For the many Canadians who don’t have access to a defined benefit plan, retirement income is derived from their savings and government pensions. For you, the main sources of retirement income are your CAAT Plan pension, your government pensions (Canada Pension Plan and Old Age Security) and personal savings such as your RRSPs or service from other pension plans.
Total retirement income can include income from working, either full-time or part time. In the near future, you may also be able to work, and collect a pension from the same employer.
Your government pensions
Canada's public pension programs are designed to provide basic retirement income to Canadians. Human Resources and Social Development Canada (HRSDC) is the federal agency that manages the federal retirement savings programs - the Canada Pension Plan (CPP) and Old Age Security (OAS) as well as the Guaranteed Income Supplement (GIS) and the Allowance. Several provinces also offer Provincial Income Supplements. Ontario's program is the Guaranteed Annual Income System (GAINS).
Many Canadians will rely on their government pensions as one of their key sources of retirement income. Your government pensions, however, are not meant to stand alone. They are intended to work alongside other sources such as personal savings and employer-sponsored pensions. Working together, each of these "pillars" helps provide the stable foundation on which your retirement income is based.
Canada Pension Plan (CPP)
The CPP provides income to individuals who have worked in Canada after the age of 18. The benefit is based on the amount of time you have contributed and the amount of contributions you and your employers have made to the CPP throughout your career. The full benefit is available at the age of 65 but you can collect a reduced benefit as early as age 60. An increased benefit is also available for those who choose to start their CPP pension after the age of 65.
The CAAT Plan's pension formula takes CPP into consideration, however it does not provide your CPP application or coordinate your benefit. It's up to you to ensure you have applied to HRSDC at least six months before you want to begin receiving your payments.
The CPP provides a Statement of Contributions which, much like your Member's Annual Pension Statement, indicates the amount of contributions you have made and the amount of pension you can expect to receive. You can request your Statement from CPP up to once a year and use it to help with your retirement planning.
Old Age Security (OAS)
The goal of Old Age Security is to provide a minimum income to Canadian citizens and legal residents aged 65 and older. OAS income is not dependent on your employment history and you do not have to be retired to begin collecting it. In fact, even if you have never worked in Canada, you can still receive OAS if you meet certain age and residency requirements. In general, the amount you receive is based on the length of time you have lived in Canada - the longer your residency, the larger the benefit.
If your income is above a certain amount, you may be required to repay some or all of the benefit you received.
You must apply for your OAS pension at least six months before you want to begin receiving it. If you apply after the age of 65, you may be able to collect up to 11 months of back payments so it's important to apply as soon as possible. Your OAS benefit is paid monthly and is indexed to inflation quarterly.Note that the age of eligibility is increasing. It will gradually increase from 65 to 67 starting in April 2023. If you were born on or before March 1958, you will be eligible for OAS at age 65. If you were born after that, your age of eligibility will increase. For those born on or after February 1962, your age of eligibility is 67.
Guaranteed Income Supplement (GIS)
The GIS benefit provides income for individuals over the age of 65 who are receiving OAS and who have little or no income from other sources. The amount of the benefit is based on both your income and that of your spouse. You must apply for the GIS benefit in order to receive it and you must renew it each year.
Your GIS benefit is added to your monthly OAS payment and is indexed quarterly. If your annual income increases above a certain amount, or you do not renew your benefit, your GIS payment will stop.
The Allowance and the Survivor Allowance
The Allowance acknowledges the circumstances facing couples who rely on one pension when the working spouse retires. To receive the Allowance, you must be between the ages of 60 to 64, married or in a common-law relationship and your spouse must be eligible to collect both the OAS and GIS benefits. You must also be a Canadian citizen or legal resident and meet certain residency requirements. The amount of your benefit is based on the combined income of you and your spouse. To receive the Allowance you must apply for it and it must be renewed each year.
The Survivor Allowance is provided to seniors who meet the requirements for the Allowance but whose spouse has died. The benefit is based on the income of the surviving spouse. If you are in receipt of the Survivor Allowance and subsequently enter into a marriage or common-law relationship, you are no longer eligible to receive the benefit. When you turn 65, both the Allowance and the Survivor Allowance stop and are normally replaced by the OAS benefit.
Government Annual Income System (GAINS)
The GAINS benefit is administered by the Ontario Ministry of Finance and is similar to programs available in some of the other provinces. This program provides a minimum income to Ontario seniors over the age of 65 whose income falls below a certain level. There are residency requirements that must be met and the individuals must be in receipt of OAS and GIS benefits from the federal government. You do not need to apply for this benefit - eligibility is determined each year based on your income tax return. For information on this program, visit the Ministry of Finance's website.
Government benefits - Spending time outside of Canada
Canada has entered into social security agreements with several countries, which may make it easier for you to collect government benefits. If you don't meet the CPP contribution or the OAS residency requirements here in Canada, time spent living and working in other countries may allow you to qualify. For example, if after the age of 18 you lived in the United States, you can count this period as residency in Canada. Any contributions to the US pension program will also count as contributions for the purposes of the CPP, thereby allowing you to qualify for Canadian benefits.
Many of the agreements work both ways. If you lived and worked in other countries but do not meet their eligibility requirements, periods of contributing to the CPP may be applied to their plans. Human Resources and Social Development Canada's website contains numerous fact sheets on the agreements Canada has with other countries such as the United States, Germany, Ireland and Barbados.
Once you have qualified to receive your CPP and OAS benefits, you can collect them outside of Canada. You may however, lose your OAS entitlement if you move outside of Canada for six months or more. If you are planning to leave the country, be sure to consult with HRSDC for information.
Timing of payments
It’s important to remember that your government benefits, like CPP and OAS, are paid in the last 3 business days of each month. Your CAAT Plan pension is paid on the first business day of each month. This means your retirement income payments from your various sources will be staggered during the month.