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.
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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.
