Canada s Public Pensions. Ifigenia Fasogiannis / Citizen Services Specialist

Transcription

1 Canada s Public Pensions Ifigenia Fasogiannis / Citizen Services Specialist

2 Canada s Retirement Income System PUBLIC PRIVATE Canada Pension Plan / Quebec Pension Plan Old Age Security Program Private pensions and savings 2

3 Canada Pension Plan Began in January 1966 Employment-based contributions Payable outside Canada Québec has a program with similar benefits (QPP) Taxable 3

4 CPP Statement of Contributions Is mailed regularly to contributors View and print it from My Service Canada Account Can be mailed to you upon request 4

5 Canada Pension Plan (CPP) Benefits Retirement pension Disability benefit Children s benefit Survivor benefits Death benefit Survivor s pension Children s benefit 5

6 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

7 Summary of Amendments Amendment 1 Bring the adjustment factors, for retirement pensions taken before and after age 65, back to neutral values. Amendment 3 Eliminate the requirement to stop working or reduce earnings in order to qualify for a CPP retirement pension before age 65. 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 4 Enhance the general drop-out provision to exclude up to an additional year of low earnings from the benefit calculation. * Those who receive a retirement pension from the Quebec Pension Plan and return to work are required to pay contributions. 7

8 Gradual Implementation of Changes to Adjustment Factors Gradual decrease of pre-65 adjustment factors will begin in 2012: -30% -31.2% -32.4% -33.6% -34.8% -36% 2009 notice period The increase of post-65 adjustment factors will be implemented at a faster rate starting as of 2011: +30% +34.2% +38.4% +42% 2009 notice period

9 Canada Pension Plan 2013 Early CPP Retirement Table Maximum CPP retirement pension payable (age 65) in 2013 is $1, Age when CPP starts Months CPP taken early: Percent that CPP will be reduced: Monthly payments: * Monthly decrease: ** Total of payments prior to 65: *** Make-up time in months: **** Make-up time in years: **** Break-even point is at age: **** - 60 months - 48 months - 36 months - 24 months - 12 months 32.4% 25.92% 19.44% 12.96% 6.48% $ $ $ $ $ $ $ $ $ $ $41, $36, $29, $21, $11,

10 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. 10

11 Application procedures. Credit Splitting 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 commonlaw partners. Credits may create eligibility or increase/ decrease entitlement to CPP benefits. 11

12 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 ( % 2014) (calculated on remaining years) 12

13 Drop-Out Provisions Example: January Year 2012 Age 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 1 13

14 Canada Pension Plan Disability Benefits

15 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, (2013 Max) 15

16 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. 16

17 Canada Pension Plan Survivor s Benefits 18

18 Death Benefit Survivor s Pension Children s Benefit 19

19 Survivor s Pension General Eligibility Criteria Who is eligible? Minimum contribution requirements Application procedures 21

20 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 $ (2013 rate). 22

21 Old Age Security Benefits Old Age Security pension (OAS) Guaranteed Income Supplement (GIS) Allowance Allowance for the Survivor 23

22 OAS Pension Residency & Entitlement 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. If you cannot meet the requirements for the full OAS pension: You may qualify for a partial pension: If you have resided in Canada for at least 10 years after the age of

23 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. 25

24 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 (Canada or U.S.) Request to reduce OAS Recovery Tax at Source T1213(OAS) 26

25 GIS - Eligibility Must: Be in receipt of an OAS pension Reside in Canada Apply in writing 27

26 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) 28

27 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) 29

28 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. 30

29 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. 31

30 International Agreements Antigua and Barbuda Australia Austria Barbados Belgium Chile Croatia Cyprus Czech Republic Denmark Dominica Estonia Finland France Germany Greece Grenada Hungary 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 * Limited agreement 32

31 CHANGES TO THE OLD AGE SECURITY Proactive Enrolment Voluntary Deferral of the OAS Pension Change in Age of OAS Eligibility 33

32 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

33 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. 35

34 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. 36

35 Eligibility for the Old Age Security pension & Allowances ( ) Gradually increase the age for OAS from 65 to 67. People currently receiving OAS benefits will not be affected by the proposed changes. 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. Visit: Gradually increase the age for Allowance & Allowance for the Survivor from to

36 Who is affected by the Change in Age of OAS Eligibility?

37 January - 65 February - 65 March - 65 Example - Year of Birth years of age in 2023 April month May month June months July months August months September months October months November months December months 39

38 For More Information Click Call CPP/OAS Call centre (English) (TTY) Visit a Service Canada Office Go to Select Find a Service Canada Office for a list of all offices 40

39 Questions 41

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