The Canada Pension Plan (CPP) and Old Age Security (OAS) are two retirement benefits that help Canadians generate a steady income stream once their paycheques stop. In this article, I examine four significant changes implemented to these retirement benefits in 2025.
So, let’s dive deeper.
Higher CPP and OAS payouts in 2025
The most important change to the CPP and OAS is the inflation-adjusted payment hikes. In 2025, OAS recipients between the ages of 65 and 74 will receive $727.67 each month, while those over 75 will get $800.44, indicating a 2% increase year over year.
Comparatively, CPP retirement payouts will increase by 2.6%, which should enable seniors to maintain their purchasing power against rising living costs.
The OAS clawback threshold
The OAS clawback threshold is adjusted upward to $90,997 (from $86,912 in 2024). It means that seniors can earn more before their OAS benefits are reduced. Notably, the reduction rate remains at $0.15 for every dollar above the threshold.
The CPP Enhancement in 2025
A key development is the full implementation of the CPP Enhancement Program, which began in 2019. This program aims to increase the coverage of your pre-retirement earnings from 25% to 33.33%. So, if retirees previously received $1,000 a month via the CPP, the program would increase the monthly payment by 33% to $1,333 over time.
The GIS enhancement in 2025
For low-income seniors, the Guaranteed Income Supplement (GIS) is being enhanced with these new monthly rates:
- Single seniors: Up to $1,086.88
- Couples (both receiving OAS): Up to $654.23 per person
While consistent hikes in retirement benefits benefit households, it’s essential to supplement these payouts with other income sources.
Invest in TSX dividend stocks
One low-cost way to begin a passive-income stream in 2025 is to invest in blue-chip dividend stocks such as Canadian Natural Resources (TSX:CNQ). In the last 30 years, CNQ stock has returned 5,720% to shareholders. However, if we adjust for dividend reinvestments, cumulative returns are closer to 10,300%.
So, a $1,000 investment in CNQ stock in early 1995 would be worth close to $104,000 today. Despite these outsized gains, the TSX stock offers a tasty dividend yield of 4.8%.
While Canadian Natural Resources is part of a highly cyclical sector, the company has consistently raised dividend payouts over the years, significantly enhancing the yield at cost.
Its annual dividends have risen from $0.03 per share in 2001 to $2.10 per share in 2025. Moreover, Bay Street analysts expect these payouts to increase by 9.7% annually over the next two years.
Canadian Natural Resources recently presented its 2025 budget and strategic plans, highlighting its position as a diversified energy company with significant competitive advantages.
It announced a $6 billion operating budget for 2025, with production targets ranging from 1.51 to 1.55 million barrels of oil equivalent per day, representing a 12% growth year over year. The capital allocation includes $3.2 billion for conventional exploration and production and $2.185 billion for thermal and oil sands operations.
CNQ emphasized its market-leading position, boasting the largest proven reserves among Canadian energy peers and a 33-year reserve life index that is 1.75 times longer than its peers.
A notably low corporate decline rate of 11% complements its diverse product mix, consisting of 47% SCO/light crude/NGLs, 26% heavy oil, and 27% natural gas. This diversity helps maintain stable cash flows and reduces market risk exposure, making it a top dividend stock in 2025.
