Canada’s Public Pensions

Ifigenia Fasogiannis / Citizen Services Specialist

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Canada’s Retirement Income System

PUBLIC

Old Age Security

Program

Canada Pension

Plan / Quebec

Pension Plan

Private pensions

and savings

PRIVATE

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Canada Pension Plan

Began in January 1966

Employment-based contributions

Payable outside Canada

Québec has a program with similar benefits

(QPP)

Taxable

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CPP Statement of Contributions

Is mailed regularly to contributors

View and print it from “My Service Canada Account”

www.servicecanada.gc.ca

Can be mailed to you upon request

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Canada Pension Plan (CPP) Benefits

Retirement pension

Disability benefit

Children’s benefit

Survivor benefits

Death benefit

Survivor’s pension

Children’s benefit

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Modernizing the Plan

The Canada Pension Plan and Societal Trends

Canadians are living longer and healthier lives, and this is creating greater opportunities for employment later in life.

Changes to the Plan may affect how and when contributors

choose to retire from work and when they decide to apply for a

CPP retirement pension.

The amendments ensure that the Plan remains fair and secure

as it responds to socio-demographic changes and labour

market trends.

These amendments will be implemented gradually from 2011 to

2016.

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Summary of Amendments

Amendment 1

Bring the adjustment factors, for

retirement pensions taken

before and after age 65, back to

neutral values.

* Those who receive a retirement pension from the Quebec Pension Plan and

return to work are required to pay contributions.

Amendment 2

For workers receiving a CPP

retirement pension*, contributions

are required until age 65 and then

voluntary until age 70 for additional

pension benefit.

Amendment 3

Eliminate the requirement to

stop working or reduce earnings

in order to qualify for a CPP

retirement pension before age

65.

Amendment 4

Enhance the general drop-out

provision to exclude up to an

additional year of low earnings

from the benefit calculation.

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Gradual Implementation of

Changes to Adjustment Factors

2009

-30%

2016 2012 2013 2014 2015

-31.2% -32.4% -33.6% -34.8% -36%

notice period

2009

+30%

2013 2011 2012

+34.2% +38.4% +42%

notice period

Gradual decrease of pre-65 adjustment factors will begin in 2012:

The increase of post-65 adjustment factors will be implemented at a faster

rate starting as of 2011:

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Canada Pension Plan

2013 Early CPP Retirement Table

Maximum CPP retirement pension payable (age 65) in 2013 is $1,012.50

Age

when CPP starts

60

61

62

63

64

Months CPP

taken early: - 60 months - 48 months - 36 months - 24 months - 12 months

Percent that CPP

will be reduced: 32.4% 25.92% 19.44% 12.96% 6.48%

Monthly

payments: * $684.45 $750.06 $815.67 $881.28 $946.89

Monthly

decrease: ** $328.05 $262.44 $196.83 $131.22 $ 65.61

Total of payments

prior to 65: *** $41,067.00 $36,002.44 $29,364.12 $21,150.72 $11,362.68

Make-up time in

months: **** 125 137 149 161 173

Make-up time in

years: **** 10.4 11.4 12.4 13.4 14.4

Break-even point

is at age: **** 75 76 77 78 79

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Pension Sharing

For couples who live together, are at least 60 years of

age, and apply for or receive CPP/QPP retirement

pensions:

If there is a difference in the amount of retirement

pension you or your spouse/common-law partner

receive, you can request to share your retirement

pensions.

If only one of you is a CPP contributor, you share that

one pension.

The overall benefits paid do not increase or decrease with

pension sharing.

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Credit Splitting

Application procedures.

The contributions a person makes into the CPP

over the years becomes their “CPP pension

credits”.

“Credits” may be divided upon divorce, legal

annulment or separation of spouses or common-

law partners.

“Credits” may create eligibility or increase/

decrease entitlement to CPP benefits.

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CPP Drop Out Provisions

Periods of CPP Disability

Periods over age 65

Periods during which children were raised up to age 7

(Child Rearing)

16% of the lowest earning years in the contributory period

(2012-2013 – 17% 2014) (calculated on remaining years)

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Drop-Out Provisions Example:

Year 2012

Age 65

Contributory Period

47 Years

25 years after drop-outs

(approximate only as calculation actually uses months)

1. Periods of disability (1985 to 1995) 11 Years

2. Raising children (1968 to 1974) 7 Years

3. 16% (47 - 18 = 29 years x 16%) approx. 4 Years

1968 - 1974 1977 - 1978 1985 - 1995 1982-1983

1 3 3

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January

1966

Canada Pension Plan

Disability Benefits

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CPP Disability Benefit Contribution requirements

You must have made sufficient valid contributions to

the CPP in four of the last six years; or

As of March 3, 2008, you may qualify if you have:

25 years or more of contributions; and

Made sufficient valid contributions to the CPP in

three of the last six years.

$ 1,212.90 (2013 Max)

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CPP Disability Benefit Medical requirements

You must have a mental and/or physical disability

that is both severe and prolonged.

Severe: Unable to regularly pursue any

substantially gainful occupation. (This means

that your medical condition prevents you from

doing any type of work on a regular basis).

Prolonged: The disability is of indefinite

duration or is likely to result in death.

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Canada Pension Plan

Survivor’s Benefits

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Death Benefit

Survivor’s Pension

Children’s Benefit

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Survivor’s Pension General Eligibility Criteria

Who is eligible?

Minimum contribution requirements

Application procedures

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CPP Child’s Benefit

Payable to the dependent child of a deceased

contributor or of a disability recipient.

Child must be under the age of 18 or between

18 and 25 and in attendance at school full

time.

Child may be eligible to a maximum of 2

benefits

$ 228.66 (2013 rate).

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Old Age Security Benefits

Old Age Security pension

(OAS)

Guaranteed Income

Supplement (GIS)

Allowance

Allowance for the Survivor

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You may qualify for a full OAS Pension if:

You have resided in Canada for at least 40 years after age 18 and before your application is approved; or

You meet the 10 year residence rule.

OAS Pension – Residency & Entitlement

You may qualify for a partial pension:

If you have resided in Canada for at least 10 years

after the age of 18.

If you cannot meet the requirements for the full OAS pension:

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Portability

To Receive OAS Outside of Canada you must:

have 20 years of residence in Canada after age 18; or

meet the 20-year residence requirement through an International Social Security Agreement.

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OAS Pension – Repayment of Pension

OAS pension higher-income pensioners

Net World Income from $70,954 to $114,640)

15% for residents, varies for non-residents

Based on previous year’s income

Monthly deductions from OAS pension

CRA International Tax Services Office

1-800-267-6999 (Canada or U.S.)

www.cra-arc.gc.ca

Request to reduce OAS Recovery Tax at Source T1213(OAS)

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GIS - Eligibility

Must:

Be in receipt of an

OAS pension

Reside in Canada

Apply in writing

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Allowance - Eligibility

Must be:

Between the ages of 60 and 64

The spouse/common-law partner of a GIS recipient

A Canadian citizen or a legal resident (same as OAS)

A resident of Canada for at least 10 years after age 18 (can be met through one of Canada’s International Social Security Agreements)

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Allowance for the Survivor - Eligibility

Must be:

Between the ages of 60 and 64

A survivor

A Canadian citizen or legal resident (same as OAS)

A resident of Canada for at least 10 years after age 18 (can be met through one of Canada’s International Social Security Agreements)

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Portability

The GIS, Allowance, and Allowance for

the Survivor may only be paid outside

of Canada for…

…the month of departure, and

the following 6 months.

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International Social Security Agreements

Co-ordinates the pension programs of two countries

for contributors who lived and/or worked in both

countries. This way, contributors would qualify:

for CPP benefits (Disability or Survivor) if they

lived and/or worked in Canada;

For OAS benefits, if they lived and/or worked

abroad & have some residence in Canada

for foreign benefits if they lived and/or worked

abroad.

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International Agreements

Antigua and Barbuda

Australia

Austria

Barbados

Belgium

Chile

Croatia

Cyprus

Czech Republic

Denmark

Dominica

Estonia

Finland

France

Germany

Greece

Grenada

Hungary

* Limited agreement

Iceland

Ireland

Israel

Italy

Jamaica

Japan

Jersey and Guernsey

Korea

Latvia

Lithuania

Luxembourg

Malta

Macedonia

Mexico

Morocco

Netherlands

New Zealand

Norway

Philippines

Poland

Portugal

Romania

Saint Kitts and Nevis

Saint Lucia

Saint Vincent and the

Grenadines

Slovak Republic

Slovenia

Spain

Sweden

Switzerland

Trinidad and Tobago

Turkey

* United Kingdom

United States

Uruguay

Proactive Enrolment

Voluntary Deferral of the OAS

Pension

Change in Age of OAS Eligibility

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CHANGES TO THE OLD AGE SECURITY

Proactive Enrolment

Will remove the need for many seniors to apply for OAS pension or the Guaranteed Income Supplement (GIS).

Individuals will be notified by mail if they meet the criteria for proactive enrolment.

Will be phased-in from 2013 to 2016.

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Voluntary Deferral of OAS Pension

As of July 1, 2013, individuals will be able to choose the option to defer their OAS pension by up to five years past the age of eligibility.

All individual circumstances and financial details should be considered before making a final decision to defer.

The voluntary deferral of the OAS pension could benefit those who are able to continue working and those who can afford to wait to receive an OAS pension.

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Voluntary Deferral of OAS Pension

By deferring their OAS pension, an individual will receive an increased benefit of 0.6 % per month; 7.2% for each year up to 36% for the maximum period of 5 years.

Once the receipt of the OAS pension begins, the percentage increase will be applied to their pension permanently.

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Eligibility for the Old Age Security pension

& Allowances (2023-2029)

Gradually increase the age for

OAS from 65 to 67.

People currently receiving OAS

benefits will not be affected by

the proposed changes.

Visit: www.servicecanada.gc.ca

Gradually increase the age for

Allowance & Allowance for the

Survivor from 60-64 to 62-66

Year of birth: 1963 or later

Under the proposal, anyone born

in 1963 or later will be eligible for

the Old Age Security pension at

the age of 67.

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Who is affected by the Change in

Age of OAS Eligibility?

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Example - Year of Birth 1958

65 years of age in 2023 January - 65

February - 65

March - 65

April - 65 + 1 month

May - 65 + 1 month

June - 65 + 2 months

July - 65 + 2 months

August - 65 + 3 months

September - 65 + 3 months

October - 65 + 4 months

November - 65 + 4 months

December - 65 + 5 months

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For More Information…

Click www.servicecanada.gc.ca

Call CPP/OAS Call centre

1 800 277-9914 (English)

1 800 255-4786 (TTY)

Visit a Service Canada Office

• Go to www.servicecanada.gc.ca

• Select “Find a Service Canada Office”

for a list of all offices

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Questions

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