March 2015 Canada s Retirement Income System
Canada s Retirement Income System Old Age Security Program PUBLIC PRIVATE Canada Pension Plan Quebec Pension Plan Registered Pension Plans RRSPs, savings, etc 2
Canada Pension Plan Began in January 1966 Employment-based contributions Self-supporting Payable outside Canada Reviewed and revised regularly Québec has similar program (QPP) 3
Contributory Period the span of time that an individual may contribute to the Canada Pension Plan Age 60 Age 65 Age 70 (Flexible start date option) Starts (later of): January 1966; or age 18. Ends (first of): retirement at age 65; age 70; or death. 4
CPP Drop Out Provisions Periods of CPP Disability Periods during which children were raised up to age 7 (Child Rearing) Periods over age 65 17% of the lowest earning years in the contributory period (calculated on remaining years provided contributory period is not reduced to less than 120 months) 5
Child Rearing Provision - Eligibility Must have: Child born after December 31st, 1958 Left or reduced work to care for the child while under the age of 7 received the Family Allowances; or Been eligible for the Child Tax Benefit Must apply in writing 6
January 1966 Drop-Out Provisions Example: 1968-1974 1977-1979 1985-1990 2002-2003 2 1 3 3 Dec. 2010 Age 65 Contributory Period 45 Years 27 years after drop-outs (approximate only as calculation actually uses months) 1. Periods of disability (1985 to 1990) 6 Years 2. Raising children (1968 to 1974) 7 Years 3. 15% (45-13 = 32 years x 15%) 5 Years 7
Contributions for Year 2016 Maximum Contributory Earnings: $54,900.00 (Year s Maximum Pensionable Earnings [YMPE]) - $3,500 (Year s Basic Exemption [YBE]) = $53,600.00 Employee Rate: 4.95% Amount: $2,544.30 Employer Rate: 4.95% Amount: $2,544.30 Self-Employed Rate: 9.9% Amount: $5,088.60 8
Canada Pension Plan Statement of Contributions: 1 877 454-4051 Online http://www.hrsdc.gc.ca/eng/isp/co mmon/proceed/socinfo.shtml 9
YR CPP QPP UPE 1966 60.27 0.00 03948 1967 41.18 0.00 02888 R 1968 62.94 0.00 04097 R 1969 62.62 0.00 04079 R 1970 84.60 0.00 05300 M 1971 86.40 0.00 05400 M 1972 88.20 0.00 05500 M 1973 90.00 0.00 05600 M 1974 106.20 0.00 06600 M 1975 120.60 0.00 07400 M 1976 135.00 0.00 08300 M 1977 151.20 0.00 09300 M 1978 169.20 0.00 10400 M 1979 190.80 0.00 11700 M 1980 212.40 0.00 13100 M 1981 239.40 0.00 14700 M 1982 268.20 0.00 16500 M 1983 300.60 0.00 18500 M 1984 332.05 0.00 20447 R 1985 142.09 S 0.00 06246 1986 506.00 S 0.00 16555 1987 776.00 S 0.00 22921 YR CPP QPP UPE 1988 956.00 S 0.00 26500 M 1989 832.00 S 0.00 22250 1990 864.00 S 0.00 22436 1991 122.00 S 0.00 05646 1992 0.00 0.00 00000 B 1993 157.15 0.00 08746 1994 0.11 0.00 00000 BR 1995 0.34 0.00 00000 BR 1996 116.41 0.00 06640 1997 0.00 0.00 00000 B 1998 340.00 S 0.00 08813 D 1999 87.71 S 0.00 04753 D 2000 166.28 S 0.00 05631 D 2001 97.74 0.00 05773 D 2002 0.00 0.00 00000 2003 0.00 0.00 00000 2004 0.00 0.00 00000 2005 0.00 0.00 00000 2006 0.00 0.00 00000 2007 0.00 0.00 00000 2008 0.00 0.00 00000 2009 0.00 0.00 00000 10
Credit Splitting 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 Applicant s ex-spouse/ex-partner is notified of the request in writing 11
Credit Splitting Under the Canada Pension Plan spouses are: persons legally married to one another. common-law partners are: persons of the opposite or same sex who have been living together in a conjugal relationship for at least one continuous year. 12
Canada Pension Plan (CPP) The CPP provides contributors and their families with modest income replacement in the case of retirement, disability or death. Contributions to the CPP may provide the following: Retirement pension Disability benefits Survivor benefits Amendments to the CPP will primarily impact the retirement pension. 13
Retirement Pension May start receiving : Between age 60 and 65 Age 65 (full benefit) Anytime after age 65 (increased benefit) Must have made at least one valid contribution Taxable 14
Post Retirement Benefit Starting in 2012 if you are between ages of 60-65 it will be mandatory for both you and your employer to contribute to CPP if you are already receiving your CPP RTR. The first payment of the PRB begins 2013 after contributions paid on 2012 employment are received by CRA. 15
Basic Retirement Pension At age 65: Full retirement pension paid the month after your 65th birthday You do not contribute to the CPP even if you continue working. Increased amount of benefit up to a max of 142% if you wait until age 70 Up to 12 months retroactive payment (if applying after age 65) 16
Sharing your CPP Retirement Pension Both spouses or common-law partners must be: at least 60 years old married or living in a common-law relationship (not separated or divorced) in receipt of a Retirement pension if they contributed to the Plan one or both spouses/partners must have valid CPP contributions payments to both spouses/partners are taxable 17
Sharing Retirement Pensions Starts: As soon as the application is approved Ends (first of): Month either spouse or common-law partner dies Month of divorce 12 months after the spouses/ partners separated Month non-contributor spouse/partner becomes a contributor Upon written request signed by both spouses/partners 18
Disability Benefit Must be under age 65; Must meet contributory and medical requirement; Child benefit Must apply in writing Maximum monthly benefit $1290.81 (flat rate of $471.43 & 75% of full Retirement benefit) Taxable 19
Minimum Qualifying Period Contributory Requirement: CPP contributions in 4 of the last 6 years minimum level of earnings (10% of YMPE) Late Applicant s Provision Protects eligible applicants who are late applying Must meet the minimum qualifying period at time considered disabled Up to 11 months retroactive payments 20
Medical Requirement Must have a severe and prolonged disability, defined in relation to the capacity to work, not just the diagnosis/prognosis: Must be unable to do any work (not just previous job) on a regular basis Personal characteristics such as age, education and work experience are considered Socio-economic factors such as availability of work are not considered 21
Maximum $2,500 Paid to: Death Benefit Executor, Administrator or Legal Representative Person/agency responsible for funeral expenses Surviving spouse or common-law partner Next-of-kin Must apply in writing Taxable 22
Survivor s Pension Monthly benefit paid to the survivor of the deceased contributor (deceased contributor must have met minimum qualifying period) Survivor must be considered married or common-law under the CPP legislation May recognize separated legal spouse provided there is no eligible common-law partner Survivor must be over age 35, or have a dependent child, or be/become disabled Pension continues upon change in marital status Maximum monthly benefit (under age 65)$593.62 (age 65 & over) 60% of the deceased contributors CPP Benefit 23
Child s Benefit Dependent child of a deceased CPP contributor or CPP disability beneficiary Maximum of two benefits paid per child Paid on behalf of child who is under 18 Paid directly to child who is between 18 25 and attends school full time Taxable to the child Flat rate benefit $237.69 Must apply in writing 24
Old Age Security Program Basic Old Age Security Pension (OAS) Guaranteed Income Supplement (GIS) Allowance (ALW) Allowance for the survivor (ALWS) 25
Old Age Security Pension A monthly pension payable to all eligible persons Age 65 or more Canadian citizen; or A legal resident of Canada (on the day preceding the approval of the application or on the day before the day applicant stopped living in Canada) Resident in Canada for at least 10 years after age 18 Full or partial benefit Must apply in writing 26
Full OAS Pension Must: Have resided in Canada for at least 40 years after age 18 and before your application is approved 27
Partial OAS Pension You do not qualify for a full OAS pension 1/40 th of a full OAS pension for each full year of residence in Canada after the age of 18 Minimum of 10 years residence required Once approved, a partial OAS pension will not be increased following additional years of residence in Canada 28
Portability To have the OAS pension paid outside Canada, you must: Have 20 years of residence in Canada after age 18; or Meet the 20-year residence requirement through one of Canada s International Social Security Agreements 29
OAS Pension Repayment of Pension OAS pension higher-income pensioners Net World Income from $73,756 to $119,398 (2016) 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.gc.ca 30
Guaranteed Income Supplement (GIS) Must be in receipt of an OAS pension Based on income and marital status Based on combined income, if the applicant has a spouse/common law partner Reside in Canada Apply in writing Non-taxable 31
Allowance Must be: Between the ages of 60 and 64 The spouse/common-law partner of a GIS recipient (same as CPP) 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 if not sponsored) Non-taxable 32
Allowance for the Survivor Must be: Between the ages of 60 & 64 A survivor who was married or living common-law when spouse or partner died 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 if not sponsored ) 33
Allowance for the Survivor Under the OAS Program, a Survivor is: a person whose spouse or common-law partner has died; and since the death, has not become the spouse/common-law partner of someone else. Note: Both the legal spouse (even if separated at time of spouse s death) and the common-law partner (living with partner at time of death) can apply for this benefit. 34
GIS, Allowance and Allowance for the Survivor may only be paid outside of Canada for: The month of your departure, and The following six months Portability 35
Renewal of GIS, Allowance and Allowance for the Survivor Must be renewed each year Usually renewed automatically if pensioner or couple files their income tax return prior to April 30 If the tax return is not filed or filed too late, a renewal form is sent 36
International Social Security Agreements Protect social security rights Coordinate social security programs Help meet eligibility requirements for benefits from both countries Over 50 agreements have been signed 37
Antigua and Barbuda Australia Austria Barbados Belgium Chile Croatia Cyprus Czech Republic Denmark Dominica Estonia Finland France Germany Greece Grenada Limited agreement International Agreements Hungary Iceland Ireland Israel Italy Jamaica Japan Jersey and Guernsey Korea Latvia Lithuania Luxembourg Malta Mexico Morocco* Netherlands New Zealand * Not yet in force Norway Philippines Poland Portugal St. Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Slovakia Slovenia Spain Sweden Switzerland Trinidad and Tobago Turkey United Kingdom United States Uruguay 38
Important Tips Proper documentation Apply for all benefits Your rights and responsibilities Inform us of changes that may affect benefits Change in marital status Return to work No longer disabled Residence Tax deductions Direct deposit Right to appeal 39
Contact us for Information and Applications Service Canada 1 800 O-Canada (1 800 622-6232) TDD/TTY: 1 800 926-9105 Pensions: 1 800 277-9914 (English) 1 800 277-9915 (French) TDD/TTY: 1 800 255-4786 www.servicecanada.gc.ca 40