Vol. 10, #11 – August 3, 2018 – ALLAN GOLD’S BLOG
Fourth blog post of series on Elder Law for seniors and their families, particularly spouses, adult children, caregivers, etc.
BLOG ALERT! We have interrupted the business series to bring you in this space another series, this one on Elder Law, another area of specialization of Attorney Gold.
OPEN LETTER TO READERS FROM A. J. GOLD:
You may or may not know that Elder Law is another area of specialization of mine. Today, I am addressing a big area of concern to everyone, notably money, or as otherwise known, in the parlance of those 50+, Pensions (& Retirement Income). If you’re approaching ‘senior hood’ or already a retiree, I have a few questions for you. 1. “Do you think about your retirement?” 2. “Do you stress over your pensions, be it to be government, company, etc.?” or 3. “Are you concerned about the revenue of an elderly loved one?” If so, you’re in luck. I have written a multi-part blog on topic. Consider it, if you will, something that I call ‘pension education’; or ‘PEN-ED’ for short. The first earlier this month was about company plans, such giving particular emphasis to the problem of pension deficits. The second dealt with making (non-registered) investments so as to provide for retirement. And today, I will cover governmental plans, particularly focusing on the rules that may lessen your monthly check. So if money is important to you, I invite you to continue reading below.
A. Gold
Note. A.J. Gold is the author of the following books:
“Elder Law in Canada*ELIC*” It’s a ground breaking (2,500+ page) legal text, acquired by legal libraries, Bar Associations, and Law Schools. (For testimonials, excerpts etc, please visit www.practitionerspress.com)
“Estate Document Professor* EDP* (Part of the www.45pluslifehandbook.com* series), informing Canadians everywhere about greater estate preparedness, covering: Last will and testament (will); Power of attorney (POA); Advance medical directive (living will); Trust; Organ donation consent; Estate Inventory and Distribution Survey(For testimonials, excerpts etc, please visit www.practitionerspress.com)
OA$-GI$
CPP-QPP
A. TOPIC & PROPOSITION: “Pensions & Retirement Income (Part #2): Government Plans- Rules That May Limit Monthly Check **
Some people think that governmental pensions are clear cut, the rules are clear, easy to understand and it’s simple to apply. They also believe that the terms and conditions of public pensions are perfectly straight forward. To this, I say: “Not exactly…. there are indeed, issues, which do arise for prospective retirees and pensioners. And these sometimes pose real challenges for them and can limit their monthly check”
A.1 QUOTE(S) OF THE DAY:
Jenny Eclair : “… I have this vision of myself living in a skip and eating cat food. It’s because I’m freelance, and I’ve never had a proper job. I don’t have a pension, and my savings are dwindling. I always thought someone would just come along and look after me.”
(Source: https://www.supanet.com/find/famous-quotes…/i-cant-watch-other-peopl-fqb26351/)
O. J. Simpson: “My NFL pension can barely pay my son’s tuition. You know, it’s very little money.”
(Source: https://quotefancy.com/…/O-J-Simpson-My-NFL-pension-can-barely-pay-my-son-s-tu..)
The Honourable Jean-Yves Duclos, Minister of Families, Children and Social Development: “I would like to reiterate the government’s commitment to improve the income security of seniors, which includes increasing the Guaranteed Income Supplement for seniors who live alone, indexing Old Age Security and Guaranteed Income Supplement payments to a new senior’s price index, and cancelling the increase in the age of eligibility, from 65 to 67 years, for Old Age Security.”
(And yes, he/she really did say that!) 
B. WHY IS THIS IMPORTANT …TO ME (YOU)?
Calling all prospective retirees or pensioners and their families, this is for you!
First, generally speaking, most people are looking forward to receiving their public pensions in retirement. Intuitively, they understand that this will have a positive impact upon their finances, but they usually don’t comprehend how much.
Second, respecting OLD AGE SECURITY (OAS) pension, nearly everybody has heard of it, but they really don’t know the ins and outs and how it really works. I suggest and I think that you will agree with me, that it might be a good idea for you to know a little more on this topic.
Third, while we all remember getting an allowance as kids, most are unfamiliar with the benefit under the OAS program called the “Allowance”. So who amongst us, even if we’re in our sixties, would not like having an allowance?
Fourth, believe it or not, some people don’t know about the GUARANTEED INCOME SUPPLEMENT (GIS). As a result, although qualified, many don’t receive it. Since this involves income security, it’s critical and will have a material impact upon the amount of the monthly check. I hope it’s not too presumptuous for me to say that those missing out may want some information about this benefit so that they can get with the program! (P.S. I always wanted to use that expression.)
Fifth, respecting the CANADA PENSION PLAN (CPP) or QUEBEC PENSION PLAN (QPP), while they’re not for everybody, many people might think otherwise. I hazard to guess that those not yet qualified, would like to learn how to get on board and those already registered, would appreciate knowing more about getting increased benefits.
C. ARGUMENT: FACTS, FIGURES, LEGALITIES & COMMENTARY
Here are the straight facts.
Respecting the Canadian public pensions, here is an overview.
Old Age Security (OAS) forms one of the two major components of Canada’s public retirement income system. The Old Age Security program is the Government of Canada’s largest pension program. It is funded out of the general revenues of the Government of Canada, which means that you do not pay into it directly. The other component is the “Canada Pension Plan (CPP; French: Régime de pensions du Canada) is a contributory, earnings-related social insurance program…The CPP (or the Quebec Pension Plan (QPP) in Quebec) is funded through contributions by Canadian workers, their employers and the self-employed and through investment earnings on the Plan’s funds. In addition to retirement benefits, the Plan provides disability, death, survivor and children’s benefits.
Let’s dig deeper into OAS & CPP/QPP. Here are some specifics.
“…The Old Age Security (OAS) program and the Canada Pension Plan (CPP) enhance the quality of life of Canadian seniors by providing a modest base upon which to build additional income for retirement. …
The Old Age Security (OAS) pension is a monthly payment available to seniors aged 65 and older who meet the Canadian legal status and residence requirements. You may need to apply to receive it. In addition to the OAS pension, there are three types of OAS benefits:
- Guaranteed Income Supplement
If you live in Canada and you have a low income, this monthly non-taxable benefit can be added to your OAS pension. - Allowance
If you are 60 to 64 years of age and your spouse or common-law partner is receiving the OAS pension and is eligible for the Guaranteed Income Supplement (GIS), you might be eligible to receive this benefit. - Allowance for the Survivor
If you are 60 to 64 years of age and you are widowed, you might be eligible to receive this benefit. ”
(Source: https://en.wikipedia.org/wiki/Canada_Pension_Plan; https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/eligibility.html; https://www.newswire.ca/news-releases/canada-pension-plan-and-old-age-security-benefit-amounts-effective-january-1-2016-563833101.html)
The CPP (or the QPP in Quebec), provide retirement benefits, plus disability, death, survivor and children’s benefits.
Figures. Here are some numbers respecting Canadian public pensions.
Old Age Security pension and Guaranteed Income Supplement amounts – July to September 2018
Old Age Security (OAS) pension
| Your situation | Maximum monthly payment amount | Maximum annual income to receive the OAS pension |
|---|---|---|
| Regardless of your marital status | $596.67 | $123,302 (individual income) |
Guaranteed Income Supplement (GIS) amounts for individuals receiving a full Old Age Security (OAS) pension.
| Your situation | Maximum monthly payment amount | Maximum annual income to receive the OAS pension |
|---|---|---|
| If you are a single, widowed or divorced pensioner | $891.18 | $18,096 (individual income) |
| If your spouse/common-law partner receives the full OAS pension | $536.48 | $23,904 (combined income) |
| If your spouse/common-law partner does not receive an OAS pension | $891.18 | $43,392 (combined income) |
| If your spouse/common-law partner receives the Allowance | $536.48 | $43,392 (combined income) |
Allowance and Allowance for the Survivor amounts – July to September 2018
Allowance
| Your situation | Maximum monthly payment amount | Maximum annual income to receive the OAS pension |
|---|---|---|
| If your spouse/common-law partner receives the GIS and the full OAS pension | $1,133.15 | $33,456 (combined income) |
Allowance for the Survivor
| Your situation | Maximum monthly payment amount | Maximum annual income to receive the OAS pension |
|---|---|---|
| If you are a surviving spouse or common-law partner | $1,350.74 | $24,360 (individual income) |
(Source : https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/payments.html)
CANADA PENSION PLAN (CPP)
| Your situation | New benefits maximum amount 2018 - CPP | Number of benefits October 2017 - CPP |
|---|---|---|
| Survivor/retirement (retirement at 65) | $1,134.17 | 840,174 |
| Survivor/disability | $1,335.83 | 14,160 |
| Total - Combined benefits | not applicable | 854,334 |
(Source : https://www.google.com/search?q=CPP+QPP+benefits+2018&ie=utf-8&oe=utf-8&client=firefox-b-1)
QUEBEC PENSION PLAN (QPP)
Maximum retirement pension amounts payable for persons who begin receiving their pensions in 2018
| Age | Rate | Maximum monthly amount - See Note 1 |
|---|---|---|
| 60 | 64% | $725.87 |
| 61 | 71.2% | $807.53 |
| 62 | 78.4% | $889.19 |
| 63 | 85.6% | $970.85 |
| 64 - See Note 2 | 92.8% | $1052.51 |
| 64 - See Note 3 | 94% | $1066.12 |
| 65 | 100% | $1134.17 |
| 66 | 108.4% | $1229.44 |
| 67 | 116.8% | $1324.71 |
| 68 | 125.2% | $1419.98 |
| 69 | 133.6% | $1515.25 |
| 70 or over | 142% | $1610.52 |
1. The amounts apply to persons entitled to the maximum pension.
2. The amount applies to persons born in 1954 or later and whose pension began in February 2018 or later.
3. The amount applies to persons born in December 1953 or later and whose pension began in January 2018.
(Source: https://www.rrq.gouv.qc.ca/en/programmes/regime_rentes/rente_retraite/Pages/montant_rr.aspx)
Legalities.
Respecting Canadian public pensions, here is the legal situation.
Old Age Security (OAS) Program
“2. Eligibility
Your employment history is not a factor in determining eligibility: you can receive the Old Age Security (OAS) pension even if you have never worked or are still working.
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; and
- have resided in Canada for at least 10 years since the age of 18.
If you are living outside 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; and
- have resided in Canada for at least 20 years since the age of 18.
If neither of the above scenarios applies to you, you may still qualify for an OAS 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…”
Canadians working outside Canada for Canadian employers
Canadians working outside Canada for Canadian employers, such as the armed forces and banks, may have their time working abroad counted as residence in Canada. To qualify for the OAS pension, you must have returned to Canada within six months of ending employment or have turned 65 years old while still employed.
You must provide:
- proof of employment from the employer; and
- proof of physically returning to Canada.
Under certain conditions, spouses, common-law partners, dependants and Canadians working abroad for international organizations may also count time spent abroad as residence in Canada.”
(Source: https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security.html#h2.3)
N.B. You can defer your Old Age Security pension: “As of July 2013, you can defer receiving your Old Age Security (OAS) pension for up to 60 months (five years) after the date you become eligible for an OAS pension in exchange for a higher monthly amount. If you delay receiving your OAS pension, your monthly pension payment will be increased by 0.6 percent for every month you delay receiving it, up to a maximum of 36 percent at age 70.
If you choose to defer receipt of your OAS pension, you will not be eligible for the Guaranteed Income Supplement, and your spouse or common-law partner will not be eligible for the Allowance benefit for the period you are delaying your OAS pension.” (Source: https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/eligibility.html)
Applying for OAS
For the OAS application entitled “Application for the Old Age Security Pension Under the Old Age Security Program SC ISP-3000 (2018-02-15) E and contact information for Service Canada (which delivers Employment and Social Development Canada programs and services for the Government of Canada) , please visit: https://catalogue.servicecanada.gc.ca/apps/EForms/pdf/en/ISP-3000.pdf
(N.B. When it comes to OAS, you could be selected for automatic enrolment. This is when you receive a notification letter in this regard. In order to avoid delays, don’t wait for the government to come see about you and drop the OAS in your lap – instead apply yourself on the due date(s).)
GUARANTEED INCOME SUPPLEMENT (GIS)
“..2. Eligibility
You qualify for the GIS if you meet all of the following conditions:
- you are receiving an Old Age Security pension; and
- your annual income (or in the case of a couple, your combined income) is lower than the maximum annual threshold.
Using your income information from your federal Income Tax and Benefit Return, we will review your eligibility for the GIS very year. If you still qualify, your benefit will be automatically renewed. In July, you will receive a letter telling you:
- that your benefit will be renewed;
- that your benefit will be stopped; or
- that your income information is required.
You were selected for automatic enrolment for the Old Age Security pension and the Guaranteed Income Supplement
If you were automatically enrolled for the OAS pension, you will be automatically enrolled for the GIS if you are eligible. If so, you will be considered for the GIS on an annual basis, without needing to apply. If you can be automatically enrolled, Service Canada will send you a notification letter the month after you turn 64.
If you did not receive a letter from Service Canada informing you that you were selected for automatic enrolment, you must apply in writing for the GIS. An application kit will be sent to you automatically”
“5. Apply
In December 2017, Service Canada implemented a process to automatically enroll seniors who are eligible to receive the GIS. If you can be automatically enrolled, Service Canada will send you a notification letter the month after you turn 64.
If you did not receive a letter from Service Canada informing you that you were selected for automatic enrolment, you must apply in writing for the GIS; however, you must first apply for OAS.
You must apply in writing for the GIS. Complete and mail the Application for the Guaranteed Income Supplement (ISP-3025) for the payment year that applies to you and include certified true copies of the required documentation. You will find this form on the Old Age Security forms page.
To find out where to mail your application form, see Returning the form.
Sources of income and deductions
When applying for the Guaranteed Income Supplement and the Allowance, you, or in the case of a couple you and your spouse or common-law partner, must report your income and deductions.
Use the information slips issued to you for income tax purposes, as well as your federal Income Tax and Benefit Return, to report the following income and deductions:
- Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits;
- other pension income, such as private pensions, superannuation and foreign pension income;
- Registered Retirement Savings Plans (RRSPs) that you cashed during the year;
- Employment Insurance benefits;
- interest and other investment income;
- capital gains and taxable Canadian dividends;
- net income from any rental properties;
- net employment income minus the following deductions:
– your CPP or QPP contributions, your Employment Insurance premiums and the $3,500 earnings exemption; - net self-employment income minus the following deductions:
– your CPP or QPP contributions on self-employment and your Employment Insurance premiums; - other income from sources such as workers’ compensation payments and alimony; and
- other deductions, such as union dues, RRSP deduction, moving expenses and other employment expenses.”
(Source: https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/guaranteed-income-supplement/apply.html – https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/guaranteed-income-supplement/before-applying.html)
ALLOWANCE
“2. Eligibility
You qualify for the Allowance if you meet all of the following conditions:
- you are aged 60 to 64 (includes the month of your 65th birthday);
- your spouse or common-law partner receives an Old Age Security pension (OAS) and is eligible for the GIS;
- you are a Canadian citizen or a legal resident;
- you reside in Canada and have resided in Canada for at least 10 years since the age of 18; and
- you and your spouse or common-law partner’s annual combined income is less than the maximum allowable annual threshold.
Other situations where you might qualify for the Allowance:
- If you meet all the above eligibility conditions, but your spouse or common-law partner does not receive the OAS pension or the GIS because they are incarcerated.
- If you have not resided in Canada for at least 10 years since you turned 18, but you have resided or worked in a country that has a social security agreement with Canada, you may still qualify for a partial benefit. For the list of countries with which Canada has established a social security agreement, see Lived or living outside Canada.
Using your income information from your federal Income Tax and Benefit Return, we will review your entitlement for the Allowance every year. If you still qualify, your benefit will be automatically renewed. In July, you will receive a letter telling you:
- that your benefit will be renewed;
- that your benefit will be stopped; or
- that your income information is required.
The Allowance stops the month after your 65th birthday, when you may become eligible for the OAS pension and possibly the GIS.”
The form is available from Service Canada and is entitled “Application For The Allowance Or Allowance For The Survivor Under The Old Age Security Program sc isp-3008 (2016-05-02)”
(Source: HTTPS://WWW.GOOGLE.COM/SEARCH?Q=APPLICATION+FORM+GIS&IE=UTF-8&OE=UTF-8&CLIENT=FIREFOX-B-1)
CANADA PENSION PLAN (CPP)
Applying for Canada Pension Plan (CPP)
“To apply for your Canada Pension Plan (CPP) retirement pension online, you must sign in to your My Service Canada Account and submit your application online. If you have not yet registered for a My Service Canada Account, you will require a Personal Access Code.
When you apply online for your CPP retirement pension, you must confirm your personal information and provide:
- your banking information to sign up for direct deposit; and
- the date you would like your pension to start;
You can apply a maximum of 12 months before the date you would like your pension to start.
If you are 65 years plus 1 month or older, you can request retroactive payments for a maximum of 11 months, or back to your 65th birthday plus 1 month—whichever is shortest.
Please note the initial launch of this simplified CPP retirement pension online registration system is designed to issue CPP retirement pension benefits by direct deposit to the beneficiary’s bank account, since a majority of CPP retirement pension recipients request direct deposit as their form of payment. The registration system will be updated to allow for selection of CPP retirement pension payments by paper cheque.
If you prefer to receive your CPP retirement pension payment by paper cheque before the system update is in place, please complete the Application for a Canada Pension Plan Retirement Pension and mail it or bring it to the Service Canada Centre closest to you. Mailing addresses are provided on the form.”
(Source: https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/before-apply.html)
“…4. What you need before you start
To apply for your Canada Pension Plan (CPP) retirement pension online, you must sign in to your My Service Canada Account and submit your application online. If you have not yet registered for a My Service Canada Account, you will require a Personal Access Code.
When you apply online for your CPP retirement pension, you must confirm your personal information and provide:
- your banking information to sign up for direct deposit; and
- the date you would like your pension to start;
You can apply a maximum of 12 months before the date you would like your pension to start.
If you are 65 years plus 1 month or older, you can request retroactive payments for a maximum of 11 months, or back to your 65th birthday plus 1 month—whichever is shortest.
Please note the initial launch of this simplified CPP retirement pension online registration system is designed to issue CPP retirement pension benefits by direct deposit to the beneficiary’s bank account, since a majority of CPP retirement pension recipients request direct deposit as their form of payment. The registration system will be updated to allow for selection of CPP retirement pension payments by paper cheque.
If you prefer to receive your CPP retirement pension payment by paper cheque before the system update is in place, please complete the Application for a Canada Pension Plan Retirement Pension and mail it or bring it to the Service Canada Centre closest to you. Mailing addresses are provided on the form.
(Source : https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/before-apply.html)
QUEBEC PENSION PLAN (QPP)
“… Eligibility for a retirement pension under the Québec Pension Plan
If you are age 60 or over, you do not need to have stopped working to receive your retirement pension under the Québec Pension Plan. However, you must have contributed to the Québec Pension Plan for at least 1 year. If you worked elsewhere in Canada, we also take into account contributions made to the Canada Pension Plan when calculating the amount of your retirement pension.
If you no longer live in Québec, you are still entitled to your pension.
You cannot receive your retirement pension before age 65 if you are receiving an unreduced income replacement indemnity from the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST) or if you are entitled to an indemnity from the Société de l’assurance automobile du Québec (SAAQ) and Retraite Québec has deemed you to be disabled for the same disability.
Payment of your pension is not automatic. You must file an Application for a Retirement Pension under the Québec Pension Plan to receive it.”
(Source: https://www.rrq.gouv.qc.ca/en/retraite/rrq/admissibilite/Pages/admissibilite_rr.aspx).
APPLYING FOR QPP
“You will need:
- a clicSÉQUR account. If you don’t have one,
- the dates of birth of your children, if applicable
- your file number with the Société de l’assurance automobile du Québec (SAAQ), if you are receiving an indemnity
- your banking information to sign up for direct deposit.
Note that…
- You can apply for your retirement pension 1 to 3 months before the date on which you would like to receive your first payment.
- You cannot apply more than 12 months in advance.
- You can use CompuPension to help you determine the best time to retire.
- You can also use our Application for a Retirement Pension form . However, expect longer processing times.”
The continuation of this blog will be available next week, so be sure to come back – AJG
* ©/TM 2005, 2008 Allan Gold, Practitioners’ Press Inc. – ALL RIGHTS RESERVED
** ©/TM 2015, 2016, 2017, 2018 Allan Gold, Practitioners’ Press Inc. – ALL RIGHTS RESERVED