Income Security Programs

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Income Security Programs
SOCIAL DEVELOPMENT CANADA
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Income Security Programs
SOCIAL DEVELOPMENT CANADA

• Old Age Security (OAS)
• Canada Pension Plan (CPP)
• International SocialSecurity Agreements
• 1 800 277-9914
• www.sdc-dsc.gc.ca/isp

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Canada's Retirement Income System
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The 3 levels of Canadas
Retirement
Income System

• 3 Private SavingsEmployer Pensions
• 2 Canada Pension Plan Québec Pension Plan
• 1 Old Age Security

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Canadas Retirement Income System

• In general, 70 of pre-retirement income is
  required
• OAS and CPP retirement pensions are designed to
  replace about 40 of thepre-retirement income

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Canadas Retirement Income System

• On average, 70 of pre-retirement income is
  required to maintain pre- retirement 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

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Old Age Security
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Old Age Security Sustainability

• Financed from general tax revenues of the
  Government of Canada
• OAS on solid ground - Actuarial studies
• Canadas Gross Domestic Product (GDP) and
  individual incomes to rise

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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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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

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OAS Pension

• Must
• be 65 years ofage or more
• meet the legalstatus andresidencerequirements
• apply in writing

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OAS PensionLegal 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.

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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

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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

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Full OAS Pension

• Must
• have resided in Canada for at least40 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.

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Full OAS Pension 3 for 1 Residence Rule

• Example

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65
18
64
Need 3 years ofresidence
For each year ofabsence
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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

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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-yearresidence throughone of
  CanadasInternationalAgreements withanother
  country.

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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 years income
• (continued)

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OAS Repayment of Benefits

• Monthly deductions from OAS pension
• CRA International Tax Services Office
• 1-800-267-5177 (Canada or U.S.)
• www.cra-arc.gc.ca

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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

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GIS

• Must
• be in receipt of an OAS pension
• reside in Canada
• apply in writing.

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Allowance

• For low-income seniors who meet the eligibility
  conditions
• Based on combined income from the previous year
• Not taxable
• Must apply in writing

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Allowance

• Must be
• between the ages of 60 and 64
• the spouse/common-law partner of a GIS recipient
• a Canadian citizenor a legal resident(same as
  OAS)
• a resident of Canadafor at least 10 yearsafter
  age 18

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Allowance for the Survivor

• For low-income seniors who meet the eligibility
  conditions
• Based on previous years income
• Not taxable
• Must apply in writing

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Allowance for the Survivor

• Must be
• between the ages of 60and 64
• a survivor
• a Canadian citizen or legal resident (same as
  OAS)
• a resident of Canada for at least 10 years after
• age 18.

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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

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Maximum Net Income Allowed

• Jan to March 2006
• GIS Single 14,256 Table 1
• GIS Married - Spouse/Partner is
• an OAS pensioner (65) 18,720 Table 2
• a Non-pensioner (under 60) 34,368
  Table 3
• an Allowance pensioner (60-64) 34,368 Table
  4
• Allowance 26,496 Table 4
• Allowance for the Survivor 19,368
  Table 5
• (widow/widower 60-64)
• NOT INCLUDING OLD AGE SECURITY!

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Portability

• GIS, Allowance andAllowance for theSurvivor may
  only be paid outside of Canada for the month of
  your departure and for the following six months

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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 toApril 30
• (continued)

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Canada Pension Plan
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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

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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

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Contributions for Year 2006

• Maximum Contributory Earnings
• 42,100 (YMPE) - 3,500 (YBE) 38,600
• Employee Rate 4.95
• Amount 1,831.50
• Employer Rate 4.95
• Amount 1,831.50
• Self-Employed Rate 9.9
• Amount 3,663

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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
• 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)

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Adjusted Earnings

• Protects pension by taking growth of wages into
  account

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Contributory Period

• Starts (later of)
• January 1966 or
• month after your 18th birthday.

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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.

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Contributory Period Example

• Ends (first of)
• retirement or
• age 70 or
• death

• Starts (later of)
• January 1966 or
• age 18

Age 65
Age 60
Age 70
Start
(Flexible start date option)
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Canada Pension Plan

• Statement of
• Contributions
• Sent periodically
• 1 877 454-4051

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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)

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Drop-Out ProvisionsExample
Year 2005Age 65
1968 - 1974
1982-1983
1977 - 1978
1985 - 1990
Contributory Period40 Years23 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
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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 FamilyAllowances or
• been eligible for theChild Tax Benefit.
• Must apply in writing

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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 toCPP benefits
• Applicants ex-spouse/ex-partner is notified
  ofthe request in writing

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Canada Pension Plan Benefits

• Retirement pension
• Disability benefit
• Disabled Contributor Childs benefit
• Survivor benefits
• Death benefit
• Survivors benefit
• Surviving Childs benefit

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Retirement Pension

• May start receiving theRetirement 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

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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)

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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

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Substantially Ceased WorkingCessation 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)

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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

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Sharing Your Retirement Pension

• Sharing your Retirement pension withyour spouse
  or common-law partner.

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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

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Disability Benefit

• Under age 65
• Paid contributions for the minimumqualifying
  period
• Disability both severe and prolonged
• Must apply in writing

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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)

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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
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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.

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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.

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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

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Disability Benefit

• Vocational Rehabilitation
• Vocational Rehabilitation Program is designed to
  help recipients of CPP Disability benefits return
  to work
• Started in 1995
• Voluntary

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Disability Benefit

• Vocational Rehabilitation
• Motivated toreturn to work
• Doctor agrees
• Signs a consentto participate

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Disability Benefit at Age 65

• At age 65, the Disability benefit is replaced by
  the CPP Retirement pension

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Canada Pension Plan

• Survivor Benefits

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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

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Canada Pension Plan

• Death Benefit
• Max. lump sum benefit (2006) 2,500
• Total expenditure (2002/2003) 234 M

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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.

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Canada Pension Plan

• Survivors 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

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Survivors Benefit

• Paid to the survivor of the deceased contributor
• Survivor must be overage 35, or have adependent
  child,or be disabled
• Benefit continues uponchange in marital status
• Up to 12 monthsretroactive payments
• Taxable
• Must apply in writing

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Canada Pension Plan

• Combined Benefits

Retirement pensionor Disability benefit
Survivors benefit
Combined benefits
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Canada Pension Plan

• Childs Benefit
• Number of beneficiaries (2002/2003)
• Disabled Contributor Childs benefit 90,000
• Surviving Childs benefit 86,000
• Flat-rate monthly benefit (2004) 200.47
• Total expenditure (2002/2003) 461 M

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Childs Benefit

• Dependent child of a deceased or disabled
  contributor
• Maximum oftwo benefitsmay be paidper child
• Taxable
• Must apply in writing

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Full Time Attendance at School

• Acceptable educational institution
• Benefits paid during vacation period
• Must confirmattendance eachyear/semester
• May be deemedin school, ifabsence is dueto
  illness

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International Social Security Agreements
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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
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Appeals

• Reconsideration
• Review Tribunal
• Pension AppealsBoard

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Direct Deposit

• Bank, Credit Union or Financial Institution
• 81 of ISP clients receive their monthly payment
  through direct deposit

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Start Planning Today

• Things to do now!
• Social Insurance Number
• Birth certificate
• Marriage certificate
• Citizenship certificate
• Immigration/legal status
• Passport
• Will
• Statement of Contributions

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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