Canada’s Retirement Age May Rise to 67, New CPP and OAS Reforms Could Delay Retirement

As 2025 unfolds, Canada’s retirement landscape is undergoing intense scrutiny. With a population that’s rapidly aging, longer life expectancies, and increasing pressure on pension funds, the long-standing retirement age of 65 is now under serious review by lawmakers and experts alike.

While no laws have been passed yet, the government of Canada is actively considering major reforms to both the Canada Pension Plan (CPP) and Old Age Security (OAS)—two pillars of financial support for older Canadians. The outcome could impact millions of current workers, near-retirees, and seniors already receiving benefits.

In this detailed report, we break down why these changes are being considered, what reforms are on the table, how different groups of Canadians could be affected, and what lies ahead for the country’s retirement system.

Why Canada’s Retirement Age Is Up for Debate in 2025

Canada is at a crossroads. The combination of economic and demographic changes has made the traditional retirement model unsustainable for the long term. Here’s why:

1. Aging Population Puts Pressure on Pensions

By 2030, over 20% of Canadians will be 65 or older, creating a surge in pension demand. As baby boomers retire, the number of contributors to the CPP and OAS systems is shrinking while the number of beneficiaries is growing.

2. Canadians Are Living Longer

Thanks to improved healthcare, Canadians are enjoying longer lifespans. While this is positive, it also means pensions must now cover longer retirement periods, increasing financial strain.

3. Rising Living Costs

Inflation and cost-of-living hikes are making it harder for seniors to retire comfortably at 65. Basic expenses like housing, utilities, and healthcare have all surged in recent years, especially for those on fixed incomes.

4. CPP and OAS Sustainability Concerns

Numerous financial experts have warned that unless structural changes are made, both CPP and OAS could face long-term funding issues. With fewer workers per retiree and escalating payout obligations, the math simply doesn’t add up.

Retirement Policy Proposals on the Table in 2025

Lawmakers are now weighing several bold reforms. While these are still under discussion and not yet law, they represent the most significant review of Canadian retirement rules in decades.

1. Increasing Retirement Age to 67

One of the most talked-about proposals is to gradually raise the retirement age from 65 to 67 by the year 2030. This would bring Canada in line with countries like the United States and the UK, where similar age hikes have already been adopted.

2. Flexible Early Pension Withdrawals

This policy would allow Canadians to begin drawing partial CPP as early as age 60, even while continuing to work. It’s seen as a way to offer more flexibility without jeopardizing long-term system health.

3. Higher Contributions from High-Income Earners

To boost funding without penalizing low-income retirees, the government is considering raising CPP contribution rates for high earners. This means wealthier Canadians would contribute more to support national retirement programs.

4. Incentives for Delayed Retirement

The existing bonus for deferring CPP beyond age 65 may be enhanced, offering larger payouts for those who postpone retirement to 68 or 70. The goal is to reward those who stay in the workforce longer.

5. New Tax Credits for Seniors Who Work Past 65

To encourage seniors to remain employed, the government may offer expanded tax breaks to those who continue working after 65. This is especially aimed at skilled workers and professionals.

Who Will These Reforms Affect?

The proposed changes won’t impact everyone equally. Their effects will vary significantly based on age, occupation, and current benefit status.

1. Canadians Aged 60–64

This group may face a new normal for retirement. If the age is raised to 67, they may need to work longer or plan for reduced early benefits. However, they could benefit from partial CPP withdrawals and flexible retirement planning tools.

2. Current Retirees (65+)

Seniors already receiving CPP or OAS will likely be protected from major changes. However, future adjustments like cost-of-living indexing or tax policies could still affect them down the road.

3. Younger Workers (Below 60)

This group will bear the brunt of changes. They may face a later retirement age, higher CPP contributions, and more pressure to plan private savings. Experts suggest this is a wake-up call for millennials and Gen Z to reassess their long-term financial strategies.

4. Blue-Collar and Rural Workers

Advocacy groups warn that increasing the retirement age could unfairly affect people in physically demanding jobs, many of whom cannot easily extend their careers. There are growing calls for exemptions or accommodations in such cases.

Proposed Retirement Policy Changes – Summary Table

Policy Area	Current Rule	Proposed Change	Mainly Affects
Retirement Age	65	67 by 2030	Workers under 60
Early Pension Withdrawal	From 60 (Reduced CPP)	More flexible options	Ages 60–64
CPP Contributions (High Earners)	Flat rate	Increased contribution rate	High-income earners
Pension Deferral Bonus	Optional (up to 42% increase)	Larger bonus for delay	Seniors delaying retirement
Tax Credit for Working Seniors	Limited tax break	New or increased incentives	Seniors aged 65+

Public and Political Reactions: A Divided Country

The proposed reforms have sparked strong—and mixed—responses across the country.

Supporters Say:

• It’s financially necessary to ensure the sustainability of pensions
• People are living longer and should work longer
• Incentivizing later retirement reduces pressure on social programs

Critics Argue:

• Low-income and physically demanding workers are being left behind
• Life expectancy varies significantly by income and occupation
• The focus should be on strengthening retirement, not postponing it

Organizations like CARP (Canadian Association of Retired Persons) have called for targeted protections for vulnerable seniors, while some politicians have pushed for regional or occupational exemptions.

In short, urban professionals may be more open to delayed retirement, but rural and blue-collar communities are strongly opposed.

What Comes Next?

As of mid-2025, no legislation has been passed, but the federal government is expected to table official proposals before the year ends. A parliamentary committee is currently reviewing feedback from economists, citizens, and advocacy groups.

Expect:

• Formal draft bills by fall 2025
• Public consultations and town halls
• Pilot programs for new tax credit and withdrawal rules

The pressure is on. Without decisive action, experts warn that Canada’s pension system may become unsustainable by the early 2030s.

What Should Canadians Do Now?

Whether you’re already retired, nearing retirement, or just starting your career, preparation is key.

For Those Aged 55+:

• Review deferral options for CPP and OAS
• Consider RRSP and TFSA contributions to supplement pension income
• Attend government webinars or town halls about proposed reforms

For Younger Workers:

• Don’t rely solely on government pensions
• Start or increase workplace and personal retirement savings
• Stay informed about CPP contribution changes

5 SEO-Optimized FAQs

Q1: Is the Canadian government increasing the retirement age to 67 in 2025?
A: No law has been passed yet, but proposals are under review to raise the age to 67 by 2030.

Q2: Will current retirees lose their CPP or OAS benefits under new rules?
A: Current retirees are unlikely to be affected, though future indexing or adjustments could apply.

Q3: Can Canadians still retire early under the new proposals?
A: Yes, early retirement would remain possible, but with reduced benefits and more flexible options.

Q4: How will higher-income earners be impacted by the CPP reform?
A: They may face increased contribution rates to help sustain the pension system.

Q5: Are tax credits being considered for seniors who work past age 65?
A: Yes, expanded tax incentives are part of the reform proposals to encourage longer workforce participation.