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Retirement Done Right: OAS Pension Tips for Canadians

Posted by : Premraj | Posted on : Tuesday, January 12, 2016

50th Anniver

The Old Age Security program is a program for Canadians that ensures there is at least some income coming in after retirement. The Government of Canada’s largest pension program is funded from the general revenues of the government. You don’t pay directly into it, it’s not allocated to you or your family, but everyone is entitled to collect from it.

Here’s what you need to know about it, including the mysterious “clawback” provisions.

The Three Types of Benefits You Need To Know About

There are three types of benefits under the OAS:

— A guaranteed income supplement

— An allowance

— An allowance to the survivor

The guaranteed income supplement gives you a monthly non-taxable benefit that can be added to your basic OAS pension if you are a low-income individual or household.

An allowance can be added if you are aged 60-64 and your spouse or common-law partner is getting OAS and is also eligible for the guaranteed income supplement.

Finally, the allowance provisions for survivors allow you to receive a benefit payment if you are 60 to 64 and are widowed.

If you are already enrolled in the OAS, you should apply for your guaranteed income supplement at least three months prior to your 65th birthday.

Over the next few years, eligibility requirements are going to change. Specifically, they will increase from 65 to 67 and full implementation will occur by January 2029. If you were born on or after April 1, 1958, you will be affected.

Your Benefit Payment Amounts

You can receive a variety of payments, but the amount you receive ultimately depends on your marital status and your previous year’s income.

You must apply in writing for the income supplement using form ISP-3025. When you complete the application, mail it to your closest Service Canada office (which is indicated on the application).

If you are receiving any income, you must report it. This included CPP income or QPP benefits, any other pension income, including private and superannuation benefits, registered retirement savings plan income, employment insurance income, interest or dividend income, capital gains from investments, net income from rental properties, employment income (including self-employment income), and any other income you may receive (even if it’s from worker’s compensation or alimony or spousal support).

Important Changes You Need To Know

The government recently announced three important changes, which include a change in the age of eligibility from 65 to 67. Starting in July 2013, Canada changed the rules on income deferral. You are allowed to voluntarily defer the OAS pension for up to 60 months from the first date of eligibility in exchange for a higher monthly benefit.

Finally, you may take advantage of an automatic enrollment process to eliminate the need to apply for the OAS pension.

If your income exceeds a certain annual amount ($72,809 in 2015), some of your benefits will be clawed back (15 percent of the amount that exceeds the threshold).

if your income exceeds $117,000, and you are age 65 or over, your OAS benefit is likely to be eliminated entirely.

What If You Work Outside Of Canada?

If you work outside of Canada, for Canadian employers, you might be able to have your working time counted toward benefit payments. To qualify under the OAS pension plan, you must return to Canada within 6 months of ending employment abroad and you must have turned 65 while still employed.

You need to prove your employment with a Canadian employer and prove that you’ve physically returned to Canada.

When It’s Time To Get Help

Many people, as they get older, find it difficult to manage on their own. Because of this, there are specific programs set up to help you. Independent Senior Living programs can help you, for example, manage the day-to-day activities of running a household.

From cleaning up, to helping you prepare and perform chores, to helping you sort out your medication. Both skilled and unskilled help is typically available, with skilled nursing care replacing the need for a skilled nursing facility. It’s like employing your own on-staff medical professional.

Programs may also include video technologies that help you stay connected with your friends and family. For example, a healthcare service provider may help you set up, and maintain, a tablet computer, iPad, or other device so that you can easily make and receive video calls on a set schedule. You will receive reminders of these calls.

Using television-like conferencing and video calls, you can speak with loved ones, stay up-to-date on family happenings, and stay connected with family without having to move out of your home.

Many people in Canada opt for this because it allows them to maintain their independence. You may need long-term care insurance to pay for these services, however, so you should speak with a qualified insurance agent or financial planner about your circumstances and what you qualify for.

Lucy Howells is a pension consultant and has worked in personal finance for over 30 years. With the growing number of people hitting retirement soon she is sharing as much knowledge as possible by writing for personal finance and over 50s websites.


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