Canada’s Retirement Age May Soon Rise – Will CPP And OAS Rules Change For Future Retirees?

Talks about raising Canada’s retirement age are heating up again.

While no law has changed as of August 29, 2025, several influential groups are urging Ottawa to consider increasing the “normal” retirement age from 65 to 67 to reflect longer lifespans and ease budget pressure from an aging population.

For Canadians planning their future, understanding how a higher retirement age could reshape the Canada Pension Plan (CPP) and Old Age Security (OAS) is essential.

Below, you’ll find the latest rules, the most credible proposals on the table, and clear, practical implications for future retirees.

What’s Being Discussed Right Now

• Think-tank proposals: Major policy voices have urged Ottawa to gradually raise the normal retirement age to 67, positioning it as a response to labour shortages and demographic pressures. These recommendations are not law, but they are shaping the conversation.
• Global backdrop: Across the OECD, many countries have already lifted retirement ages or linked them to life expectancy—a trend Canada may consider as older-age dependency grows.
• Political reality: The federal government has not announced a change to the retirement age. In fact, previous attempts to move OAS to 67 were reversed in 2016, restoring eligibility to 65—a reminder that pension age is a politically sensitive lever.

The Rules Today (2025): CPP and OAS at a Glance

Current CPP rules

• Normal start age: 65.
• Start earlier (60–65): Permanent reduction of 0.6% per month you start before 65 (up to -36% at 60).
• Start later (65–70): Permanent increase of 0.7% per month after 65 (up to +42% at 70).
• Indexation: Payments are adjusted to inflation.
• 2025 maximum at 65: $1,433.00/month (your amount depends on your contributions).

2025 CPP contributions (employees/self-employed)

• YMPE: $71,300; YAMPE: $81,200.
• Rates: 5.95% base + 4.0% additional (double for the self-employed).

Current OAS rules

• Eligibility age: 65 (you cannot start earlier).
• Deferral: Delay up to age 70 for an increase of 0.6% per month (maximum +36% at 70).
• Quarterly indexation: OAS rates adjust with inflation.
• Typical 2025 amounts (July–September):
  • Age 65–74: up to $734.95/month
  • Age 75+: up to $808.45/month (reflects the permanent 10% boost for 75+).

OAS clawback (Recovery Tax) thresholds for 2025

• Clawback starts when net world income exceeds $93,454 (age 65–74).
• Full OAS eliminated around $151,668 (65–74) or $157,490 (75+).

Key point: Canada has no general mandatory retirement age; most workers can choose to continue working past 65, subject to role-specific exceptions.

Why Raising the Retirement Age Is Back on the Agenda

• Demographics: Canada’s 65+ population is growing fast. Longer life expectancy and lower fertility mean more retirees supported by proportionally fewer workers. Global experts warn this drags growth unless policies adapt.
• Program sustainability: CPP is deemed sustainable on current settings, but OAS spending is rising with the boomer wave. Some groups propose redesigning OAS (for example, tighter targeting) or linking ages to longevity to keep costs manageable.
• International trend: Many peer countries now retire later or use automatic age links to life expectancy; Canada is an outlier for keeping OAS at 65.

If the Retirement Age Rises, What Could Change?

Potential implications for CPP

“Normal” age shift (65 → 67):

Your baseline (no discount/bonus) could move to 67.

Early start might still be allowed, but the penalty could be larger or start from a higher reference age.

Delayed retirement bonuses might be recalibrated (for example, 67–72 instead of 65–70).

Contribution years:

Longer careers would mean more contributory years, potentially increasing your CPP retirement amount for many workers, especially those with continuous earnings.

Bridging periods:

Workplace pensions and RRSP/TFSA savings might need to bridge income between your planned exit from work and a later CPP start.

Today’s benchmark: CPP’s early/late factors remain -0.6% per month (early) and +0.7% per month (late), with normal age 65—no change legislated.

Potential implications for OAS

Eligibility age (65 → 67):

If changed, OAS would start later, shifting the entire GIS (Guaranteed Income Supplement) and Allowance timelines as well.

Clawback math unchanged, timing later:

The recovery tax thresholds would still apply, but at ages 67+ if eligibility moves.

Deferral incentive:

The 0.6% per-month OAS deferral could still exist, but starting from a later base would change who benefits from delaying.

Today’s benchmark: OAS still starts at 65, with +0.6% per month for delaying to 70; 2025 clawback bands are $93,454 to ~$151,668 (65–74) and up to $157,490 (75+).

Who Would Be Most Affected by a Higher Retirement Age?

• Younger cohorts: Historically, age increases are phased in over many years and apply mainly to people well below retirement at the time legislation passes (for example, those in their 40s–50s when a bill is introduced).
• Lower-income seniors-to-be: A later OAS/GIS start may widen the income gap in the mid-60s unless bridged by savings or targeted programs.
• Late-career workers with gaps: Those with intermittent contributions could see less room to benefit from extra years unless employment opportunities improve with age-friendly policies.

Action Steps to Stay Ready (Even If Nothing Changes Yet)

Stress-test age scenarios: Model retirement budgets with OAS at 67 and CPP normal at 67; include bridge years funded from RRSP/TFSA or part-time work.

Optimize CPP timing: Use the -0.6% / +0.7% factors for now; many Canadians gain from delaying CPP toward 70 if they expect longevity and have other income early on.

Manage OAS clawback: If your projected income in your late 60s exceeds $93,454 (2025 basis), explore income-splitting, TFSA drawdowns, and RRSP→RRIF timing to minimize the 15% recovery tax.

Watch quarterly indexation: OAS adjusts four times a year; an additional 0.7% increase is slated for October–December 2025 under current CPI movements.

Track contributions: Know your YMPE/YAMPE and contribution limits; steady earnings under the CPP enhancement can materially improve your future pension amount.

Quick Reference: Current Rules vs. Possible Future Shift

Feature	2025 Rule (Now)	If Age Rises (Illustrative)	What It Means for You
Normal retirement age	CPP 65, OAS 65	67 for one or both programs (phase-in likely)	Later “full” benefit start; more years to save; review bridge strategy.
Early start	CPP: allowed at 60 with up to -36% reduction	Could still allow early start but from a higher reference age (potentially larger reduction)	Early starters may face steeper cuts; confirm before electing.
Deferral bonus	CPP: +0.7%/mo to 70; OAS: +0.6%/mo to 70	Similar bonuses but from a later base age	Delaying may still pay, but the math shifts; revisit your optimal age.
OAS clawback	Starts $93,454; OAS eliminated ~$151,668–$157,490 (age-based)	Thresholds likely unchanged in design (indexed annually)	Income planning remains crucial to protect OAS.
CPP max at 65 (2025)	$1,433.00/month	Unchanged formula, but later “normal age” could alter behaviors	Your amount still depends on contributions and start age.
Indexation	CPP & OAS indexed (OAS quarterly)	Would likely continue	Maintain expectations for inflation-linked increases.

Canada’s retirement age has not changed—but the debate is real.

With longevity rising and the senior population expanding, policymakers are weighing whether to raise the “normal” retirement age to 67 or link it to life expectancy.

If that happens, expect a later full-benefit start for OAS and possibly CPP, recalibrated early/late adjustments, and a greater need to bridge income in your mid-60s.

For now, the smartest move is to plan proactively under today’s rules—optimize your CPP timing, manage the OAS clawback, keep track of YMPE/YAMPE contributions, and stress-test your plan against a later eligibility age.

That way, whether the retirement age stays at 65 or eventually moves higher, your retirement income remains resilient.

Frequently Asked Questions