Somebody asked me a while back about some upcoming changes to Canadian pension they had heard about. I said I would look into it to see what was going on. Well, I’m glad I did because I learned a lot.
The specific fear that I was asked about appears to be unfounded, thankfully. There was a private member’s bill before Parliament suggesting several changes, one of which would have affected residency requirements in order to collect the Old Age Security (OAS). The current requirement is 10 years of adult life and will remain that way because the bill suggesting a shorter period of time has been withdrawn.
At this time, you have to be 65 in order to collect the OAS (unless you are a survivor — there are some different rules for that) and the amount you are paid is pretty much based on how much of your adult life you lived in Canada. The OAS is funded by the Government of Canada. Major changes being introduced over the coming years will affect those aged 54 and under, however. For instance, they are going to have to work a couple of years longer until the age of 67 before they can collect.
The Canadian Pension Plan (CPP) is completely funded by mandatory contributions from both employees and employers. It likely wouldn’t hurt to consult a professional before applying for this or any pension. I’m contemplating applying now at the age of 60. Or I could decide to wait until I’m 70 — it is my right to do so. The amount I receive each month will be less, though, the earlier I elect to receive it. By the way, in order to qualify for a CPP you must have worked in Canada and contributed to the plan for at least one pay period. Don’t start thinking about fairness here — the amount you receive is based on the amount contributed on your behalf so I doubt that anybody working for one pay period is going to get much at all!
The fear on the street has always been: “By the time it’s my turn there isn’t going to be anything left!”
I’ve been hearing that since I was in my early twenties and, as a matter of fact ,I may have even said it a time or two. It looks to me, though, that the baby boomers will be looked after.
If you’d like to learn more about this, visit www.servicescanada.gc.ca and you’ll find a lot of