| Dear Rizwani!
Talking of pensions and allowances at retirement can take several dimensions
as it involves various factors
which can affect your CPP pension and Old Age Security benefits.For
this purpose you can request your official CPP Statement of Contributions
by contacting the HRDC offices.
Following is a brief description of various benefits and provisions
you may be entitled to under CPP. For a complete description of your benefits
both under CPP and OAS you can visit the HRDC site at www.hrsdc.gc.ca which
covers the topic comprehensively and gives an insight to the benefits regime.
1. Canada's retirement income system has three levels: Old Age Security
(OAS), the Canada Pension
Plan (CPP) and private pensions and savings. The CPP, which was established
in 1966, provides basic
benefits when a contributor to the Plan becomes disabled or retires.
At the contributor's death, the
Plan provides benefits to his or her survivors.
2. CPP Retirement Pension
A CPP retirement pension is a monthly benefit paid to people who are
at least 60 years of age and who have contributed to the Canada Pension
Plan.
3. The pension is designed to replace about 25 percent of the earnings
on which a person's contributions were based. You qualify for a CPP retirement
pension if you have made at least one valid contribution (payment) to the
Plan and if:
• you are at least 65; or
• you are between 60 and 64, and meet the earning requirements set
out in the legislation.
Your retirement pension does not start automatically. You must apply
for it (unless you already receive a
CPP disability benefit and turn 65, at which point your disability
benefit automatically changes to a
retirement pension).
4. To qualify for a retirement pension between the ages of 60 and 64,
you need to do one of the
following:
• Stop working
This means that you are not working by the end of the month before
the CPP retirement pension begins and during the month in which it begins.OR
• Earn less than a specified amount
This means you earn less than the current monthly maximum CPP retirement
pension payment ($814.17 in 2004) in the month before your pension begins
and in the month it begins. Once you start receiving your CPP pension,
you can work as much as you want without affecting your pension amount.
However, you cannot contribute to the CPP on any future earnings from employment.
Your CPP retirement pension is based on how much, and for how long, you
contributed to the Plan (or to both the CPP and QPP). The age at which
you choose to retire also affects the amount you receive.
The CPP retirement pension is indexed to the Consumer Price Index annually.
The average monthly retirement pension in 2003 was $448.73.
Your retirement pension normally starts the month after your 65th birthday.
Your monthly payment is
smaller if you begin receiving it before then, and larger if you take
it after. This "flexible" pension
can start as early as at the age of 60 or any time up to the age of
70. The CPP adjusts the amount of your pension by 0.5 percent for each
month before or after your 65th birthday from the time you begin to receive
your pension. The adjustment is permanent. This means that if you choose
to start your pension early, the payment does not increase when you reach
65.
For example, if you start your pension at 60, your monthly payment is
30 percent lower than if you wait
until you're 65. However, by starting it sooner, you will likely receive
it for a longer time. If you start
your pension at 70, your monthly payment is 30 percent higher than
if you had taken it at 65. There is no
financial benefit in delaying receiving your pension after the age
of 70.
5. You can get an estimate of your retirement pension before you decide
to apply?
Applying for Your Retirement Pension Although it is not a requirement,
it is best to apply
at least six months before you want your pension to begin. Please note
that there are legislative
restrictions on retroactive payments. A delay in applying could result
in lost benefits.
6. You must complete an application. You can obtain an application kit
from HRDC. The kit contains the
information and instructions you need to apply. For instance, it tells
you what documents you need, such
as proof of your date of birth.
Contact: Human Resources Development Canada
By phone
• 1 800 277-9914
By mail
• Human Resources Development Canada
• PO Box 8522, Ottawa ON K1G 3H9
On the Internet or by e-mail:
• www.hrdc.gc.ca/isp
7. Applying for the Old Age Security pension You should apply for the Old
Age Security pension six
months before you turn 65. Normally, you must apply on your own behalf.
You can print an application kit from the HRDC Forms Web site. You can
also call at 1 800 277-9914.
The kit contains detailed instructions to help you apply for the Old
Age Security pension, including
where to send the completed application form.
8. What documents will you need to provide?
Depending on your situation, you will have to provide up to two kinds
of documents with your application:
• Birth certificate - Normally, you have to prove that you
are at least 65 years old by submitting a birth certificate. You do not
have to provide these certificates if you applied for a benefit under the
Canada Pension Plan and sent one of these documents at that time.
• Citizenship or immigration documents - If you were not born in Canada,
you must submit proof of your legal status in Canada such as citizenship
or immigration documents. If you have not lived continuously in Canada
since age 18, you must submit proof of all the dates you arrived in Canada
and when you left. Usually, you can do this with a passport.
.
9. How is the Old Age Security benefit calculated?
The Old Age Security pension is like a large pie divided into 40 equal
portions. If you qualify for the
"full pension," you are entitled to receive all 40 portions
each month. If you qualify for a "partial
pension," you will receive some, but not all, of the 40 portions
each month. Whether you qualify for a full
or partial pension depends on how long you've lived in Canada.
Full Pension
Normally, if you meet the conditions in either of the two categories
below, you qualify for a full pension:
Category 1 - You meet the one condition below
• You lived in Canada for at least 40 years after turning 18.
Category 2 - You meet the three conditions below
1. You were born on or before July 1, 1952.
2. Between the time you turned 18 and July 1, 1977, you lived in Canada
for some period of time.
3. You lived in Canada for the 10 years immediately before your application
was approved.
If you have not lived in Canada for all of these last 10 years because
you gave up residence here at some time, you may still qualify for a full
pension if you meet both conditions below:
• You lived in Canada for the year immediately before your
application was approved.
• Prior to these last 10 years, you lived in Canada after age 18 at
least 3 times as long as the total of your absences during the last 10
years.
Partial Pension
If you don't qualify for the full pension and you meet the conditions
in either of the situations below, you
may qualify for a partial pension. Once a partial pension is approved,
the number of portions of the
"pie" that you will receive can never be increased. You will, however,
qualify for any cost-of-living
increases.
10. How much is a partial pension?
For each complete year of residence in Canada after age 18, you earn
1 of the 40 portions available in the
pension. In other words, if you lived in Canada for 10 years after
age 18, you would qualify to receive 10
portions which is equal to one-quarter of the full pension.
11. Receiving your Old Age Security pension You must apply to receive
your pension. Usually, your
Old Age Security pension will begin either on the month after you have
met the residence requirements or
the month after your 65th birthday, whichever comes later.If you apply
after age 65, you can receive a back payment to cover up to 11 months plus
the month in which we receive your application. For example, if you apply
for the pension when you turn 66, you would receive a back payment for
12 months of benefits. The back payment is calculated from the month that
we
receive your application.
For more information about the Old Age Security Program and the Canada
Pension Plan, you can contact
at this telephone number 1 800 277 9914.
Hope the above would somehow clear the concept. While we will not be
in a position to foretell any thing in your case, we all pray for your
safe retirement.
Najam Saqib, najam-oman@rocketmail.com
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