Can an immigrant in Canada look forward to a decent old age?
How much do you think a typical Canadian immigrant will get from the government when he or she retires? $500 a month? Or $1000? Or maybe even more?
The Canada Pension Plan (CPP) is a social insurance program with contributions to and payments from a special fund that depend on the recipient's income. It is one of the two most important parts of the public pension system, along with Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), which is paid to retirees who receive too low a pension.
Note that the state pension is supposed to amount to 25-30% of the entire pension (a kind of safety cushion), and everyone should take care of the remaining 70% himself. This could be private pensions at the expense of the employer or individual tax-deferred savings.
The maximum you can get from the state is $24,346.44 per year. In fact, no one gets that much money, because you have to meet many criteria to get it. The real amount will be 2-3 times lower — on average about $ 1,000 per month. Therefore, one cannot rely exclusively on the state pension.
Let's take a closer look at how much you will receive under CPP and OAS in retirement.
CPP
In 2019, Canadian pensioners will receive a maximum of $1154.58 per month, or $13,854.96 per year. But you should understand that you should not expect to receive the maximum — the actual payments will be significantly lower. The average amount is usually just over $640 per month.
The amount you get from CPP depends on how much you put into CPP. The best way to determine the amount of CPP you are entitled to is to get a CPP contribution report.
How do I get the most? Eligibility for maximum CPP benefits depends on meeting 2 criteria:
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Contributions. You can participate in the CPP program between the ages of 18 and 65, which is 47 years old. 83% of age 47, which is 39, is the minimum you are required to contribute to CPP. You can look at CPP as a 39-point system. If you haven't participated in CPP for at least 39 years between the ages of 18 and 65, you won't get the maximum amount. If you've been paying for 39 years, you can count on the maximum, but there's another nuance.
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Amount of contributions. Each year that you work and contribute to CPP between the ages of 18 and 65, you increase your benefit. To qualify for the maximum, you must contribute "enough" money each year. CPP uses what's called a maximum annual income (YMPE) to determine if your contribution is sufficient. In 2018, you had to contribute a minimum of $55,900 a year. This year, it's $57400.
As you can see, it's not easy to qualify for the maximum CPP payments, especially when you consider that people leave work later because of extended schooling, maternity leave, or retire early.
So, when you get your CPP contribution report, you will see that it will list all the years you contributed between the ages of 18 and 65 and how much you contributed each year. If you contributed the maximum, it will be marked with an "M" for that year. If you have 39 M, you will get the maximum. If you have 20 M, you will get about half of the maximum amount.
OAS
Old Age Security (OAS) includes a basic pension that is paid to all people age 65 and over who have lived in Canada for at least 10 years from age 18. This benefit does not depend on your income.
The amount you get depends on how many years you lived in Canada after you turned 18. You'll get a full pension — ($7039.92 in 2018, $7217.40 in 2019) if you've lived in Canada for at least 40 years after you turn 18. If you've lived here for less time, you may qualify for a partial pension. For example, if you have lived in Canada for 10 years, you will get 1/4 of a full pension. If you have lived in Canada for less than 10 years, you will get nothing.
