What are CPP and OAS and their role in retirement planning?

• A. CPP is a private pension; OAS is a private savings plan.
• B. CPP provides retirement, disability, and survivor benefits; OAS provides a basic state pension; together they form baseline retirement income.
• C. CPP provides only disability benefits; OAS provides only survivor benefits.
• D. CPP is a lump-sum state pension; OAS is a mortgage subsidy.

Answer: (B)

The main idea is that CPP and OAS are the government's programs that provide a base layer of retirement income. CPP is an earnings-related, contributory program funded by you and your employer; it offers retirement benefits, plus disability and survivor benefits for covered workers and their families. OAS is a universal, non-contributory pension funded from general revenues; it provides a basic monthly pension to eligible seniors (age 65+ with enough residency history). Taken together, they form the baseline retirement income most Canadians can expect, with additional savings (like RRSPs/TFSA or workplace pensions) filling the gap. You can also optimize planning by timing: CPP can be started as early as 60 (with reductions) or delayed to 70 (with increases), and OAS can similarly be optimized by delaying to enhance benefits, though higher-income households may face clawbacks from OAS.