Are you retiring in Canada this year, Pillar 1: Canada’s public pension system

Many more people are retiring this year, so I want to take a look at the three pillars of the Canadian Pension System over the next few posts. 

Pillar 1: Canada’s public pension system

The majority of today’s Canadian seniors receive income from Canada’s public pension system. The two main pension programs that provide benefits are the Old Age Security program (OAS) and the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP). Keep in mind that these benefits are taxable income. Old Age Security (OAS)

If you are a Canadian citizen or legal resident, have lived in Canada for more than 10 years after turning 18 and are 65 or older, you may be eligible to receive OAS. OAS is not tied to contributions you have made, and whether you qualify for a full pension or a partial pension depends on how long you have lived in Canada. For further information concerning  OAS eligibility, visit Service Canada.

Note: OAS benefits do not necessarily begin automatically. You may have to apply for OAS benefits.  There are four types of benefits available within the OAS program:

1.  The Old Age Security pension—a monthly benefit available to all Canadians 65 years of age and over who meet the legal status and residence requirements. (The average monthly payment in October 2013 was $520.10).

2.  The Guaranteed Income Supplement (GIS)—a monthly benefit available to Canadian seniors who receive an OAS pension and have little or no other income. (The average monthly payment in October 2013 was $500.56 for single individuals).

3.  The Allowance—the monthly benefit available to eligible low-income Canadians who are between 60 and 64 and have a spouse or common-law partner who is receiving the GIS. (The average monthly payment in October 2013 was $433.73).

4.  The Allowance for the Survivor—a monthly benefit available to eligible low-income Canadians who are between 60 and 64 and are widows or widowers. (The average monthly payment in October 2013 was $641.87).

Automatic enrolment

Proactive enrolment of OAS benefits was announced in Budget 2012 and is being phased in, starting in 2013. Individuals who do not receive a notification letter indicating that they will be automatically enrolled for the OAS pension are required to apply for their OAS pension. 

For more detailed information about Old Age Security, visit Service Canada.