Income Security Programs

1
Income Security Programs

• Old Age Security
• Canada Pension Plan
• International Agreements

2
CanadasRetirement 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
• 14,500 (2001)

3
Old Age Security

• Cornerstone of Canadas Retirement income system
• Financed from general tax revenues

4
Old Age SecuritySustainability

• 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

5
Old Age Security Benefits

• Old Age Security pension
• Guaranteed Income Supplement
• The Allowances

6
OAS Pension

• Based on
• Age
• Legal Status
• Years of
• Residence

7
OAS Pension
Residence Requirement Full or Partial OAS
pension depends on the years of living in Canada
8
Partial OAS Pension

• People living in Canada
• need 10 years after 18
• People living outside of Canada
• need 20 years after 18

9
Partial OAS Pension

• Rate 1 for each year in Canada
• 40 after
  age 18
• International Agreements can be used when
  there are not enough years in Canada.

10
International Agreements

• Protects social security rights
• Current
• Agreements
• 38 countries

11
International Agreements
Antigua/ Finland Korea St.
Kitts/Nevis Barbuda France Luxembourg St.
Lucia Australia Germany Malta St.
Vincent/ Austria Greece Mexico
Grenadines Barbados Grenada Netherlands
Sweden Belgium Iceland New Zealand
Switzerland Chile Ireland Norway
Trinidad / Croatia Italy Philippines
Tobago Cyprus Jamaica Portugal United
Kingdom Denmark Jersey / Spain United
States Dominica Guernsey
12
International Agreements

• Help to meet eligibility rules
• Total Time
• Prorate payment

13
Supplement - GIS

• Must
• receive OAS pension
• reside in Canada
• have low income

14
GIS Amount

• Based on
• rate of OAS pension
• income
• marital status
• Paid on a sliding scale

15
Definitions

• Spouse
• legally married person
• Common-law partner
• person cohabiting in a conjugal relationship for
  at least one year
• same sex or opposite sex

16
Allowance

• Paid to the younger partner if
• age 60 to 64
• couples
  income is low
• residence
  rules are met
• Paid on sliding scale

17
Allowance for the Survivor

• Paid if
• age 60 to 64
• a survivor
• residence rules are met
• Paid on sliding scale

18
Canada Pension Plan

• Began in January 1966
• Compulsory contributions based on earnings
• Self-supporting
• Payable outside Canada
• Québec has a similar program

19
Canada Pension Plan

• Workers pay into CPP during earning years
• To protect against future loss of
• income due to retirement
• disability
• death

20
Contribution Rates Schedule
Employee Employer Self-Employed 2000
3.9 3.9 7.8 2001 4.3
4.3 8.6 1,496.40
1,496.40 2,992.80 2002 4.7
4.7 9.4 2003 4.95 4.95
9.9
21
Pensionable Earnings

• 3,500 - Years Basic Exemption (YBE)
• 38,300 - Years Maximum Pensionable
  Earnings (YMPE)

38,300
3,500
0
Pensionable Earnings for 2001
22
Contributory Period

• Starts
• January 1966
• or
• month after 18th birthday

• Ends
• month before
• Retirement pension
• month age 70
• month of death

23
Drop-Out Provisions

• Periods of CPP disability
• Periods during which children were raised
• Plus 65 years of age
• 15

24
Drop-Out ProvisionsExample
January1966
Year 2001Age 65
1968 - 1974
1982
1977 - 1978
1985 - 1990
Contributory Period36 Years20 years after
drop-outs
1. Periods of CPP Disability (1985 to 1990) 6
Years 2. Raising Children (1968 to 1974) 7
Years 3. 15 (36 - 13 23 years x 15) 3
Years
25
Canada Pension Plan

• Statement of
• Contributions
• Sent annually
• Records earnings after age 18

26
Canada Pension PlanSustainability

• Employment-based contributions
• Self-supporting (contributions, interests and
  earnings from investments)
• Financially sound - 17th Actuarial Report

27
CPP Investment Board

• Separate Act - Minister of Finance
• 12 members - Provincial representation
• Operates at arms length from government
• Professionally manages the CPP surplus accrued
  since 1998
• Subject to the same investment rules as other
  pension funds
• Reports investments and returns regularly

28
CPP Benefits

• Retirement
• Disability
• - Childrens benefits
• Survivor
• - Death benefit
• - Survivor pension
• - Childrens benefits

29
CPP Retirement Pension

• Need one valid contribution
• Retirement Choices
• Early - age 60 to 65
• Standard - age 65
• Late - age 65 - 70

30
Early Retirement Pension

• must have stopped or substantially stopped work
• pension is reduced by
• 0.5 for each month under age 65

31
Late Retirement Pension

• no need to stop work
• pension is increased by
• 0.5 for each month over age 65

32
CPP Disability Benefit

• Rules
• Under age 65
• Paid long enough and recently enough
• Disability must be both severe and prolonged

33
Childrens Benefit

• A child of the disabled contributor
• under 18
• or
• 18 to 25,
• at school
• flat rate

34
Disability Benefit

• Vocational Rehabilitation Program
• designed to help recipients of CPP Disability
  benefits return to work
• Voluntary

35
Survivor Benefits

• Earnings Requirements
• 1/3 of years in
  contributory period
  up to 10
  years
• never less
  than 3 years

36
CPP Survivors Pension

• Paid to the survivor of the
• deceased contributor
• legal spouse
  or
  common-law
  partner

37
Childrens Benefit

• A child of the deceased contributor
• under 18
• or
• 18 to 25, at school
• payment is a flat rate

38
Amounts Paid

• Retirement 13.3 billion
• Disability 2.5 billion
• Survivor 2.7 billion
• Death benefit 232 million
• Children 440 million

39
CPP Current Benefit Payments
40
How to reach us ?
Call toll free 1 800 277-9914 English 1 800
277-9915 French 1 800 255-4786 TDD/TTY
Visit our web at www.hrdc-drhc.gc.ca/isp