When planning your retirement, one thing to keep in mind is the money you can get from the government. There are a few pensions available, and these are the three main ones: CPP/QPP, OAS and GIS.
The Canada Pension Plan (CPP)
CPP is a benefit available to everyone and it provides a monthly benefit to eligible applicants. This benefit is correlated to your work life and contributions made during those years, which means the amount you get is based on how much you have contributed and for how long. Canada Pension Plan does not start automatically, you have to apply for it. In order to be eligible you have to be at least a month past your 59th birthday; have worked in Canada and made at least one valid contribution; and want your CPP payments to begin within 12 months.
The official age to apply and receive a full CPP is at age 65, but you can receive it as early as age 60 with a permanent reduction, or as late as age 70 with a permanent increase.
To learn more about CPP/QPP watch this video from Manulife.
The Old Age Security (OAS)
Different from the CPP, the Old Age Security doesn’t count your employment history. This program is the largest pension program in Canada and it’s funded out of the general tax revenues of the Government of Canada. The OAS is a monthly payment available to people age 65 and older who meet the eligibility criteria.
If you are living in Canada, you must:
- be 65 years old or older;
- be a Canadian citizen or a legal resident at the time we approve your OAS pension application; and
- have resided in Canada for at least 10 years since the age of 18.
If you are living outside Canada, you must:
- be 65 years old or older;
- have been a Canadian citizen or a legal resident of Canada on the day before you left Canada; and
- have resided in Canada for at least 20 years since the age of 18.
You can qualify to receive a full or partial pension, the partial being 1/40th of the full OAS pension for each complete year of residence in Canada after age 18.
The Guaranteed Income Supplement (GIS)
(GIS) provides a monthly non-taxable benefit to Old Age Security (OAS) pension recipients who have a low income and are living in Canada. In order to receive this benefit you need to be receiving an OAS and your annual income is lower than the maximum annual threshold. The Government of Canada will review your eligibility to this program every year, which means you need to report your income and deductions, and if eligible you will have an automatically renewal.
To understand more about pensions and how to maximize your retirement income, speak to an Advisor.
For Government of Canada – Public Pensions content click here.
