The year 2023 will be remembered for the insidious effect of inflation on our daily lives. While higher interest rates were cheered by people who invest in fixed income investments such as Guaranteed Investment Certificates (GICs) or bonds, the high rate of inflation made balancing budgets a challenge for much of the year.
Fortunately for people who depend on government pensions for either their entire retirement income or a portion of it, our federal and provincial programs have built-in cost-of-living provisions to help recipients keep pace with rising consumer prices (at least to some extent).
As a result, recipients will notice a continued level of indexing as it applies to income levels that can be expected in 2024. Here are the amounts qualifying individuals can expect for the coming year as well as the payment dates.
This year, recipients of the Quebec Pension Plan (retirement, disability, orphan’s and surviving spouse’s pensions) who have signed up for direct deposits can expect to generally receive their payments on the last working day of each month. In 2024, these will be Jan. 31, Feb. 29, March 28, April 30, May 31, June 28, July 31, Aug. 30, Sept. 27, Oct. 31, Nov. 29 and Dec. 30.
The maximum monthly amounts for those applying for QPP benefits beginning in 2024 will be $1,364.60 for those 65 years of age (100 per cent of the maximum pension amount), $873.34 for those 60 years of age (64 per cent of the maximum QPP pension at age 65) or $2,166.98 for those 72 years of age (158.8 per cent of the maximum QPP pension at age 65). For those who began receiving QPP prior to 2024, the inflation-adjusted amount may not be equal to the maximum listed above because of how indexing is calculated. Also, not everyone is entitled to the maximum QPP benefit.
Retraite Québec (retraitequebec.gouv.qc.ca) has an online calculator for those who wish to estimate what their maximum QPP benefits might be if they were to apply now.
The maximum monthly surviving spouse’s pension for those ages 45 to 64 will be $1,102.80. Those ages 65 and over can receive up to $822.14 per month. If you are already receiving a retirement pension, you will be paid a combined pension subject to a maximum amount, which may not be equal to the sum of both the survivor’s pension and the retirement pension. Other surviving spouse’s pension amounts are available for beneficiaries under age 45 and can be found on the government’s website.
QPP benefits are taxable. Quebec residents who would like more information about these benefits can call Retraite Québec at 514-873-2433 or can apply for the benefits online.
For those who receive pension benefits under the federal Old Age Security program, those payments can be automatically deposited into bank accounts typically on the third-from-last banking day of the month. Specifically, in 2024 these dates will be Jan. 29, Feb. 27, March 26, April 26, May 29, June 26, July 29, Aug. 28, Sept. 25, Oct. 29, Nov. 27 and Dec. 20.
The OAS pension is a monthly benefit available, if applied for, to most Canadians 65 years of age or older who meet certain legal status and residence requirements. Individuals are allowed to postpone receiving their OAS payments for up to five years. Those who postpone receive a higher monthly OAS payment.
To qualify for an Old Age Security pension, in addition to being age 65 or older, they must also be a Canadian citizen or legal resident of Canada on the day preceding the application’s approval or, if no longer living in Canada, must have been a Canadian citizen or legal resident of Canada on the day preceding the day he or she stopped living in Canada. Furthermore, if they are a resident of Canada at the time of application, they must have lived in Canada for at least 10 years after turning age 18. For OAS applicants living outside of Canada, they must have lived in Canada for at least 20 years after turning age 18.
People not covered by either of these two scenarios may still qualify for some type of pension, since Canada has social security agreements with many countries. For more information on OAS, you can call Service Canada at 1-800-277-9914 or visit canada.ca/oas.
The maximum OAS monthly benefit payment for the first quarter in 2024 will be $713.34 for those between ages 65 and 74, and $784.67 for those 75 and over. OAS pension payment rates are reviewed and adjusted, if necessary, in January, April, July and October to reflect any increases in the cost of living as reflected by the Consumer Price Index. As an example of this, these new amounts are 0.80 per cent higher compared with the previous quarter (from October to December 2023)
Unfortunately, those pensioners with individual net income that exceeds the “minimum income threshold” of $86,912 in 2023 may have to repay part or the entire maximum OAS pension amount at the time they file their 2023 tax return. If a pensioner age 65-74 has net world income that exceeds $142,609 or is 75 or older with net world income exceeding $148,179 in 2023, they will have to repay all the OAS benefits received in 2023. This is commonly referred to as the “clawback” or, more formally, as the OAS “pension recovery tax.” OAS benefits are also taxable. Further information on federal taxation can be obtained by calling the Canada Revenue Agency at 1-800-959-8281 or visiting canada.ca/cra.
Your government pension amounts may vary from the numbers above depending on your own set of circumstances and when you began receiving your pensions. For questions regarding your own situation, please contact the relevant government offices.
John Archer is a portfolio manager and Wealth Adviser with RBC Dominion Securities in Montreal. www.johnarcher.ca. He can be contacted at [email protected] or 514-878-5040.