The monthly benefit for the Canada Pension Plan ( CPP) is revised each January. The calculation is based on the average monthly CPI (Consumer Price Index) for the most recent twelve month period ending in October over the same period for the previous year. Because we don’t yet know the CPI for this month we cannot yet precisely calculate the upcoming January change. On the other hand, the CPI for September 2024 was released this morning so we have eleven months of data available. The average CPI for the eleven months ending with September 2024 was 160.2. The average CPI for the twelve months ending October 2023 was 156.3. Based on these two numbers the calculation for the January adjustment would be 160.2 over 156.3 indicating an increase of 2.5% for the new year. Assuming the October CPI will be similar to September, we can easily predict a revision of 2.5-2.6% for January 2025.
Tuesday, October 15, 2024
Wednesday, September 18, 2024
OAS To Increase In October 2024
Yesterday's release of the latest Consumer Price Index (CPI) data reveals that Canada's annual inflation rate has cooled to 2%. This has long been the target of the Bank of Canada. This bodes well for an additional interest rate reduction with the next BOC announcement on October 23. As always, this is both good and not so good news...Good for young Canadians wrestling with mortgages and credit card debt...not so good for Canadian Seniors with savings invested in cash accounts.
That aside, Canadian Seniors will see an increase in their monthly OAS benefit beginning in October. OAS monthly benefits are reviewed quarterly and revised if the average monthly CPI for the most recent quarter exceeds the average monthly CPI for the previous quarter. The monthly benefit doesn't increase every quarter but it doesn't go down if quarterly data indicates no inflation or even a reduction.
The October benefit is based on the average monthly CPI for May, June & July over the months of February, March & April if this later period resulted in an increase for the July benefit, which it did. This data indicates an increase for the October payment of 1.21%. As Service Canada uses only a single decimal for their math, they round the 1.21% UP to 1.3%. They're obviously on to the fact that if they rounded down they could be accused of not complying with the established formula.
Sooooo, Canadians aged 65-74 will see their monthly benefit rise from $718.33 to $739.88 and those 75 and over will see a bump from $790.16 to $800.43.
Next up. Projections for CPP Benefits for 2025.
