Federal Benefits for all Canadian Seniors

For most people, retirement is likely to result in a significant reduction in inflows of funds. Returns on investments and that increasingly rare company pension may not be sufficient to allow the average person to retire in the style he or she would ideally want to.

Fortunately, there are a few Government of Canada benefits for seniors that you should know about which can help provide a financial cushion in retirement.

The main three government programs that help seniors retire are the Canada Pension Plan, Old Age Security, and the Guaranteed Income Supplement. Therefore, it’s important for seniors to know the details of all three benefits.

Canada Pension Plan (CPP)

The CPP is a monthly, taxable income that serves to replace part of your income when you retire. You have to meet certain requirements and apply to receive the CPP, but if you qualify, you’ll receive it for the rest of your life.

To qualify for a CPP retirement pension, you must be at least 60 years old and have to have made at least one valid contribution to the CPP. Valid contributions can either be from work you did in Canada or as the result of receiving credits from a former spouse or former common-law partner at the end of the relationship.

You are still allowed to work while receiving the CPP retirement pension without reducing the pension amount. If you work while receiving a pension and are under the age of 70 years old, you can actually increase your retirement income by making contributions to the CPP. Each year you contribute to the CPP will result in a post-retirement benefit and increase your retirement income. Your contributions stop at 70, even if you’re still working.

The amount you receive from the CPP depends on different factors, such as:

• the age you decide to start your pension, as the amount increases each year you wait from 60 until a maximum at 70
• how much and for how long you contributed to the CPP
• your average earnings throughout your working life.

To give you a reference, the maximum monthly amount you could receive as a new recipient starting the pension at age 65 in 2021 is $1,203.75, while the average amount in January was $619.75.

Before applying, you’ll have to decide between starting to receive your pension as soon as you qualify, once you turn 65, or at a specific date chosen by you.

Once you’ve done that, you can choose between applying online or by sending a paper application.

Something to note is that a paper application is mandatory if you:

• are receiving, have ever received, or have been denied a CPP benefit such as disability pension, survivor’s pension or a children’s benefit
• live outside of Canada
• have an authorized third party such as a power of attorney that manages your CPP account.

Wait times for online applications are far shorter (7 to 14 days) than wait times for paper applications (around 120 days), so if you’re able to apply online, I would suggest doing it that way.

The instructions for each method can be found on the Government of Canada’s website, in the section titled “Decide how to apply”. Government of Canada’s website to go there.

If you apply online, you’ll need to have, or register for, a My Service Canada Account. Once you’ve applied, you can check your application status by using this account, which is fairly useful.

You can also check your application status by phone if you call 1-800-277-9914 from 8:30 am to 4:00 pm, Monday to Friday.

Additionally, if you qualify for the CPP, there are some other benefits that you may qualify for listed on the Other CPP Benefits page of the government’s website.

Now, onto the next program!

Old Age Security (OAS)

The OAS pension is a monthly payment you can receive if you’re 65 or over. In most cases, you won’t need to apply in order to receive the OAS pension as the government will enroll you automatically and notify you. However, in some cases, you may have to apply if the government doesn’t have enough information.

There are three different situations accounted for in the eligibility requirements for the OAS pension.

If you are living in Canada, you must:

• be 65 years old or older
• be a Canadian citizen or a legal resident at the time we approve your OAS pension application
• have resided in Canada for at least 10 years since the age of 18.

If you are living outside of Canada, you must:

• be 65 years old or older
• have been a Canadian citizen or a legal resident of Canada on the day before you left Canada
• have resided in Canada for at least 20 years since the age of 18.

Canadians working outside of Canada for Canadian employers may have their time working abroad counted as residence in Canada. To qualify, this time working abroad as residence, you must have either:

• returned to Canada within 6 months of ending employment
• turned 65 years old while still employed and maintained residence in Canada during your time outside of Canada.

You must also provide the following two documents in this situation:

• proof of employment from the employer
• proof of physically returning to Canada (unless you turned 65 while still employed outside of Canada).

Finally, if neither of the above situations applies to you, you may still qualify for the Old Age Security pension, a pension from another country, or from both countries if you have:

• lived in one of the countries with which Canada has established a social security agreement; or
• contributed to the social security system of one of the countries with which Canada has established a social security agreement.

If you qualify for the OAS pension, the amount you receive depends on the number of years you’ve lived in Canada after the age of 18. You’ll receive a partial amount if you’ve lived in Canada for less than 40 years. The maximum monthly payment amount (based on April to June of 2021) is currently $618.45.

The OAS pension is subject to a recovery tax if your individual net annual income is greater than the net world income threshold set for the year.

To give you an example, in 2019 the net world income threshold was $77,580, so if you were on the OAS pension and made more money than that, you would’ve had to repay some of the OAS pension.

Much like the CPP, delaying your first payment from the OAS pension increases the amount you’ll receive each month. Since you become eligible at 65, the maximum number of months you can delay the first payment while increasing the monthly amount is 60 months (5 years) as it stops increasing when you turn 70.

If you need to apply to receive the OAS pension, the government will send you a letter notifying you. Besides that, if they send you a letter about the OAS pension and the information is incorrect, you’ll also have to apply. If you didn’t receive a letter about the OAS pension the month after you turned 64, you’ll need to contact the government to find out if you have to apply.

In cases where you do need to apply, you’ll have to decide whether you would like to start receiving the OAS pension the month after you turn 65 or at a specific date that you choose.

Then, like the CPP, you’ll need to choose between applying online or sending a paper application. The instructions for both application methods are found on the government’s website, in the section titled “Submit your application”. CLICK HERE to visit the site.

The final program is an extension of the OAS pension.

Guaranteed Income Supplement (GIS)

The GIS is a monthly payment you can get if you’re already receiving the OAS pension and your annual income meets certain requirements. If you’re receiving the OAS pension and have never received the GIS, then you’ll have to apply for it. More generally, you’ll probably apply for the OAS and the GIS at the same time.

You may be able to get the GIS if:

•     you’re 65 or older
•     you live in Canada
•     you receive the OAS pension
•     your income is under $18,744 if you are single, widowed, or divorced
•     your income plus the income of your spouse or common-law partner is below:
  •         $24,768 if they receive the full OAS pension
  •         $44,928 if they don’t receive an OAS pension
  •         $44,928 if they receive the Allowance (a benefit for the partner of someone who’s eligible for the GIS).

The maximum monthly payment amount you could receive depends on your situation. You could receive up to:

• $923.71 if you’re single, widowed, or divorced
• $556.04 if your spouse or common-law partner receives the full OAS pension
• $923.71 if your spouse or common-law partner doesn’t receive an OAS pension
• $556.04 if your spouse or common-law partner receives the Allowance.

If you didn’t receive a letter from the government about the GIS the month after you turned 64, you should contact the government to see if you need to apply.

You can either apply for the GIS online with the same account you’ll be using to apply for the OAS or you can send a paper application. However, if you’re already receiving the OAS pension, then you’ll have to apply for the GIS with a paper application.

CLICK HERE to visit the site where you will find the instructions for applying for the GIS.

Well, that’s all three programs covered. It’s important for seniors to know about the benefits that apply to them.