What are OAS and CPP worth?



Clay Gillespie

Managing Director, Financial Advisor & Portfolio Manager


Both OAS (Old Age Security) and CPP (Canadian Pension Plan) are government income entitlements that are meant to provide Canadians a guaranteed inflation-indexed pension for as long as they live.

But what are they worth to you today?  Another way to look at this question is to ask how much it would cost to buy a pension (life annuity) to replicate these government pensions.

For analysis purposes, I looked at the value of the income stream at age 65 (both male and female).


Currently OAS pays a maximum monthly income of $570.53 a month, indexed quarterly to the consumer price index (CPI).

The OAS payment is based on residency and you’re entitled to the full OAS payment if you have been a Canadian resident for at least 40 years after the age of 18.

The OAS clawback starts at $73,656 and is completely clawed back at $119,615. This means once your taxable income is higher than $119,615, your OAS will be completed clawed back.

If you were to buy a pension (life annuity) today and started receiving the equivalent of the OAS maximum income, it would cost approximately $140,000 for a male aged 65 and $155,000 for a female aged 65.  The reason for the difference is that female life expectancy is longer than male life expectancy. Thus, it takes more capital to provide a lifetime income for the longer life expectancy.


The maximum CPP benefit is $1114.47 a month.  CPP is indexed annually to the inflation rate as measured by the consumer price index (CPI).

Unlike OAS, the CPP payment is a retirement pension based on how much you contributed and how long you have been making the contribution to the CPP.

The approximate cost to purchase a pension (life annuity) today reflecting the maximum CPP benefit for a male would be approximately $265,000 aged 65 and $300,000 for a female aged 65.

The higher the interest rate, the lower the cost to purchase the pension and vice versa.

Both CPP and OAS have significant value in your retirement planning.
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