increases
Here’s a simple look at how CPP and OAS pensions are changing:
CPP (Canada Pension Plan) Increases:
- Maximum Monthly CPP in 2023: $1,306.57
- Maximum Monthly CPP in 2024: $1,364.60
- Average Monthly CPP in 2024: $758.32
- Income Cap Increase: From $66,000 to $68,500
OAS (Old Age Security) Increases:
- Maximum Monthly OAS (ages 65-74) in 2024: $713.34
- Maximum Monthly OAS (ages 75+) in 2024: $784.67
- Percentage Increase for ages 75+ since July 2022: 10%
This gives you a clear picture of how the pension amounts are expected to change in the coming year.
For further details on the 2024 OAS and CPP increases, visit the official Government of Canada websites.
Final Thoughts
Thinking about retirement means getting a good grasp on what you’ll get from government programs like CPP and OAS. With the upcoming boosts in 2024, retirees can expect a bit more money each month, which should help ease the sting of inflation.
Thanks for reading our guide on the CPP and OAS pension increases set for July 2024. We hope this info makes it easier for you to plan for a comfortable retirement.
FAQs
What is the Old Age Security (OAS) increase for 2024?
The OAS benefit will see a [specific percentage or amount] increase starting in January 2024. This adjustment is designed to help offset inflation and rising living costs.
How much will the Canada Pension Plan (CPP) increase in 2024?
The CPP benefit will increase by [specific percentage or amount] in 2024. This adjustment reflects the changing cost of living and aims to provide better financial support to retirees.