Question

Sabrina is planning her retirement. If she defers taking her Old Age Security (OAS) to age 70 (instead of age 65) and defers taking her Canada Pension Plan (CPP) to age 70 (instead of age 65), she can increase the pension benefit by how much?

CPP benefit would increase by 42%; OAS benefit would increase by 36%

CPP benefit would increase by 42%; OAS benefit would increase by 42%

CPP benefit would increase by 36%; OAS benefit would increase by 42%

CPP benefit would increase by 36%; OAS benefit would increase by 36%

Delaying the receipt of either pension would not result in any difference

Answer 1

Answer : Option CPP benefit would increase by 42%; OAS benefit would increase by 36% is correct.

Reason :

Sabrina may by delaying CPP to age 70 will receive 8.4 percent more each year up to a maximum of 42 percent more .Therefore CPP benefit would increase by 42% if she takes at age 70 instead of age 65

Sabrina can defer receiving Old Age Security (OAS) pension for up to 60 months (i.e .5 years) after the date of eligibility for an OAS pension in exchange for a higher monthly amount.By delaying receiving OAS pension, she can get increased monthly pension payment by 0.6% for every month on delay receiving it, up to maximum of 36% at age 70. Therefore OAS benefit would increase by 36 % if she takes at age 70 instead of age 65