A while back, I wrote an article on how much money you might get from government benefits.
In the article I stated, “The most you will receive from the government is $24,346.44 if you have no other sources of income and only $16,684.92 if you have other sources of income. Clawback and contribution rules may reduce these amounts.”
I’ve been asked by many readers where these numbers came from so here it is.
First, let’s address the $16,684.92. Most Canadians will qualify for some level of Canada Pension Plan (CPP) and Old Age Security (OAS).
At the time the article was written, the most you could collect from CPP was $10,614.96 per year. For Old Age security the most you can get was $6,069.96 per year. Add those numbers together and you get $16,684.92. Heres the maximum CPP and OAS amounts for current years:
| YEAR | Max Monthly CPP | Max Monthly OAS | Combined monthly | Combined Annual Max |
| 2013 | $1,012.50 | $546.07 | $1,558.57 | $18,702.84 |
| 2012 | $986.67 | $540.12 | $1,526.79 | $18,321.48 |
| 2011 | $960.00 | $524.23 | $1,484.23 | $17,810.76 |
| 2010 | $934.17 | $516.96 | $1,451.13 | $17,413.56 |
| 2009 | $908.75 | $516.96 | $1,425.71 | $17,108.52 |
| 2008 | $884.50 | $502.31 | $1,386.81 | $16,641.72 |
| 2007 | $863.75 | $491.93 | $1,355.68 | $16,268.16 |
| 2006 | $762.92 | $484.63 | $1,247.55 | $14,970.60 |
As of October 2007, the average CPP retirement pension paid out was only $481.46 per month. That’s a lot lower than $884.58 per month because not everybody qualifies for the maximum. Some of the reasons you might not get maximum CPP includes lower contributions because of lower income levels or not contributing for enough years because of starting late into the workforce or maybe you retire early which also means you contribute less into CPP.
1. Canada Pension Plan is a contributory plan. Basically that means how much you get when you retire depends on how much you contributed while you worked. If you have made at least one payment into the CPP plan, you qualify to collect a benefit.While it would be nice to get the maximum from the government, not everyone does. As I said in the article that amount represents the most anyone can get from the government. Here are a few examples of why people might get less than the maximum:
It’s a little more complicated than this but basically, you have to contribute the maximum amount for at least 40 years over the age of 18 to qualify for the maximum benefit. For more details, you can visit the Service Canada website (www.hrsdc.gc.ca).
Related article: How much will you get from CPP in retirement?
2. The maximum CPP amount is based on a normal pension at age 65. You can collect the CPP as early as age 60 but at a reduced amount. In 2013, you will lose 0.54% for every month you take CPP before your 65th birthday. For example, at age 60, you will lose 32.4% (0.54% x 60months) of your eligible amount at age 65. To collect CPP early, you no longer have to stop working. Taking CPP early means makes good sense for most people but it means you will not get the maximum.
Related article: Should you take CPP early under the new rules?
The best way to find out how much you will get from CPP is to check your Statement of Contributions, or call 1 800 277-9914. The closer you are to the date on which you want to begin your pension, the more accurate the estimate will be.
3. Old Age Security is a monthly benefit available to anyone 65 years of age or over (unlike CPP, you cannot collect earlier). Eligibility for OAS is all based on residency and has nothing to do with employment history. It also does not matter if the applicant is working or retired. If you were resident of Canada for less than 40 years after the age of 18, you will get a reduced amount of OAS.
Related article: Three big changes to OAS
In addition to the basic OAS pension, low-income seniors may qualify for other retirement benefits such as the Guaranteed Income Supplement (GIS) and the Allowance. The threshold for low income depends on whether you are single, married or widowed. That’s where the $24,346.44 figure came from. The difference between this number and $16,584.92 is the maximum benefit for GIS as a single person. Again, few people qualify for the maximum GIS.
Related article: The difference between CPP and OAS
The rules for government benefits are not easy to understand. For more information, contact Service Canada.
Other Relevant Articles
Will Canada Pension Plan (CPP) be there when you retire?
Child Rearing Drop Our Provision – parents can get more out of CPP
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I was forced to retire prior to turning 65 due to ill-health. So, I retired and am fast approaching my 65th birthday, at which point, as everyone has told me, I will lose whatever CPP has been sending me each month.
I was a provincial employee and paid into our pension plan. I receive a cheque from this fund. I applied for early CPP and receive a cheque from CPP. According to all, once I turn 65, the pension amount from CPP will be “deducted” from my provincial pension cheque.
For example, say I receive $2000 a month from my provincial pension and $600 from CPP; according to retired friends, once I’m 65, the provincial pension will be dropped to $1400 a month and I will receive $600 from CPP — essentially, a big drop in income regardless of which cheque is affected.
Can you tell me why this will happen and if there is any way to minimize the loss?
Gloria
It is unclear to me whether the CPP that you are currently receiving is the disability pension or the early retirement pension. If it is an early retirementy pension, that amount will continue to be paid to you until death (with annual increases for cost of living). If it is a disability benefit, that will convert at age 65 to a retirement pension at a lower rate. The basic formula for the conversion from disability to retirement benefit is to subtract the flat-rate benefit (approx $440) and divide the answer by 75%. Thus if your current CPP disability were $600/mthly, your converted retirement pension would be about $213.33 ($600-$440)/75%.
As to your provincial pension, you probably should check with your personnel office, but the common approach if you worked for the province for your entire CPP contributory period is that your pension from them would be reduced at age 65, by your estimated age-65 CPP retirement pension (which may be more than your actual CPP if you’re receiving the early retirement benefit.
The good news (assuming you’ve lived in Canada for at least 40 years after age 18) is that you should also be eligible for Old Age Security (OAS) at age 65. The approximate amount of OAS is $530 mthly.
I receive a provincial pension and the clawback is calculated when I retired, independent of my CPP. It is a little higher than my CPP at age 60 but does not start til age 65 so I feel it is to my benefit to receive CPP for 5 years with no clawback. If you wait til 65, CPP will be bigger but you have lost 5 years of CPP at the lower rate. I calculated to breakeven at age 76, if I am still alive.
You Canadians have it made. I wish our government could get it together for retirees. My parents are suffering bad and I help all I can.
recognition awards
Yes, we Canadians have certainly become accustomed to some wonderful advantages for living in Canada … health care and post retirement assistance however they are not free.
Would you have the same outlook knowing that these ‘freebies’ come at a tax rate that easily creeps into the 40% or more range of your earned income?
Does the calculation of the benefit (before the penalty) at 60 count the years 60-65 as no income for the average? In other words, can they bring down the average?
I am thinking of someone who turns 60 and can choose to stop working early but has less than 40 years of contributions. Is the difference just the 30% or must they also look at any potential increase in their benefit from 5 more years of higher contributions?
Mike
If someone applies for a CPP retirement pension at age 60, their contributory period ends then, thus they will not have those 5 years of zero income reducing their average earnings for benefit calculation purposes.
Jim I believe that the $24K in maximum benefits may be overstated. If you receive the maximum in CPP benefits of $10.6K and OAS of $6K, you can’t receive the full amount of GIS payments of $7.7K because your CPP income is included in the income that is taken into consideration for GIS clawback. So based on 2012 clawbacks they would only receive $2.9K in GIS payments. This would total $19.5K. Please correct me if I’m wrong. Please clarify. Thanks.
Jeff
I agree with you 100%, but if we want to use the 2012 figures for the GIS, perhaps it would be useful to update the CPP & OAS figures also.
I get max CPP for 2012 as $986.67 mthly x 12 = $11,840 annually and max OAS for Jan/2012 as $540.12 mthly x 12 = $6,481 annually. Using the $11,840 to calculate GIS for a single pensioner would be $188.76 mthly x 12 = $2,265.
Using these numbers, the max gov’t payout for 2012 would be $20,586 ($11,840 CPP + $6,481 OAS + $2,265 GIS).
Jeff
I agree with you that you can’t count the max GIS if you’re receiving max (or any) CPP. Updating all of the data for Jan/2012, I get:
- max CPP mthly of $986.67 x 12 = $11,840;
- max OAS mthly of $540.12 x 12 = $6,481;
- GIS of $188.76 mthly (based on max CPP of $11,840) x 12 = $2,265.
- combined total of CPP/OAS/GIS = $1,715.55 mthly x 12 = $20,586.
Does one qualify for GIS if one owns a house or condo and is receiving only $400 in CPP?
Denyse
Owning a house or condo (or any other assets) does not affect GIS eligibility. The only 3 factors are:
- receiving OAS;
- marital status;
- income (combined income if married or C/L).
In your example, if the person is receiving “full OAS” (based on having lived in Canada for 40 years after age 18), is single and has income only of $400/mth CPP, they would be eligible for GIS in the amount of $481.76/mth.
I already receive a pension from my workplace of 33 years. When I reach the age to get old age and cpp do i lose this amount from my workplace pension?
Tony
You would have to get that answer from whoever administers your workplace pension. Some plans are “integrated” with the government benefits (OAS and/or CPP), whereby they pay higher amounts until you become eligible for benefits from the government. Other workplace plans are independent from government benefits and may not be reduced at age 65 or when those government benefits start.
I just wanted to thank you so much for such great information. I still have a few years to go but it still helps to be informed. By the time I retire things will totally be different because the Canadian Government likes to change things without our input.
Great info Doug, thanks a bunch.
Amazing, so many Canadians don’t know all the ins-and-outs of our system. For example one of my neighbors just turned 65 gets max CPP benefits but I mentioned what about OAS, he was clueless. Apparently when you apply for CPP whether earlier or at age 65, OAS is not received until you separately apply for it. And the good thing if we can say anything for the governement, they told him once you apply for OAS it is paid retro-actively from when you apply to that starting age of 65.
Phil
You’re welcome for the info. I’m glad to be able to pass on some of the knowledge that I learned in working for OAS/CPP for over 30 years. Speaking of which, the retroactivity that your neighbour mentioned for OAS is limited to 1 year, so it’s good that he learned of it when he did.
If a woman (or man) stops working to have children (raise children) and never really goes back to full-time work for the rest of her/his life, is there some advice you can give as to how much money she/he can expect for her/his contribution to society?
Will they be poverty stricken because their contribution to society was in the area of volunteerism (not measurable in GDP or dollar earning exactly)? Has the government thought of rewarding volunteers for their equally important, but not monetarily measurable contributions?
It seems that CPP should not only be tied to “paying in dollars” but also recognizing years of effort and time/volunteer hours. Has there been some thought given to that by the government to your knowledge? Since most communities have a lot of non-profit organizations and charitable efforts, we see huge numbers of people volunteering their time, sometimes they are unable to find work and volunteer in the meantime, but some forego a salaried job for the growth and benefit of their community and community organizations. Some of these people are well off due to spouses working, but some live a meager existence, yet contribute hugely to the social fabric of their communities by their dedication, hard work and sacrifice. This is not being recognized at pension time, yet hours and hours of time are devoted to their country and community without a measurable monetary input.
Would love to hear your thoughts on this and if you feel it would be beneficial (what with all the push for people to “serve” “volunteer” etc) if some of these volunteers (under certain conditions) may be able to translate their freely given hours into a pension later in life. I am thinking of clergy also in this, but mainly people who volunteer for a non-profit organization (community recreation, religous, charities, etc) and are unable/unwilling to hold a full-time job because of the time commitment (or even that taking a full-time job would mean the valuable work of that organization would falter). Would love to hear your thoughts on this.
Dear Interested Reader
From a CPP perspective, every year spent out of the workforce raising children under age 7 by an eligible parent (usually the female), can be “dropped out” under the CRDO provision. This won’t create a benefit if they’ve never worked, but if they did work before or after raising children, it will increase the amount of their benefit by about 2.5% for every year that they’re able to drop out.
Aside from feeling good about themselves, the only other “payment” for volunteers is under the OAS program. Under that program, each year of residence in Canada after age 18 (up to a max of 40 years) is worth about $13.50 monthly at age 65. In addition, if they have no other income, they could be eligible for up to $732/mth in the form of GIS benefits.
I am 59 and retiring next July; My private pension will be approximately 6000/mnth; My wife quite work when we had our kids however she will be collecting $200 per month Canada Pension; I am figuring maximum Canada pension of “800 something”
1. If I continue to work a part-time job (not related to my principal occupation) that pays approximately 1200 a month will it have an effect on my ability to collect/ amount of Canada Pension?
2. What is the present maximum amount of Canada pension to collect at 60 years old?
Allan
1. Effective 2012, working a part-time (or even fulltime) job has no impact on your ability to collect your CPP retirement benefit at age 60, and it affects the amount of your benefit only if it increases or decreases your “average lifetime earnings” prior to age 60.
2. For 2012, the maximum age-65 retirement benefit is $986.67. If you start your CPP retirement benefit prior to age 65, for 2012 that amount is reduced by 0.52% for every month that you’re under age 65. Therefore the max age-60 CPP retirement benefit for 2012 is $678.83 ($986.67 – 60 X 0.52%).
I was told by a gov. agent that if we make 21.700.oo we were not able to collect any gis monies from the gov.If that is true you would be better off knowing about the system when you call or read the system you get different answers. Sad system people moving in to Canada knows more about the details the we being bon here BIG ?
I’m 57. I would like to start collecting my pension at 60. I was told that my pension would be $350. Will I get some GIS if I have some bank interest? And what about RRSP if I don’t want to withdraw it for some time? Thanks
Allan
GIS is part of the Old Age Security program, so you can’t receive GIS until age 65 at the earliest. At that time, the amount of GIS would depend on your marital status, your income (joint if married or common-law) and how many years of residence you have in Canada.
For example, if you are receiving the full OAS (40 yrs residence in Canada after age 18) and if you are single, the maximum GIS is $732.36/mth and it’s basically reduced by half for any income that you have (excluding the OAS itself). The current annual income cutoff for a single pensioner is $16,368, above which you wouldn’t receive any GIS.
I hope this helps?
How in hell can any two, retire on an income making a couple of dollars more than 21,648.oo be closed out from receiving the GIS. Not all people in their days of struggling to make a living by working dam hard coud save for a great sum of monies to lay back and live on in time of retirement.Yet there are ways for some people to get GOV. hand outs with out working ever in their lives. Good luck for those who can God Bless Those who cant
And if my wife and I start collecting pension at 60 and it will be $700 (combine), will we recieve any additional allowance? Thanks
Allan
I’m not really sure what you’re asking? When you say that you will both start collecting pension at age 60, I assume you’re talking about the Canada Pension Plan (CPP)?
If so, there are no further government pensions until at least one of you reaches age 65, at which time you should qualify for Old Age Security (OAS), depending on how long you’ve lived in Canada since age 18, and possibly the Guaranteed Income Supplement (GIS). If the other one of you is still under age 65 at that time, that person might then be eligible for the Spouse’s Allownace, depending on residence in Canada and income.
what income can 2 people expect when we retire we are wife is 58 and i am 60 both of have always work and there are no company pensions just cpp and oas.
Thanks
Doug, the replies you have provided to everyone have been so much more helpful than anything I can find on the GC.CA sites. They warn their tables for OAS/GIS calculations only apply if you have lived in Canada the full 40 years. When younger, we lived overseas for over 15 years so can never get to 40 years. With 27 years of Canada residency by 65, your 13.50 per month figure suggests an OAS of $364 per month at age 65. If CPP is also less than max at $650 per month, and younger partner age 60 opts to retire at same time taking early CPP of $400 month, and no other income/RRSPs, how can we estimate GIS and Allowance for the first 4 years until parter reaches 65 and also gets a reduced OAS? Many thanks.
Jess
Before I reply to your question, there’s a bit more info that I need. What is each of your mth/yr of birth, and what years have you resided in Canada?
The importance of these questions is that the 40-year rule is only one way of qualifying for full OAS. If you were a) age 25 by July 1, 1977 and b) had some residence in Canada over age 18 and prior to July 1, 1977; there are a couple of other ways that you might qualify for the full OAS and not the 27/40ths that you are counting on.
Thanks again, my partner Len is born Jun/53 and departed in Apr/78 at age 24. I am born Apr/58 and departed Oct/79 at age 21. We both returned to Canada in 1997. So neither of us was age 25 in 1977. It’s a good thing we have experience living frugal artist lifestyles!
Jess
Thanks for the additional details. After doing a little further checking to refresh my memory (I “retired” from the gov’t almost 10 years ago), it appears that at your income levels, there is little or no difference to the net amount that you will be eligible for, combining the OAS, GIS and Allowance amounts, regardless whether your husband qualifies for full OAS (which he won’t) or partial OAS (which he will).
That is because the gov’t “tops up” partial OAS recipients who are eligible for GIS, by adding more GIS benefits to replace the missing OAS benefits. In some ways you’ll actually be better off, as the OAS benefits are taxable and the GIS?Allowance benefits are not taxable.
So, by my calculations and using the current April/12 benefit amounts, your husband would be eligible for about $915/mth (comprised of 27/40ths of the full OAS of $540.12 = $364.50 plus a topped-up GIS of approx $550.50) and you would be eligible for an Allowance of approx $376/mth. How’s that sound?
Doug, I can’t thank you enough for doing the calculations. I was rather hoping it would be around that much. We have always managed to “live happy” over the last 30+ years, balancing a modest lifestyle with our artistic leanings. And we think we could definitely “retire happy” on approx $28K per annum of CPP/OAS/GIS (with some TFSA savings for emergencies and incidentals). We already had our extensive travel years in our youth, so we’re looking forward to quiet times in our small paid-off home and studio 7 or 8 years from now. Thanks again!
Jess
You’re more than welcome! It sounds like you’ve got your priorities right, so congrats and good luck in your future.
I came back to Canada 9/5/2004 from the States! I had no idea that I would need proof of my entry back into Canada. I went back to the border to see if they would stamp my Canadian passport, and they refused. How am I going to prove I have been here for 10 years without that? Someone told me I needed proof! I have worked the last eight years, and will retire at 65 in two years. I have my taxes for all years, and worked at the same job for seven years. Not sure what to do when my time comes..I can’t collect from the other side as I didn’t work while I lived in the States except for a few years, and don’t qualify there either. Any information would be appreciated! Louise
Louise
I wouldn’t worry too much about what to use as proof. The government is pretty reasonable about what they might accept, and the main thing might be that nothing contradicts your dates. Things that they might consider are lease or purchase agreements for your housing, a letter from your employer(s), utility records, tax returns etc.
Doug,
I have worked every summer in Canada since I was about 12 years old through high school and every summer I was at university contributing to CPP etc…Then after I graduated from university in 1989 I worked full time till 2000 when I left Canada to work abroad. If I return to Canada in 2015 at the age of 55 with my wife 43 who is not a Canadian citizen and who has never lived in Canada what sort of benefits will I be eligible for in Canada assuming both I and my wife work till the age of 65 once back in Canada?
Sam
Sorry that it’s taken me a few days to reply. Let’s look at your CPP entitlement first. As you’ve perhaps read elsewhere in this Blog, CPP at age 65 can be estimated at about $25/mth for every year (up to your best 39 years) that you’ve made max earnings and contributions (Year’s Maximum Pensionable Earmings, or YMPE).
For yourself that means that if your 11 years of contributions from 1989 to 2000 and your 10 years from 2015 to 2025 were all at the YMPE, those years alone would be worth about $525/mth at age 65. You wouldn’t have contributed for any of your work prior to age 18, so if your part-time work for the 11 years from 1978 to 1988 was at approx 1/4 of the YMPE, those years would equal 2 3/4 years of YMPE and would net you an additional $68.75/mth of CPP at age 65 .
For your wife, if she contributes for 22 years from age 43 to age 65, she would qualify for a CPP retirement benefit of approx $550/mth if all of those years are at YMPE, and proportionately less if under YMPE.
For the Old Age Security (OAS), it’s earned at 1/40th of the maximum (approx $540/mth) for every year of residence in Canada after age 18. Your total of 32 years would therefore give you about $432/mth and your wife’s 22 years would give her about $297/mth.
Hope this helps?
Is the amount of GIS one can get according to number of years in Canada? I sponsored my parents here, and they will be here 10 years next year. Assuming their income is nil, what amount will they get in OAS and in GIS, and will this increase as they live longer here, e.g. in year 11, in year 12, etc? They are both 80 years old.
I work in Canada on a contract basis but I am considered as a non resident tax payer. From what I can see is that as I am paying tax I should therefore be paying CPP contributions. My question is that I do not know if I will be working in Canada till retirement age, So if I for example only contributed for 5 years and then stopped working in Canada do lose the money I put into the CPP or is it kept till 70 years of age and then paid out?
Andre
I can’t answer your question as to whether you should be paying CPP contributions, as that is a Revenue Canada Taxation question. For the most part however, CPP contributions are not optionable. Either your earnings are considered contributable and you must make contributions, or they aren’t and you can’t make contributions.
I can answer your questions on benefits however. If you make even one valid contribution to the CPP, you will be eligible for a retirement benefit. It is not paid to you automatically at any age though. You must apply for it and you can do so as early as age 60. A rough estimate for your benefit would be $25/mth at age 65, for every year of earnings & contributions at or above the yearly maximum (YMPE). If you apply before or after age 65, that amount is adjusted down or up by an actuarial adjustment factor.
What you may not qualify for under the CPP is the disability and death/survivor benefits, as they both require contributions for more years (it’s slightly complicated). Depending what other countries you have lived and worked in though, you may even qualify for those CPP benefits if you have sufficient credits in those countries to meet the minimum requirements through what is called “totallizing” your contributions to both countries.
I hope this answer helps a bit, but your first enquiry should be to RCT to find out if you must or may contribute to the CPP, based on your earnings and your status in Canada.
Hello,
How is GIS calculated: does it depend on your savings or only on interest from them? Does it mean that one can have savings and other investments but doesn’t have any income from them, will a person receive GIS?
Thanks, Allan
Allan
GIS is based on income only, and not on assets. So yes, as you suggest, if someone has investments but doesn’t have any income from them, they could receive max GIS. Unfair perhaps, but that’s the way it is.
You are right, Doug. This is unfair to GIS to people who never contributed in Canada. You work all your life and just get CPP (far from full amount) and OAS and you can end with $1000-1200. And people who never contributed make $1350. This system work perfect in Austarlia. Everybody gets $500 and then… if you paid contributions, you can get a lot, if not – just $500.
Allan
Not exactly why I considered the GIS to be unfair, and not exactly correct. GIS is only reduced by 50 cents on the dollar for any CPP benefits received (or any other income), so you would always be better off to have worked and contributed to the CPP than not.
Hi
I have an Ont. govt. pension of $3100/month and took my CPP at age 60. I am turning 65 next July and wonder what I can expect from the OAS. (if any) Thanks. Rick
Rick
You left out the critical details of how long you have resided in Canada, but for purposes of responding I’ll assume that you have lived here for at least 40 years after age 18 (probabaly a safe assumption based on your Ont gov’t pension amount). If that is true, you will be eligible for the max OAS of approx $550/mth. The “clawback” doesn’t start until your income (excluding OAS) exceeds approx $70,000/yr, so you shouldn’t have to worry about that unless you have significant income that you haven’t mentioned.
I am applying for CPP and OAS pension. I turned 65 just over a month ago. My CPP benefits are supposed to be around $690 per month and I am assuming that my OAS will be $544. My wife’s will be around the $200 mark for CPP. We are both working and will continue to do so. Will she also be eligible for OAS at the $544 level when she turns 65 next summer? I will continue working full time and she is working half time.
Hi Don,
OAS is based on residency. If she was resident of Canada for 40 years between the age of 18 and 65, she is likely to get maximum OAS. You can call Service Canada to see how much OAS she qualifies for.
Jim
Thank you for your reply, Jim. Based on your reply she should qualify for the maximum as she has lived in Canada all her life.
My pension on retirement will be approximately 80,000 (72 private + 8 CPP); My wife just CPP will be 2700 ; As you would expect we are splitting income on our tax filing therefore we will both be claiming approximately 41350. The claw back on OAS begins at around 70,000; would I be effected? Is the clawback based on your income tax filing?
OAS clawback is based on individual income, not combined income. If you split your income properly and keep your income below the $70,000 threshold, you should not be affected.
I am 64 and my wife is 61. I looked at the tables and if I receive full OAS at 65 and qualify for GIS, my benefits will be $X. If my wife qualifies for the Allowance (she has not lived in Canada for 10 years and would have to use U.S. credits under the tax treaty), my GIS would be reduced, to make up for the amount she would receive. My question is: is she required to apply for the Allowance? The amount we as a couple would receive looks to be the same, whether it all comes in the form of OAS and GIS to me, or whether she gets part as an Allowance.
Alf
The GIS/Allowance rate tables are complex when a partial benefit is involved, but if you are correct in thinking that the net benefit is the same either way, there is no requirement for youe wife to apply for the Allowance. I would however recommend that you confirm those calculations with SCC.
Thanks. Now I’m completing the GIS application and a couple things are unclear: 1. for U.S. Social Security, do I put down the total I received, or only the 85% that is taxable in Canada (under the tax treaty)? 2. My spouse and I are pension splitting. Do I have to make note of that anywhere?
Alf
I believe that GIS will be based on your total U.S. Social Security, but I would include a note about the lower taxable portion just in case. Because the income that you report will be compared to what you declare on your tax returns, I would clearly note who actually received the pension amounts, and that you are splitting it differently for income tax purposes.
I am retiring in July 31, 2013 (60 years old); I am presently employed where I pay the maximum CPP and Unemployment insurance by the month of June. Will I get a rebate for the five months (Aug 1 to Dec 31)?
Allan
I have no knowledge of the EI, although I’d be surprised if you would get a refund of those premiums. As for CPP, prior to 2012, you would have been eligible for a refund if you applied for your CPP retirement at age 60, as that would have been the end of your contributory period. Your max contribution would have been 7/12ths of the YMPE, and you could have claimed a refund on your 2013 tax return.
Since 2012 however, you are required to continue contributing on any employment earnings until age 65, regardless whether you apply for your CPP retirement pension early or not. If you do apply for a retirement benefit effective Aug 2013, 7/12ths of your 2013 earnings should be used to calculate your early retirement pension, and the other 5/12ths should be used to calculate a post-retirement benefit (PRB), which would be payable effective Jan, 2014.
I have read here a number of times that it is necessary to have 40 years in Canada to receive full OAS. But isn’t there another way of qualifying, which is to have been born before July 2, 1952, and lived in Canada for some time…even briefly…as an adult (over 18), and to have lived in Canada for the last 10 years? I think this means that someone who left Canada in his or her 20s, then returns to Canada to retire, can get full OAS after being here for 10 years. It’s important that they know not to seek OAS before they have those 10 years, or they’ll just get a partial pension. (But they can make up for missing years in the final 10, with years in Canada after age 18, at the rate of 3 old years = 1 new year.)
Frank
You are basically right in what you say, and thanks for pointing this out. There should be no concern however, if someone who can qualify for the old or new rules (ie., someone who had attained the age of 25 by July 1/77 AND resided in Canada on that date or had prior residence in Canada after age 18 or possessed a valid Canadian immigration visa on that date) applies before they had the “magic 10 years”. Such a person would always be given a choice between taking an immediate partial pension under the new rules, or waiting until they qualified for a full pension under the old 10-year or 3-for-1 rules.
I applied for OAS based on the above formula (born before 1952, lived in Canada before 1977, lived in Canada last 10 years). I’m one year short of 10 years back in Canada, and was hoping to use the 3-for-1 rule to make it up. I received a letter from Service Canada stating that my application can’t be processed until I prove my departure date from Canada back in the 70s. Since I’m a dual U.S.-Canadian citizen, there was no immigration involvement on either side of the border. I’ve read of cases like this where immigrants (though I’m not an immigrant) are refused a pension, because they can’t show plane tickets from 40 or 50 years ago, and that was one of the options given to me. I don’t have plane tickets, because I simply drove across the border. All I could think of to send to prove that I arrived in the U.S. was acceptance at a U.S. university (but that occurred in the following year) and a U.S. Social Security statement showing that I started contributing in the year I left Canada. I also provided the name and address of a U.S. citizen who knows when I crossed the border. Any idea if that will be enough?
Frank
All you can provide is what you’ve got, so I suspect that might be enough. If you’ve been in Canada for the last 9 years, all that you should have to establish is that you had at leats 3 years of prior residence in Canada. Is your actual departure date that critical in coming up with those 3 years, or do you clearly have much more than that?
Good luck!
Just a followup: I called Service Canada and was told that a full pension had been approved to start the month after my 65th birthday. (They didn’t event contact the person I gave as a witness.) So…everything turned out well. Thanks!
When receiving early CPP at age 60 can I count on some other government supplements?
Once you start receiving the GIS… what lines from your income tax return do they use to determine the amount of your GIS.
Barry, there is information on your question here:
http://www.moneysense.ca/2012/03/01/are-you-gis-eligible/
Thank you so much for very useful information here. I wonder if there are any conclusions regarding what is more beneficial for a couple not married, both in Canada all their lives, 4 years apart, with no income past 60 years of age, to apply as two singles or one common law? I assume this is legal to do, since we file taxes as singles. Many thanks, Gabe
Gabe
You ask a very good, but difficult question.
First, let’s look at a definition with the OAS act of a “common-law” relationship (CPP definition is similar):
common-law partner”, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship at the relevant time, having so cohabited with the individual for a continuous period of at least one year.
So, you’ll have to decide whether that definition allows you to choose or not.
As to your marital status and net CPP/OAS benefit, there is no difference to CPP, except that whoever lives longer might be eligible for a survivor’s benefit if you claim yourself as common-law. As for OAS/GIS, you would normally be better off claiming single once you’re both age 65, but you might be better off claiming common-law when the oldest reaches age 65, as the younger one could then be eligible for Spouse’s Allowance.
So, the choice isn’t as simple as you might think!!!
Thank you Doug, your kind input it reinforces my own calculations of reporting a common law spouse, since I turn 65 and she is 4 years behind.
And, after a 35 year period of cohabitation, the choice becomes obvious…..
Thank you for taking the time to help people!
Gabe
Gudonya Gabe! And you’re welcome!
I am 65 and still working, having spent the previous 21 years as a Canadian resident. My husband has just become a Canadian resident and his only income is a small pension ($6000 / year)from his country of origin. As yet, I have not applied for either CPP or OAS and intend to keep on working for a year or two. Service Canada calculates my current CPP as $4200 / year and OAS as $3600 / year. Is it worth deferring application for CPP/OAS until I finish work? I calculate I will generate around $6000 / year from RRSP savings and also have some non-registered savings. Is GIS a possibility for us?
Elizabeth
You have a very interesting scenario! You haven’t said how much income you receive from working, but based on what you have indicated, I think your plan to defer both CPP and OAS is a good one, at least until you decide to retire.
As for CPP, your current estimate of $4,200/year will be going up by 0.7% each month that you delay, based on your increasing age alone. Depending on your employment income, it could also increase by about $300/year for each subsequent year of contributions that you make.
For OAS, if you currently have 21 years of Canadian residence, you are eligible for 21/40ths of a full OAS. For every full year that you wait before applying, you accumulate another 1/40th, or about 5% of your current OAS estimate. Starting July 2013, you will also benefit from a 0.6% increase in your OAS for every month that you continue to defer your application for OAS.
As for GIS, it’s unlikely that you will be eligible, at least while you’re still working. Once you decide to quit however, that will be a better time to look at when you should apply for CPP and/or OAS, and whether you might be eligible for GIS based on your income at that time.
I hope this information is sufficient for you to decide what to do for now, but if you want more detailed calculations on your CPP options, you would have to email me at DRpensions@shaw.ca with your detailed CPP statement of contributions.
Thank you, Doug, your comments have been very helpful in outlining the various options.
in my country. I pay to the government. not government pay me
very interesting, it looks like I will try to join ppc too. because my salary is very less so
Just a quick question guys. My dad turns 65 in 3 years. He is currently getting CPP since he was 60, but at a very low rate. We are selling our current house and he is thinking of purchasing a condo. Would the government factor in that you own a property and reduce your OAS + CPP + GIS since you are paying less a month (maintenance fee + hydro = $500) as oppose to renting a place at like $1300. He would have little income, since if he does not buy the condo, he would assist me with the money for my place. Thanks!
Tom
Whether your dad owns or rents will not affect the amount of his CPP, OAS or GIS entitlement. The only possible impact if he sells his current home would be if he invested the proceeds and generated some income that might reduce his GIS entitlement. From what you say though, that’s not his plan.
Thanks Doug for the clarification, really appreciate you taking the time to response to everyone’s questions in here.