OAS Boost: A Misaligned Solution to Seniors’ Financial Struggles

 

The federal government’s decision to increase Old Age Security (OAS) payments in October 2025 has sparked debate about whether the measure truly addresses the needs of Canada’s most vulnerable seniors. While the Canada Revenue Agency confirmed that some retirees will see up to a $742 boost in their annual OAS payments, critics argue that the increase is poorly targeted—helping too little where it’s most needed, and too much where it’s not.

OAS is a universal, residency-based benefit available to Canadians aged 65 and older, regardless of income. Unlike the Guaranteed Income Supplement (GIS), which is income-tested, OAS is taxable and subject to a recovery tax only for higher-income seniors (those earning above $90,997 in 2024). This means that even relatively affluent retirees will benefit from the increase, while low-income seniors—who rely heavily on OAS and GIS to cover essentials like food, rent, and medication—may still find the boost insufficient to keep pace with inflation.

The government justifies the adjustment as part of its quarterly indexation process, designed to protect seniors’ purchasing power against rising costs of living . However, the uniform nature of the increase raises concerns about fairness and efficiency. For wealthier retirees, the extra funds may simply add to discretionary spending, while for those living below the poverty line, the additional amount may barely cover the rising cost of groceries.

A more effective approach, some experts suggest, would be to direct larger increases toward GIS recipients and lower-income seniors, ensuring that public funds are used where they can make the greatest impact. Without such targeting, the OAS boost risks being a blunt instrument—politically popular, but economically imprecise.