Voluntary deferral of the Old Age Security (OAS) program was introduced as a means of improving both flexibility and choice for those individuals who may wish to consider working beyond the age of 65. Since July 1, 2013, you have been able to defer the start of your OAS pension for up to 5 years. By taking advantage of this deferral option, you may postpone the receipt of your pension to a later time in exchange for receiving a higher, actuarially adjusted pension.
The adjusted pension is calculated on an actuarially neutral basis, meaning that on average, individuals will receive the same lifetime OAS pension whether they choose to take it at the earliest age of eligibility or defer it to a later year. Note that the Guaranteed Income Supplement will not be eligible for actuarial adjustment. There are many factors to consider when deciding whether or not to defer your OAS. Your BDO advisor can help you determine the right choice for you.
Interested in learning more? Contact your local BDO office or connect with our Canadian Tax Team.
This tax tip is a publication of BDO Canada LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this tax tip is current as of July 3, 2017.