OAS Rate Jump Projected for Fourth Quarter

Although the government has yet to announce the OAS rates for the fourth quarter, indexation factors specified in the Old Age Security Act indicate a rate increase of 0.9% or $5.16 per month for seniors receiving the standard rate.

That is, the monthly amount of $573.37 received in the third quarter would increase to $578.53 for the fourth quarter.

The same percentage increase will apply to seniors who receive less than the standard rate, due to their period of residency, or who receive more because they delayed the start of their OAS. The maximum OAS that could be received by a senior who turned 65 in June 2013 and delayed their OAS until October 2016 is $713.90 per month.

OAS and related programs such as the Guaranteed Income Supplement are indexed quarterly based on the ratio of the average consumer price index for the quarter beginning five months prior to the beginning of the current quarter, to the average consumer price index for the quarter beginning eight months before the current quarter (or, if that quarter showed a decrease in the average CPI, the last quarter that there was an increase). If the factor is negative, no adjustment is made, so the rate never goes down even if the CPI decreases.

The October 2016 to December 2016 rate increase is based on the following formula:

Walter Harder, DFA-Tax Services Specialist™, is a Master Instructor for Knowledge Bureau. He is currently working on a new course to be available soon: Preparation of T3 Trust Returns. Click here to pre-register for this course.

©2016 Knowledge Bureau Inc. All Rights Reserved.

Refer a Friend	Research	Calculators	Course Trials