Income Security Programs Old Age Security Canada Pension Plan International Agreements

In general, 70% of pre- retirement income is required OAS and CPP retirement pensions are designed to replace about 40% of the pre-retirement income $14,500 (2001) Canada’s Retirement Income System

Cornerstone of Canada’s Retirement income system Financed from general tax revenues Old Age Security

Financed from general tax revenues of the Government of Canada OAS on solid ground - Actuarial studies Canada’s Gross Domestic Product (GDP) and individual incomes to rise Old Age Security Sustainability

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

Based on: Age Legal Status Years of Residence OAS Pension

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

in People living in Canada 10 yearsneed 10 years after 18 outside People living outside of Canada 20 yearsneed 20 years after 18 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. Partial OAS Pension

Protects social security rights Current Agreements: 38 countries International Agreements

Antigua/ Finland Korea St. Kitts/Nevis BarbudaFranceLuxembourgSt. Lucia Australia Germany Malta St. Vincent/ Austria Greece Mexico Grenadines Barbados Grenada Netherlands Sweden BelgiumIceland New Zealand Switzerland ChileIreland Norway Trinidad / Croatia Italy Philippines Tobago Cyprus JamaicaPortugal United Kingdom Denmark Jersey /Spain United States Dominica Guernsey International Agreements

Help to meet eligibility rules * Total Time * Prorate payment International Agreements

Must: receive OAS pension reside in Canada have low income Supplement - GIS Supplement - GIS

Based on: rate of OAS pension income marital status Paid on a sliding scale GIS Amount

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

Allowance Paid to the younger partner if: age 60 to 64 couple’s income is low residence rules are met Paid on sliding scale

Paid if: age 60 to 64 a survivor residence rules are met Paid on sliding scale Allowance for the Survivor

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

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

Contribution Rates Schedule Employee Employer Self-Employed % 3.9% 7.8% % 4.3% 8.6% $1, $1, $2, % 4.7% 9.4% % 4.95% 9.9%

$3,500 - Year’s Basic Exemption (YBE) $38,300 - Year’s Maximum Pensionable Earnings (YMPE) Pensionable Earnings $3,500$0 $38,300 Pensionable Earnings for 2001

Starts January 1966 or month after 18th birthday Contributory Period Ends month before Retirement pension month age 70 month of death

Periods of CPP disability Periods during which children were raised Plus 65 years of age 15% Drop-Out Provisions

Drop-Out Provisions Example January 1966 Year 2001 Age 65 Contributory Period 36 Years 20 years after drop-outs 1.Periods of CPP Disability (1985 to 1990)6 Years 2.Raising Children (1968 to 1974)7 Years 3.15% ( = 23 years x 15%)3 Years

Statement of Contributions Sent annually Records earnings after age 18 Canada Pension Plan

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

Separate Act - Minister of Finance 12 members - Provincial representation Operates at arm’s 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 CPP Investment Board

RetirementRetirement DisabilityDisability - Children’s benefits SurvivorSurvivor - Death benefit - Survivor pension - Children’s benefits CPP Benefits

Need one valid contribution Retirement Choices Early Early - age 60 to 65 Standard Standard - age 65 Late Late - age CPP Retirement Pension

stopped or substantially stopped workmust have stopped or substantially stopped work reducedpension is reduced by 0.5% for each month under age 65 Early Retirement Pension

nono need to stop work increasedpension is increased by 0.5% for each month over age 65 Late Retirement Pension

Rules: Under age 65 Paid long enough and recently enough Disability must be both severe and prolonged CPP Disability Benefit

A child of the disabled contributor under 18 or 18 to 25, at school flat rate Children’s Benefit

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

Earnings Requirements Earnings Requirements 1/3 10 years1/3 of years in contributory period up to 10 years 3 yearsnever less than 3 years Survivor Benefits

Paid to the survivor of the deceased contributor legal spouse or common-law partner CPP Survivor’s Pension CPP Survivor’s Pension

A child of the deceased contributor under 18 or 18 to 25, at school payment is a flat rate Children’s Benefit

billionRetirement $ 13.3 billion billionDisability$ 2.5 billion billionSurvivor$ 2.7 billion millionDeath benefit $ 232 million millionChildren$ 440 million Amounts Paid

CPP Current Benefit Payments

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