Canada's public retirement system has two main pillars: the Canada Pension Plan (CPP) and Old Age Security (OAS). Understanding both — and planning around the OAS clawback — is essential for retirement planning for Canadians of all income levels.
Canada Pension Plan (CPP)
CPP is a contributory plan — you and your employer each contribute based on your earnings. The amount you receive in retirement depends on how much you contributed and at what age you start taking it.
| CPP detail | 2026 figure |
|---|---|
| Employee CPP contribution rate | 5.95% of earnings |
| Maximum annual contribution | ~$3,867 (at YMPE of $68,500) |
| Maximum CPP retirement pension (at 65) | ~$1,375/month |
| Average CPP retirement pension | ~$760/month |
OAS: Old Age Security
OAS is not contributory — it's a universal benefit paid by the government to Canadians 65+ who have lived in Canada for at least 10 years after age 18. The full OAS pension requires 40 years of Canadian residency after 18.
The OAS deferral strategy
You can delay OAS past 65 (up to age 70) for a 0.6% increase per month delayed — 36% more at 70. If you're in good health and can afford not to take it, deferring OAS is often mathematically advantageous. The break-even point is typically around age 83-85.
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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