SOCIAL DEVELOPMENT CANADA
Income Security Programs
SOCIAL DEVELOPMENT CANADA
Income Security Programs
• Old Age Security (OAS)
• Canada Pension Plan (CPP)
• International Social
Security Agreements
• 1 800 277-9914
• www.sdc-dsc.gc.ca/isp
SOCIAL DEVELOPMENT CANADA
SOCIAL DEVELOPMENT CANADA
The 3 levels of Canada’s
Retirement Income System
3 Private Savings
Employer Pensions
2 Canada Pension
Plan Québec
Pension Plan
1 Old Age Security
SOCIAL DEVELOPMENT CANADA
Canada’s Retirement Income
System
• In general, 70% of preretirement income is
required
• OAS and CPP
retirement pensions
are designed to
replace about 40% of
the
pre-retirement income
SOCIAL DEVELOPMENT CANADA
Canada’s Retirement Income System
• On average, 70% of pre-retirement
income is required to maintain preretirement lifestyle
• The OAS pension and CPP Retirement
pension are designed to replace about
40% of the average pre-retirement income
• Maximum OAS and CPP retirement
benefits in year 2006 is about $16,000
SOCIAL DEVELOPMENT CANADA
SOCIAL DEVELOPMENT CANADA
Old Age Security Sustainability
• Financed from general tax revenues of the
Government of Canada
• OAS on solid ground - Actuarial studies
• Canada’s Gross Domestic Product (GDP)
and individual incomes to rise
SOCIAL DEVELOPMENT CANADA
Old Age Security Benefits
• Old Age Security pension (OAS)
• Guaranteed Income Supplement (GIS)
• Allowance
• Allowance for the Survivor
SOCIAL DEVELOPMENT CANADA
Old Age Security (OAS) Pension
• Based on age, legal status, and years of
residence in Canada
• 2 types of pension - Full and Partial
• Taxable
• May be subject to OAS Repayment of
Benefits
SOCIAL DEVELOPMENT CANADA
OAS Pension
Must:
• be 65 years of
age or more;
• meet the legal
status and
residence
requirements;
• apply in writing
SOCIAL DEVELOPMENT CANADA
OAS Pension
Legal Status Requirement
Must be:
• a Canadian citizen; or
• a legal resident of Canada; on
the day preceding the approval
of your application or on the day
before the day you stopped living
in Canada.
SOCIAL DEVELOPMENT CANADA
OAS Residency Requirement
People living in Canada
• Must be a Canadian citizen or a
legal resident at the time your
application is approved
• Must have resided in Canada for at
least 10 years after the age of 18
SOCIAL DEVELOPMENT CANADA
OAS Residency Requirements
People living outside of Canada
•
Must have been a Canadian citizen or
a legal resident of Canada when you
left Canada
•
Must have resided in Canada for at
least 20 years after the age of 18
SOCIAL DEVELOPMENT CANADA
Full OAS Pension
Must:
• have resided in Canada for at least
40 years after age 18 and before your
application is approved; or
• meet the 10 years residence rule; or
• meet the “3 for 1” residence rule.
SOCIAL DEVELOPMENT CANADA
Full OAS Pension
“3 for 1” Residence Rule
Example:
18
55
Need 3 years of
residence
64 65
For each year of
absence
SOCIAL DEVELOPMENT CANADA
Partial OAS Pension
• You do not qualify for a full OAS pension
• 1/40th of a full OAS pension for each full
year of residence in Canada after age 18
• Minimum of 10 years residence
required
• Once approved, a partial OAS pension
will not be increased following additional
years of residence in Canada
SOCIAL DEVELOPMENT CANADA
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 through
one of Canada’s
International
Agreements with
another country.
SOCIAL DEVELOPMENT CANADA
OAS Repayment of Benefits
• OAS pension higher-income pensioners
• Net World Income from $62,144 to $100,914
(2006)
• 15% for residents, varies for non-residents
• Based on previous year’s income
(continued…)
SOCIAL DEVELOPMENT CANADA
Guaranteed Income Supplement (GIS)
•
•
•
•
For low-income seniors
Added to the OAS pension
Based on income and marital status
Based on combined income, if the
applicant has a spouse/partner
• Not taxable
SOCIAL DEVELOPMENT CANADA
GIS
Must:
• be in receipt of
an OAS pension;
• reside in
Canada;
• apply in writing.
SOCIAL DEVELOPMENT CANADA
Allowance
• For low-income seniors who meet the
eligibility conditions
• Based on combined income from the
previous year
• Not taxable
• Must apply in writing
SOCIAL DEVELOPMENT CANADA
Allowance
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
SOCIAL DEVELOPMENT CANADA
Allowance for the Survivor
• For low-income seniors who meet the
eligibility conditions
• Based on previous year’s income
• Not taxable
• Must apply in writing
SOCIAL DEVELOPMENT CANADA
Allowance for the Survivor
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.
SOCIAL DEVELOPMENT CANADA
Allowance and Allowance
for the Survivor at age 65:
• At age 65, the Allowance and Allowance for
the Survivor stops, must apply for OAS
Pension
• May also qualify for the GIS
SOCIAL DEVELOPMENT CANADA
Maximum Net Income Allowed
Jan to March 2006
GIS – Single
$ 14,256 Table 1
GIS Married - Spouse/Partner is:
•
an OAS pensioner (65+)
•
a Non-pensioner (under 60)
•
an Allowance pensioner (60-64)
$ 18,720 Table 2
$ 34,368 Table 3
$ 34,368 Table 4
Allowance
Allowance for the Survivor
(widow/widower 60-64)
$ 26,496 Table 4
$ 19,368 Table 5
NOT INCLUDING OLD AGE SECURITY!
SOCIAL DEVELOPMENT CANADA
Portability
GIS, Allowance and
Allowance for the
Survivor may only
be paid outside of
Canada for the
month of your
departure and for
the following six
months
SOCIAL DEVELOPMENT CANADA
Renewal
• GIS, Allowance and Allowance for the
Survivor must be renewed each year
• They are renewed automatically if you file
your income tax return prior to
April 30
(continued…)
SOCIAL DEVELOPMENT CANADA
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
• Began in January 1966
• Employment-based contributions
• Self-supporting
• Payable outside Canada
• Reviewed and revised regularly
• Québec has a program with
similar benefits
SOCIAL DEVELOPMENT CANADA
CPP Investment Board
• Professionally manages the CPP fund, not
needed to pay benefits
• Broadly subject to the same investment rules
as other pension funds
• Reports its investments and returns regularly
www.cppib.ca
SOCIAL DEVELOPMENT CANADA
Contributions for Year 2006
Maximum Contributory Earnings:
$42,100 (YMPE) - $3,500 (YBE) = $38,600
Employee
Employer
Self-Employed
Rate:
4.95%
Amount:
$1,831.50
Rate:
4.95%
Amount:
$1,831.50
Rate:
9.9%
Amount:
$3,663
SOCIAL DEVELOPMENT CANADA
Contribution Rates Schedule
Year Employee
Employer
Self-Employed
2000
3.9%
3.9%
7.8%
2001
4.3%
4.3%
8.6%
2002
4.7%
4.7%
9.4%
2003
4.95%
4.95%
9.9%
2006
4.95%
4.95%
9.9%
(Contribution Rate will now be maintained at this
maximum rate of 9.9%)
SOCIAL DEVELOPMENT CANADA
Adjusted Earnings
• Protects pension by
taking growth of
wages into account
SOCIAL DEVELOPMENT CANADA
Contributory Period
Starts (later of):
• January 1966; or
• month after your 18th birthday.
SOCIAL DEVELOPMENT CANADA
Contributory Period
Ends (first of):
• month before your Retirement pension starts;
or
• month you reach age 70; or
• month you die; or
• when eligible for Disability benefits.
SOCIAL DEVELOPMENT CANADA
Contributory Period Example
Starts (later of):
Ends (first of):
• January 1966; or
• age 18
• retirement; or
• age 70; or
• death
Start
Age 60
Age 65
(Flexible start date option)
Age 70
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
Statement of
Contributions
• Sent periodically
• 1 877 454-4051
SOCIAL DEVELOPMENT CANADA
Drop-Out Provisions
• Periods of CPP Disability
• Periods during which children
were raised up to age 7
• Plus 65 years of age
• 15% of the lowest earning years
in your contributory period
(calculated last on remaining
years)
SOCIAL DEVELOPMENT CANADA
Drop-Out Provisions
Example:
1968 - 1974
Year 2005
Age 65
1977 - 1978
1982-1983
1985 - 1990
Contributory Period
40 Years
23 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% (39 - 13 = 26 years x 15%)
4 Years
SOCIAL DEVELOPMENT CANADA
Child Rearing Drop-Out
Must have:
• a child born after December
31, 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
SOCIAL DEVELOPMENT CANADA
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
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan Benefits
• Retirement pension
• Disability benefit
 Disabled Contributor Child’s benefit
• Survivor benefits
 Death benefit
 Survivor’s benefit
 Surviving Child’s benefit
SOCIAL DEVELOPMENT CANADA
Retirement Pension
May start receiving the
Retirement pension:
 between age 60 and 65;
 at age 65;
 between age 65 and 70.
• Must have made at least one
valid contribution
• Must apply in writing
• Taxable
SOCIAL DEVELOPMENT CANADA
Flexible Retirement Pension
Between 60 and 65:
• Amount decreased by 0.5% for
each month under age 65
• Maximum decrease of 30%
• No re-adjustment of pension
amount at age 65
(continued…)
SOCIAL DEVELOPMENT CANADA
Flexible Retirement Pension
Between 60 and 65
• No retroactivity
• Stop or earn up to a maximum
amount for period of time
• Stops contributing to CPP/QPP
SOCIAL DEVELOPMENT CANADA
Substantially Ceased Working
Cessation Test For Early Retirement
• Earnings from employment must be
below the maximum monthly CPP
Retirement pension
• Only for the month before the
Retirement pension starts and for the
month the pension starts being paid
• Max. of $844.58 for each month (2006)
SOCIAL DEVELOPMENT CANADA
Flexible Retirement Pension
Between 65 and 70
• Increased by 0.5% for each
month over age 65
• Maximum increase of 30%
• Retroactivity of maximum of 11
months prior to application (back
to age 65 only)
• Cannot contribute after age 70
SOCIAL DEVELOPMENT CANADA
Sharing Your Retirement Pension
Sharing your Retirement pension with
your spouse or common-law partner.
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
Disability Benefit
Number of beneficiaries
(2002/2003):
285,000
Max. monthly basic benefit (2006):
$1,031.05
Total expenditure
(2002/2003):
$ 2.8 B
SOCIAL DEVELOPMENT CANADA
Disability Benefit
• Under age 65
• Paid contributions for
the minimum
qualifying period
• Disability both severe
and prolonged
• Must apply in writing
SOCIAL DEVELOPMENT CANADA
Minimum Qualifying Period
Applicants disabled after January 1, 1998
• 4 of last 6 years in the contributory period
• 4 years, if there is less than 6 years in the
contributory period
(continued…)
SOCIAL DEVELOPMENT CANADA
Minimum Qualifying Period
Applicants disabled after January 1, 1998
Earnings must be at least 10% of
YMPE (Disability Basic Exemption DBE) rounded down to nearest $100
YMPE for 2006 is $42,100
DBE for 2005 is $4,200
SOCIAL DEVELOPMENT CANADA
Minimum Qualifying Period
Applicants considered disabled
before 1998
• 5 of last 10 years; or
• 5 years, if less than 10 years in the
contributory period; or
• 2 of last 3 years; or
• 2 years, if only 2 years in the
contributory period.
SOCIAL DEVELOPMENT CANADA
Disability Benefit
Severe and Prolonged
Severe:
• condition prevents from
doing any type of work
on a regular basis.
Prolonged:
• condition is long term or
may result in death.
SOCIAL DEVELOPMENT CANADA
Disability Benefit
Eligibility Provisions for Late
Applicants
• Protects eligible applicants who
are late applying
• Must meet the minimum qualifying
period at time considered disabled
• Up to 12 months retroactive
payments
SOCIAL DEVELOPMENT CANADA
Disability Benefit
Vocational Rehabilitation
• Vocational Rehabilitation Program is
designed to help recipients of CPP Disability
benefits return to work
• Started in 1995
• Voluntary
SOCIAL DEVELOPMENT CANADA
Disability Benefit
Vocational
Rehabilitation
• Motivated to
return to work
• Doctor agrees
• Signs a consent
to participate
SOCIAL DEVELOPMENT CANADA
Disability Benefit at Age 65
• At age 65, the Disability benefit is
replaced by the CPP Retirement
pension
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
Survivor Benefits
SOCIAL DEVELOPMENT CANADA
Survivor Benefits
Minimum Contribution Required
• Deceased contributor must have paid
into CPP for 1/3 of their contributory
period
or
• 10 years (whichever is less)
and
• have a minimum of 3 years of
contributions
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
Death Benefit
Max. lump sum benefit (2006):
$2,500
Total expenditure (2002/2003):
$234 M
SOCIAL DEVELOPMENT CANADA
Death Benefit
• Paid to the representative of
the estate
• If there is no estate,
the benefit is paid to:
1) person or agency
responsible for the
funeral expenses;
2) survivor (spouse or
common-law partner);
3) next-of-kin.
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
Survivor’s Benefit
Number of beneficiaries
(2002/ 2003):
907,000
Max. monthly benefit (2006):
$471.85 (-65)
$506.75 (+65)
Total expenditure (2002/2003):
$3.1 B
SOCIAL DEVELOPMENT CANADA
Survivor’s Benefit
• Paid to the survivor of the deceased contributor
• Survivor must be over
age 35, or have a
dependent child,
or be disabled
• Benefit continues upon
change in marital status
• Up to 12 months
retroactive payments
• Taxable
• Must apply in writing
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
Combined Benefits
Retirement pension
or Disability benefit
Survivor’s benefit
Combined benefits
SOCIAL DEVELOPMENT CANADA
Canada Pension Plan
Child’s Benefit
Number of beneficiaries (2002/2003):
Disabled Contributor Child’s benefit
90,000
Surviving Child’s benefit
86,000
Flat-rate monthly benefit (2004):
$200.47
Total expenditure (2002/2003):
461 M
SOCIAL DEVELOPMENT CANADA
Child’s Benefit
• Dependent child of a deceased
or disabled contributor
• Maximum of
two benefits
may be paid
per child
• Taxable
• Must apply in writing
SOCIAL DEVELOPMENT CANADA
Full Time Attendance at School
• Acceptable educational institution
• Benefits paid during vacation
period
• Must confirm
attendance each
year/semester
• May be deemed
in school, if
absence is due
to illness
SOCIAL DEVELOPMENT CANADA
SOCIAL DEVELOPMENT CANADA
International Agreements
Antigua and Barbuda
Australia
Austria
Barbados
Belgium
Chile
Croatia
Cyprus
Czech Republic
Denmark
Dominica
Finland
France
Germany
Greece
Grenada
Hungary
Iceland
Ireland
Israel ●
Italy
Jamaica
Jersey and Guernsey
Korea
Luxembourg
Malta
Mexico
Morocco ×
Netherlands
New Zealand
Norway
Japan
× Not yet in force
Philippines
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
● Limited agreement
SOCIAL DEVELOPMENT CANADA
• Reconsideration
• Review Tribunal
• Pension Appeals
Board
SOCIAL DEVELOPMENT CANADA
Direct Deposit
• Bank, Credit Union
or Financial
Institution
• 81% of ISP clients
receive their
monthly payment
through direct
deposit
SOCIAL DEVELOPMENT CANADA
Start Planning Today
Things to do now!
• Social Insurance Number
• Birth certificate
• Marriage certificate
• Citizenship certificate
• Immigration/legal status
• Passport
• Will
• Statement of Contributions
SOCIAL DEVELOPMENT CANADA
How to reach us ?
1 800 277-9914
(English)
1 800 277-9915
(French)
1 800 255-4786
(TDD/TTY device)
www.sdc-dsc.gc.ca/isp