PART 1: LIFESTYLEWhy Plan for Retirement?
Timing Your Retirement
Timing For Couples (Who Retires First and Other Relational Thoughts)
Timing for Singles (and Other Relational Thoughts)
Timing for Widowed and Divorced
Once You've Set Your Retirement Date
Retirement Party - Yes or No?
Life After York
Finding a Daily Pattern
When And Where To Start
How Much Money Will You Need?
Create A Net Worth Statement
How Much Do You Need To Save Each Year?
Where Will Your Retirement Income Come From?
Personal Savings and Investments
TSFA - What is it?
RRSP - What is it?
RRIF - What is it?
How do I withdraw money from an RRSP?
What's a LIF? And what's a LRIF?
Investing for Retirement
Your House as a Retirement Savings Strategy
Tax Planning for Retirement
YORK UNIVERSITY PENSION PLAN
How Does The York Pension Plan Work?
Do I Have To Apply For My York Pension?
Do I Need To Write A Formal Retirement Letter?
When Will I Receive My York Pension Cheque?
Can I Add Additional Money To My Pension?
When Can I Retire?
What If I Want To Work Past 65?
How Can I Estimate How Much My Pension Will Be At Retirement?
Is My Pension Increased With Cost Of Living Increases?
What Decisions Will I Have To Make About My Pension? . Retirement Options
What Happens If I Marry Or Divorce After I Retire?
Will I Pay Income Tax On My York Pension?
Can I Receive My York Pension If I Move Out of Canada?
Where Can I Learn More.?
York's Post-Retirement Health Benefits
What If I Work Past Age 65?
What If I Have A Question About My Coverage?
What Else Does Sunlife Offer?
Canada Pension Plan
Who is eligible for CPP?
What does CPP provide?
Is there a statement from CPP?
How much money can I expect?
When can I start to collect CPP?
Is CPP taxable?
What If I Stayed Home To Raise A Family Or Had A Lower Salary?
Is the CPP retirement pension protected from inflation?
Can I split my pension with my spouse or common-law partner?
What if I plan on retiring outside Canada?
What if I lived or worked outside Canada?
Can I count on CPP?
When and how do I apply?
What happens to my CPP pension when I die?
How much is the death benefit?
Old Age Security
What is the Old Age Security pension?
Who can receive the Old Age Security pension?
When should I apply?
What if I apply late?
How is my Old Age Security benefit calculated?
When do payments arrive?
Will I get cost-of-living increases?
Is my Old Age Security pension taxable?
The Guaranteed Income Supplement (GIS)
What is the Guaranteed Income Supplement?
How do I apply?
Conditions affecting GIS
How is GIS calculated?
Is GIS taxed?
Can I receive GIS if I move out of Canada?
Allowance And Allowance For The Survivor
The key to a successful retirement is planning. More than ever before, people need to be strategic in their thinking and planning. We need to be aware of national and international trends that might affect our retirement such as low interest rates, reduced health care benefits or changes to government policy. The need to learn as much about issues surrounding retirement has never been more important. Some methods of learning and becoming aware the issues are: attending seminars; reading books; searching on the internet; listening to informed television or radio programs; and talking to people.
Due to changes, and unforeseen circumstances, our planning may shift over time but being flexible allows us to take full advantage of opportunities and to respond to unexpected changes. We have a choice; we can either be the driver or the passenger on our retirement journey. And while it's never too early to plan for retirement, it's also never too late.
Now that the Ontario government has abolished mandatory retirement, timing takes on an increased importance. The decision of when to retire is in your control. This is an excellent change, as research shows that people adapt better to retirement when they are in charge of their retirement date.
For those of you who are procrastinators or are having too much fun in your work, you may find yourself drifting along never really thinking about retirement. For others, you may have had a retirement date in mind for a long time and have been working steadily toward it.
Your retirement date may be influenced by a variety of factors - finances, job satisfaction, health issues (yours or others), your attitude, family obligations, employment policies, what else you want to do in your life (that may include part-time work), and if part of a couple, your partner's retirement date.
One of the great questions around timing of retirement is ""Who retires first?" There seems to be some debate over whether it is better for spouses to retire at the same or different times. Husbands and wives who retire first and are home alone might have expectations of the working partner. Talk to your spouse prior to retirement about expectations, and of course, when issues arise after retirement. Here are a couple of scenarios to think about.
A York retiree who retired before his wife has taken on more of the household responsibilities like cleaning and grocery shopping (his wife is still the better cook so she prepares most of the meals). This means that there is more time for leisure together (they have a standing once-a-week dinner date), and he provides a sounding-board when his wife wants to discuss work-related issues.
In comparison, a woman who started her professional career later in life is experiencing great difficulty because her retired husband expects her to go traveling with him at the proverbial drop-of-the-hat. Also, he wants her evenings to be free so she can spend them with him. He resents the time she spends working on projects well into the wee hours of the morning.
For couples, retirement is a time when you'll be spending 24-7 under one roof. It's a situation you've probably never experienced in your married life, except perhaps if you're faculty and have taken sabbaticals together. When married colleagues were asked what the greatest difficulty was in retirement, the gentleman said working together in the kitchen. Initially, he and his wife kept bumping into each other!
It's not unusual for spouses to view all that togetherness with some fear. A husband or wife, who has the run of the house and responsibility for planning their own time, may feel apprehensive when their spouse finally retires. How will it impact on their existing daily schedule? What will the expectations now be of them as a couple? Know that even the best of marriages will undergo a period of adjustment when both people are home together.
Knowing that, it is wise to ensure you have space of your own. Do your own thing, have your own office, have something new to talk about when you do get together. When couples retire together there is the opportunity for joint leisure activities and decision making, more division of household chores, and you are more apt to be part of a social community.
Questions to consider.
Most singles, unless independently wealthy, (don’t we wish!) will probably be concerned with finances … after all there is only one income, not two; and with how to manage time. My advice is to plan your retirement date working backwards from what you want to do in retirement and estimating how much that will cost. This will give you a much better idea of how much you need to fund retirement.
One York retiree, who wanted to retire early, said she was a bit worried about her finances but had alternate plans ready to put into action such as: getting another job, starting her own business, renting out a room, selling her condo and renting something less expensive, giving up her car, etc. As it turns out, her lifestyle is simple and she doesn’t have to do any of those things.
Some singles are more vulnerable to loneliness. See if you can gather a social network of family, friends, neighbours and people you meet in activities. You’ll want to make sure you can count on friends for travelling, to help out in time of need and to share the joys and concerns of life.
I’ve spoken to several single folk recently. One York retiree lives in a condo where there are lots of single women her own age. She says they’re a tight knit group who go to movies together, have weekly bridge parties and, support each other in a number of ways.
You may have friends who are just waiting for you to join them in retirement. Or you may be the trail blazer! Newly-retired singles sometimes forget that their friends who are still working are not always free, or are too tired, to get together.
As a single person another retiree said that she had always been involved in a variety of activities – taking courses, seeing friends, enjoying theatre and symphony, pursuing crafts, etc. To her, retirement was great since it involved much more time to do these things. She never feared retirement – on the contrary, she was delighted!
All the advice in the Singles section applies to you too…essentially to establish your support system. Your family, particularly your children and grandchildren, will play a major role in retirement life. You may find that they are more protective of you at this time. They may have expectations of you minding the grandkids more often. And you may have quite different plans – to take courses, go traveling, etc. So it might be helpful to talk with them about your retirement plans and their part too. It’s a new phase of your life and your time to explore.
Questions to consider
Back to the comment above, many people mark their retirement from York with a party. It can be a small gathering of colleagues at lunch or a larger pan-university event. It’s gratifying for you and your family to hear others speak about how you have provided value to York. Even if you don’t think you have, I bet you have. A retirement party gives you a chance to talk about events that happened during your career at York and to thank special colleagues and mentors.
Some people who say they don’t want a party and are taken at their word may lament their decision later … at the very least, they like to be asked. Most people are glad they had a celebration either before or after retirement. We all like a good party so it won’t really matter to your colleagues when it is. Make it easy on yourself. And have fun.
Questions to consider
In retirement we change from a life where others schedule our time to one where we create our own schedule. How we make use of the extra 1700 or so hours a year; who we decide will be part of our retirement life; how we keep in touch with our colleagues at York; how we will adjust to a spending mode instead of a saving mode; and where we will live; are important considerations that need to be thought about well in advance of our retirement. Decisions like these need to be talked about with your partner, family or friends.
In her book, Planning Your Retirement, Blossom Wigdor said, “Change is perhaps the most important aspect of retirement and adapting to change, one of the greatest challenges." How we have adapted to situations in the past provides a key to how we will adapt in the future. Don’t be surprised if you find yourself at loose ends for the first few months. Many retirees find it takes some time to establish a new rhythm or routine.
I really like the way Nancy Accinelli, a 2003 York retiree, describes her experience in Advice From York Retirees (2005)
Questions to consider.
When our day is structured from the moment we crawl out of bed to the time we crawl back in, it can be a daunting challenge to change our pattern.
Questions to ask yourself
We all want to be healthy so we can enjoy our life to the fullest. And when you come right down to it - you need your health to hike the Bruce Trail, to take the grandkids to soccer, or to take the subway to a movie. What good is retiring if we don’t have the health to enjoy it!
The World Health Organization describes health as a state of “physical, mental and social well being”. Indeed, successful aging involves staying independent so you can live with little or no help from others; being able to make your own decisions and live the life you want each and every day; being resilient and adaptable to change (its going to happen whether you like it or not); being actively engaged in life; having a high level of mental and physical ability; and maintaining a low risk for disease related disorders.
Here’s a true story. A doctor recently told a friend’s husband that he absolutely had to lose weight. What happened was that my friend set up a Weight Watchers program at her work, (by the way, York already has Weight Watchers), increased her veggies, lowered her fats and cut out the two glasses of wine at dinner, started using the stationary bicycle, formerly a clothing post, and, so far, has lost 30 pounds. Meanwhile, the husband watched and went on eating. It was funny, he was the one supposed to lose weight and his wife was the one who initially went on the diet. About 6 months later, he noticed how great his wife looked and how much more energy she had and decided to follow her lead. Now both of them are getting healthier and are happy with the results. They look absolutely wonderful. And they are setting an exemplary model for their two kids.
For a start take a walk, (this site will still be here when you return) eat a banana, laugh, call a friend, hum, investigate a lecture or book, dance (yes, by yourself if need be- who cares?!)
Questions to consider.
As you approach retirement, you’ll be thinking about whether to move or to stay where you are. There are a myriad of possibilities – snowbirding (wintering in the sunny south); spending more time or full-time at your cottage; moving to another country (possibly your country of origin or your spouse’s) or province; or downsizing from a house to a condominium, or staying just where you are.
Take your time in making your decision. Listen to your friends and kids but ultimately make your own choice. Weigh the pros and cons. Trust your feelings. For most of us after we do all the analysis, the decision comes down to the question “Does this feel right for me at this time?” Only you can know the answer. But remember no decision is cast in stone; you can always change your mind. What you are looking for is a place to call “home”.
If you are thinking about moving, try it out for a while, particularly in the off-season. If you don’t like unwanted surprises, the most important piece of advice is to play it safe. Rent in the new community but keep your options open for moving back into your old house if the new place doesn’t live up to your expectations. The short-term cost of renting out your primary residence, or even leaving it un-rented for six months or a year, might pay off in the end.
Another tip is to subscribe to the local newspaper. You’d be surprised how much you can learn about the values in that community, the costs of housing and food, diversity of cultural and sports events, concerns and current issues. Also see if there are medical facilities in the area and doctors accepting new patients. Many York retirees still keep their doctors and dentists in the city and tag on visits to colleagues at York or take in a theatre production or Blue Jays game.
If you are moving to another country or even province, check the medical situation. It may not be like ours in Ontario. And make sure to check out the implications of York’s post-retirement health benefits.
If you are moving, you will have the humongous task of clearing out all the stuff accumulated over the years (even if you’re not moving, one of the first things most retirees do is clean out cupboards, offices, gardens etc. Personally, I think it’s part of clearing away for a new life to begin). You might consider hiring a personal organizer or asking a friend (someone with limited attachments to “your stuff”) to help. A York retiree told me that when she and her husband moved from the house where they had raised their five children to a small flat, people said to her, “Weren’t you sad. How did you do it?” She replied with nary a pause, “I still have my memories. I’ve taken them with me.”
Questions to consider
PART 2: FINANCIAL PLANNING FOR RETIREMENT
Now that you have an idea of your retirement lifestyle it’s time to look at the amount of money you’ll need to finance it. The following section outlines the basics for determining when you’ll retire, sources of retirement income, issues around taxation, estate planning and investments.
Ideally you should start saving for retirement as soon as you receive your first York pay cheque. That’s not to suggest that if you haven’t started, all is lost. It simply means that the earlier you begin, the better the chances of you reaching your goal. If you haven’t started, starting now is a good time.If you’ve gone through the Lifestyle section of this Retirement Planning Guide you’re already on your way. You’ve talked about at what age you (and your partner) want to retire, calculated how many years left before leaving York, and what lifestyle you want to have in retirement, including housing and family obligations. While you may not have all the answers in the beginning, making the initial plan is important. It’s the first step in the planning process. Your first attempt at setting objectives will likely not be your final one, as conditions in your life change your objectives will change. And don’t be afraid to daydream, just keep your feet on the ground.
Start by creating a current budget and come to grips with the simple fact that you need to “live for today” and “save for tomorrow”. It’s never an easy task, but, it needs to be done.
Most people in retirement want to either continue, or better their standard of living. They want to live in the same house, eat the same meals and be able to afford doing the same things. Your standard of living is defined by how much you earn and what you spend. In other words your budget!
If you have not completed a budget recently you may want to do one as a first step in your plan for retirement. There are many sources where you can find itemized budgets and all you have to do is dig up your personal information as to what your costs are. A good place to start could be your bank, credit union or other financial institution. Your monthly bank statements will give you a good idea of where you spend money and how much net income you earn. The following website may be helpful to you
Compare the difference between your current expenses and projected retirement expenses. Will you need more to live on or less in retirement?
A net worth statement identifies the value of what you own and what you owe at any one time. If completed annually as part of a financial and retirement plan, it provides you with an excellent barometer to gauge your progress in reaching your retirement goal. A net worth statement provides you with the information that you need to make investment decisions, determine your savings, and identify those assets that are intended for retirement like RRSP’s, and separate those that will not be required in retirement like “second” cars. The Mackenzie Financial Corporation has an online tool that will help you create your net worth. Look for Investment Calculators under the heading Planning Tools: http://www.mackenziefinancial.com.
It is important to differentiate assets that are savings and investment from those that are personal use. Savings and investment assets, if handled properly, are the ones that will provide you with an income in your retirement.
Many people fall short of their retirement objectives – not because they have inadequate income, but because they fail to manage their financial resources along the way to retirement. The net worth statement and the budget are tools that can help you better manage your resources.
One more point in regards to Net Worth Statements, every time that your circumstances change significantly: a child graduating from university and leaving home, a property being sold or bought, the receipt of an inheritance, or a prolonged major illness in the family, it is advised to review your net worth statement and make the appropriate adjustments.
Once you have determined the annual cost for your retirement, the next step is to determine the capital that will be required to fund your retirement, and the amount that you need to save each year in order to reach the capital amount needed. This step is best done with the help of a financial planner. A qualified financial planner will take the information from the net worth statement and your budget, together with your pension statements, your CPP statements, your bank accounts, RRSP accounts. You and your advisor will make certain assumptions about inflation, your tax liability, interest rates, rates of return on investments, the number of years you have to save until retirement, as well as the number of years you intend to be retired. There may be other assumptions that your financial planner may take into consideration.
There are many web-based calculators to help you in your retirement planning. The government of Canada has neat calculator, Canadian Retirement Income Calculator:
For most people, income in retirement will usually come from the following three sources: personal savings and investments; employer’s pension; and government. It is unlikely that the employer’s pension and the government pensions will be enough to pay for many people’s selected standard of living. Therefore, your own savings and investments will determine the difference in the standard of living that you enjoy in retirement.
Once you have determined the amount of annual savings required to meet your goals, its now time to design an investment plan. Your savings can grow as registered savings (RRSPs) or non registered savings, outside RRSPs. It is best to contribute your maximum annual RRSP limit to into your RRSP account first, and the remainder into investments outside the RRSP.
Starting in 2009, Canadian residents who are 18 years of age or older will be able to earn tax-free investment income within a Tax-Free Savings Account (TFSA) during their lifetime.
RRSP – What is it?
When you withdraw money from an RRSP you will be taxed (except in the case of home ownership programs) on the amount withdrawn at your marginal tax rate.
Want to know more? Most banks have good information on their websites.
RRIF - What is it?
What’s a LIF? And what’s a LRIF?
Investing for Retirement
Your rate of return on your investment will have to exceed inflation and the possible tax consequences that may be applied in the case of non-registered investments. In addition, it will have to reflect a certain growth factor based on your risk tolerance and how much capital you need to accumulate. To develop the proper investment strategy, speak to a professional to who will help you select the right balance between equities, bonds, and cash.
Some people start with their financial institution; however, do not feel limited to dealing solely with them. There are many good financial planners and investment mangers that provide excellent service, but be careful, do your homework and check references!
Some people regard their home as a type of retirement savings. Their intention is to pay off the mortgage, sell the house, and release tied-up capital, tax free to subsidize their retirement income. Many people have, in fact, done this. Remember, however, that real estate markets fluctuate and their conditions when you retire may not produce the expected result.
Another product on the market that you’d really want to do your homework on before considering is called a Reverse Mortgage. It converts a retiree’s equity in their home into an income stream. Most financial institutions now offer Reverse Mortgages, but please remember that a Reverse Mortgage is not for everyone. The following site may help you to assess this type of product http://www.chip.ca/index.cfm?id=101.
In order for you to pay less tax in retirement you’ll need to plan well in advance. The general idea is that less income results in paying fewer taxes. However it does not mean that your standard of living will decrease, it simply means that your income can be restructured by sharing your income with a spouse, or receiving income in other forms. “Income splitting” is a term used to signify that rather than having a certain amount of income taxed in one individual’s tax rate it is in fact split between two spouses, each one being taxed at a lower rate.
A simple example of income splitting is as follows: Say you are in the top tax bracket. You'll pay almost 50% on any additional income that you earn. By contrast, suppose your spouse is in the lowest bracket of around 25%. If you can redirect just $10,000 of income from you to your spouse, your household comes out $2,500 ahead, assuming that your spouse stays in the same tax bracket.
Income splitting is achieved through spousal RRSP contributions and splitting of CPP benefits. As of October 31, 2006 Canadians are now allowed income splitting between spouses of up to one half of income derived pensions, lifetime annuities, registered retirement savings, deferred profit sharing savings, and RRIF savings.
Other ways to save on taxes and structure your income in retirement are to receive income as dividends from qualified Canadian corporations and as capital gains. Both dividends and capital gains are taxed at a substantially lower rate than income from salary or pensions.
For most of us, the York University Pension Plan will form a major component of our retirement income. Therefore, it’s important to understand how it works, what impacts on it, how much pension you can anticipate, and what happens to it upon death.
Contributions to the pension plan are deducted from your pay. York University matches your contribution and even sets aside an additional 3% that goes to a special fund called the Non-Reduction Reserve. The NRR is set aside when you elect a monthly pension to help pay for the cost to maintain the level of pension in your hands in years when the moving four-year average fund return is less than six percent. At retirement, your pension is determined by looking at your age, your marital status, and your spouse’s age, if applicable.
Yes, you have to apply for the York pension. If you want a seamless transition from receiving your pay cheque one month to getting a pension cheque the next month, you’ll want to give the Pension and Benefits Office a minimum of three months notice to prepare a retirement package and send it to you. Academic employees must provide written notice to their Dean, Principal or the University Librarian as appropriate and the Vice-President Academic, a minimum of nine months prior to which they plan to retire. Non-academic must provide written notice to their manager a minimum of six months prior to which they plan to retire.
Yes you need to write one in which you announce your intention to retire on a particular date and state how unused vacation days, if applicable, are to be treated. Your retirement letter also gives you a chance to say something personal and positive about your experience working at York. For sure, we have all met some amazing people, forged strong friendships and made a difference at York.
Your York pension payment is made the first of the month. However in the first month of retirement the payment will likely be made around the third week of the month. This is due to the Pension and Benefits Office having to wait until your final pay has been calculated to process your pension election. Your pension payment can be directly deposited into your bank account. Your pension may be adjusted the following year when the rate of return is known as the initial pension is calculated using no rate of return in the year of retirement.
Yes, you can. It’s called a “voluntary contribution” and is based on your RRSP eligibility room. The Pension and Benefits Office can help you determine what contribution room you have. Funds in this account are invested in the same way as your York pension funds. You can also transfer funds from your RRSP account to York’s plan. One of the restrictions is that you cannot access any of the voluntary contributions prior to retirement or termination. Upon retirement or termination, you’ll be asked if you want to combine the money in this account with your pension or if you want to manage these funds separate and outside of York. You’ll want to understand each option thoroughly in order to make an informed decision. The University does not match voluntary contributions or transferred in funds.
You can retire anytime after your 55th birthday with a reduced pension. You will be eligible to receive a full pension, the first of the month following your 65th birthday. If you work beyond age 65 your pension will be higher if the fund performance remains positive. Your normal retirement date remains the July 1, coincident with or following attainment of age 65.
If you decide to work past 65 you may continue to contribute to the Pension Plan and York will match your contributions until age 69. At that point, under the Income Tax Act, you are required to receive your monthly pension not later than December 1 in the year you turn 69. That means you can get your York pension and a salary at the same time. If this is the case, you’ll want to get information about tax implications.
There are two ways: 1) go on the Pension and Benefits website and log onto the York University’s Retirement Planner (YURP) http://www.yorku.ca/hr/compensation/pensionbenefits/retirementplanner.html. This program is quite powerful and allows you to estimate your pension at various ages; 2) look at the Pension Statement you receive each year. It shows a projection of what your pension will be at your normal retirement date. Check the statement to make sure all of the information is correct, especially information about spouses.
IIn simple terms, if the Pension does well, we do well. Your retirement pension may be adjusted at the beginning of each calendar year if the moving four-year average fund return is in excess of six percent at that time. In the event the moving four-year average fund return is below six percent, no reduction will be made to your pension; however, this deficit will be tracked and future adjustments (positive or negative) will be applied to the reduced amount. You will not receive any further increment until the deficit is paid up.For an example check out the booklet “York University Pension Plan booklet at: http://www.yorku.ca/hr/compensation/pensionbenefits section 7, “Adjustments to Your Pension”.
The Pension and Benefits Office will send you a list of various pension payout options in your retirement package. You’ll need to make a choice on your option before you retire. Outside of your retirement date, this is one of the most important decisions to make regarding your retirement from York. It’s essential to understand how the options work and their implications, especially upon your death. Remember, once you have retired, you cannot change your option.
If you are planning on making changes to your marital status, such as separation, divorce or remarriage, it is wise to look at the pension implications before retirement. Whoever is designated as your spouse, at retirement, will be entitled to your pension, unless they have signed a special waver upon retirement. If you remarry after retirement, the new spouse is not entitled to any of your pension.
Yes. It’s part of your annual income. There’s no way to escape taxes!
York will forward your pension to an address outside of Canada. You’ll want to consult a financial advisor about possible withholding taxes that might apply to the country to which you are moving.
Watch our e-Seminar at www.yorku.ca/retire, click on e-seminars and go to the seminars titled, “York's Pension Plan 101”. You can also direct inquiries to the Pension and Benefits staff. Using the first letter of your last name contact your Pension and Benefits Counsellor
Post-retirement health benefits differ according to the union or association to which you belong. To check out the most current listing of all union/association pre- and post-retirement benefits or to print claim forms visit the following site: http://www.yorku.ca/hr/compensation/pensionbenefits/index.html.
If you continue to work past 65, your benefits continue but there are some provisions that apply specifically to you. Once again, check out the details with the Pension and Benefits office.
If you have extended health, dental or vision inquiries you can call Great West Life at 1-800-263-5742. Have your employee and policy number available. York’ policy number is 55055 for all affiliations.
Your reimbursement cheque from Sun Life can be direct deposited into your bank account. You can register on-line at:
Government Sources of Retirement Income
The Canada Pension Plan (or Quebec Pension Plan) pays a monthly retirement pension to people who have worked and contributed to the CPP, so all York employees are eligible. York deducts contributions from your pay and makes an equal contribution. If you are self-employed, you act as both employee and employer and pay both portions.
Besides a monthly pension, CPP provides disability and survivor benefits, a monthly income to you and your dependent children if you become severely disabled during your working years, a monthly income to your surviving spouse or common-law partner and dependent children if you die. As well, a lump-sum death benefit is available to your estate upon your death.
Each year, you should receive a personal "Statement of Contributions". If you are 30 or over, your statement estimates the retirement pension you can expect from the CPP. It also estimates the benefits you and your dependants could receive if you became disabled or died. If you did not receive a statement or have questions, call the CPP toll free number at 1 877 454-4051.
In general, your retirement pension replaces about 25 percent of the earnings that you paid into the CPP. The exact amount depends on how much and for how long you have contributed. The age at which you decide to take your pension also affects the amount you receive each month. At the time of this writing December 14, 2009, the maximum monthly benefit (2010) CPP retirement pension is $934.17 per month (if taken at the age of 65) and $516.57 (if taken at age 60).
The normal age that you start receiving a CPP retirement pension is 65. However, you can start receiving your pension as early as age 60 or as late as 70. If you start your pension before 65, you must stop working and earn less than the limit set by CPP as the maximum amount of salaried income.
Your CPP retirement pension is taxable and must be declared on your income tax return each year, and is taxable at your marginal tax rate
Over the course of your career and if you raise a family, there may be years when you have low or even no earnings. To make up for this, CPP excludes 15 percent of your lowest earning years when calculating your retirement pension. Time spent away from work while you raise children under the age of seven can also be 'dropped out' of the calculation. A special form, Child Rearing Drop-out Form, is completed and sent in with your CCP application. These forms are available in the RPCentre office. For more details see the CPP web-site http://www.sdc.gc.ca (search the A-Z index).
CPP monthly retirement pension is adjusted for inflation every January to keep up with increases in the cost of living.
You and your spouse or common-law partner can share your CPP retirement pensions if both of you are at least 60 years old and each one has applied for the CPP Pension. You may want to check this out since it may result in income tax savings.
You can receive your CPP retirement pension regardless of where you live.
Canada has agreements with many countries that can help you obtain social security benefits from other countries. Even if you didn’t live or work long enough in one country to qualify for their benefits, the time you spent in that country may still be considered when determining your eligibility to collect benefits from either country. Check the CPP web-site http://www.sdc.gc.ca (search the A-Z index) or call them to find out if a country you lived in has an agreement with Canada. Their toll-free number is 1 877 454-4051.
The government assures us that we can count on CPP (and OAS) for the long term. In 1998, it took actions to ensure that CPP contributions will be enough to fund the larger numbers of people who will be reaching retirement age in the near future.
CPP is not automatic. You must apply about six months before you want it to start. Forms are available from the RPCentre or you can print one from the government site or order one by calling their toll-free number 1 877 454-4051.
Survivor benefits are paid to your estate, surviving spouse or common-law partner and dependent children. You must apply. There are three types of benefits.
There are minimum contribution periods to qualify so you might want to check it out.
The amount of the death benefit depends on how much, and for how long, you paid into the Canada Pension Plan.
The Old Age Security (OAS) pension is a monthly payment available to most Canadians age 65 or older. You must apply and meet the eligibility requirements. It’s not based on your employment years and you do not need to be retired.
Two things determine if you can receive the Old Age Security pension: your age (you must be 65 or older), and your years of residency in Canada. You have to be a Canadian citizen or a legal resident of Canada and living in Canada at the time your application is approved. If you are no longer living in Canada you must have been a Canadian citizen or a legal resident on the day preceding the day you stopped living in Canada, and you must have lived in Canada for a minimum of ten years after age 18. If you lived out of the country or lived in one of the countries that Canada has a social security agreement you might also be eligible for OAS. Check the OAS site for details.
OAS is not automatic. You must apply about six months before you turn 65. OAS forms are available in the RPCentre or on the government website or you can order an application kit from them at 1 800 277-9914.
If you apply late for the Old Age Security pension or for the Guaranteed Income Supplement, or the Allowance you may receive retroactive payments. Payments may be made for up to 11 months plus the month in which the Government receives the application, provided all conditions of eligibility are met.
Payments usually arrive in the last three banking days of each month. You can consult the exact payment dates on the government’s website. You might want to contact the government if your payment is more than a week late, or if you lose your cheque. Payments can be deposited directly into your bank account, either in Canada or the United States. If you move, make sure the government knows your new address so they can send you your yearly income tax slip and information updates.
Your pension payments will increase to reflect any increases in the cost of living as measured by the Consumer Price Index in January, April, July, and October.
Like most other retirement income, your basic Old Age Security pension is taxable income. We’ve all heard of the “clawback” of the OAS. Here’s how it works: retirees who earn individual net income of $62,144 or more as of 2006 (including the Old Age Security pension) have to repay part of their pension benefits. These payments are normally deducted each month from your pension payment. If you are a high-wage earner, it’s best to consult your income tax advisor to determine if it is to your advantage to apply for OAS, and if you live outside of Canada, are you subject to a non-resident tax.
This is an additional payment that is given to low-income seniors living in Canada. It is based is based on your annual income, or the combined annual income of you and your spouse or common-law partner. To be eligible for the GIS benefit, you must be receiving the Old Age Security pension and meet the income requirements. Eligibility also depends on whether your income and that of your spouse or common-law partner (if you have one) exceeds a specific amount.
Application forms are available online or by calling the government at 1 800 277-9914. Reapplication (because it is based on income which could change from year to year) can be done when you file your yearly income tax return or through an application form.
These conditions may affect your benefits: if you marry or separate, if your spouse or common-law partner dies, or if one of you has to live in a hospital or nursing home. Contact the Government for details.
According to the Human Resources and Social Development Canada website http://www.sdc.gc.ca (search the A-Z index), there are two basic rates of payment. The first applies to single pensioners - including widowed, divorced or separated persons; and to married pensioners whose spouses or common-law partners do not receive either the basic Old Age Security pension or the Allowance. The second applies both to legally married couples and couples living in common-law relationships, where spouses or common-law partners are pensioners. The GIS single rate is higher than the married rate. However, each spouse or common-law partner in a couple is entitled to a benefit, so the combined benefits for a couple are higher than those for a single person. Consult the website for current payment rates.
The Guaranteed Income Supplement is not subject to income tax
The Guaranteed Income Supplement is not payable outside Canada beyond a period of six months, regardless of how long the person has lived in Canada.
The Allowance, which also includes an allowance for persons whose spouse or common-law partner has died, is paid monthly. It is a payment designed to recognize the difficult circumstances faced by many surviving persons and by couples living on the pension of only one spouse or common-law partner.