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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