12 - Government Pension Programs Flashcards
Who must contribute to CPP
18 - 70
Earned income over minimum, years basic exemption YBE. 2019 was $3500
What happens to CPP when employees work outside of Canada regularly
Employers can enroll them as a group to continue coverage
Workers not covered under CPP
Migrant workers
Casual
Exchange teachers
Religious people under vow of poverty
Earnings on which CPP contribution must be paid
Above YBE and up to YMPE
YMPE for 2022
$64,900
CPP contribution rates for employer/employee
5.7
Contributors to CPP are eligible for 4 main benefit
Retirement pension
Disability
Survivor benefit
Death benefit
When and how is CPP recalculated
Annually to reflect CPI
Enhanced CPP
Additional 4% on earnings fro YMPE to YAMPE
How are CPP and enhanced CPP contribution dealt with in income tax
Regular is non refundable tax credit
Enhanced is tax deduction
How long do you have to work to get CPP
One calendar year
How to calculate maximum CPP available
Add Maximum YMPE over 5 years / 5
/12 (to make monthly) x 0.25 (supposed to replace 25% of salary)
Enhancement is supposed to replace 33%
What is the beginning of the contributory period for CPP
January 1966 or when turned 18
End of CPP contributory period
Month of 70th birthday, month of death or month before pension begins
4 adjustments that can be made to contributory period
Months that CPP disability is paid
17% of lowest earning years - up to 8 years
Raising kids to age 7
Low earnings after 65
Monthly CPP adjustment for payment under 65
0.6%
Monthly CPP adjustment for taking CPP after 65
0.7%
Do CPP benefits just start.
No you have to apply
It takes 1 - 3 months
You can get up to a year of back pay but not beyond 65
Can you cancel CPP
Only within 6 months of receiving it
All payments must be returned
How much
Over is CPP if you take it at 60 instead of 65
36%
If CPP is delayed to 70, how much more would you get
42%
Post retirement benefit
PRB
CPP benefits paid to people who continue to work and make CPP contributions while already receiving CPP between 60 and 70
- income must be over YBE
Is CPP participation mandatory
Yes, for working people 18 to 65, over 65 it is optional to employed and self employed but mist stop at 70
Maximum PRB
1/40thof the maximum retirement pension for the year multiplied by the actuarial adjustment factor
What is the application deadline to request a splitting of pension CPP credits when divorcing
No deadline if married, 4 years for common law
Stipulations for sharing CPP
Both must be over 60 and collecting CPP, they can only share from when they were together
Requirements for CPP disability benefit
Disability must be physical or mental
Must be severe and prolonged
To be eligible for CPP disability pension, contributors must meet all of the following. 3
Considered disabled according to CPP legislation
Earned specified minimum amount and contributed to CPP in 4 of last 6 years
Under 65
What does CPP disability payments consist of
Flat component and earnings related component
Earnings part is 75% of retirement pension, calculated as if they reached 65 when disabled
When do CPP disability benefits start and end
Start 4 months after disability
End at recovery, 65 or death
When does CPP disability turn into retirement pension
At 65 or if retiring earlier between 60 and 65
Are children eligible for disability payments
Yes, if full time student between 18 and 25
How long would you have had to contribute to qualify for death or survivor benefit for CPP
3 years
Amount of CPP survivor benefit
6 months worth of CPP or amount if person would have been 65 at death
$2500 max
CPP survivor if remarried
Eligible for highest if widowed more than once
Amount of survivor CPP depends on 3
If spouse was receiving CPP or disability
How much and how long contributor paid in
Age of partner when contributor died
CPP survivor benefit if surviving spouse is over 66
60% of deceased CPP if survivor not receiving
- max over max cancels, if less may receive some
CPP survivor benefit if surviving spouse is 45 to 64 ( or under 45 with dependent/ disabled chi.d)
Flat rate plus 37.5% of deceased, if survivor not receiving any
CPP benefit of surviving spouse if 35 to 45 with no dependents
Flat rate plus 37.5% of deceased CPP, reduced by 1/120th for each month age is less than 45 at contributors death
CPP survivor benefit if spouse under 35 and not disabled/depends
Not paid until 65 or disabled
CPP death children benefit
Monthly benefits payable to each child if under 18, or 18 to 25 in school
How often is OAS adjusted
4 times
OAS program consists of 4 benefits
OAS
GIS
allowance
Allowance for survivor
Earliest OAS start date
65
To qualify for OAS you must have one of
Canadian or legal resident on day preceding application approval
If no longer in Canada, must have been Canadian or legal resident on day preceding the day they stopped living in Canada
Basic requirement to receive OAS
At least 10 years in Canada after 18
Basic requirement to receive OAS outside of Canada
Loved in Canada for at least 20 years after 18
If person has not lived 40 years in Canada, how do they qualify for full OAS
If on July 1, 1977 met one of the below conditions
- lived in Canada July 1, 1977
- lived in Canada before July 1, 1977 after turning 18
- valid immigration visa on July 1, 1977
*. Also lived in Canada 10 year before OAS application
How is partial OAS calculated
1/40th of full OAS for each full year after 18th birthday
If working for Canadian employer outside Canada ( armed forces or finance), may have time abroad counted if 2 conditions
Returned within 6 months of ending or turned 65
Proof of employment and return to Canada
OAS application process
After 64, letter notifying they are automatically enrolled or telling them to enroll
Apply right after 64 birthday
Increase in OAS after 65
0.6% per month
Is OAS taxable
Yes
How much is clawback
15 cents for every dollar above threshold
Amount when OAS clawback starts
$79,845
Full OAS clawback amount
$129,757
How to apply for GIS
Automatic
What does GIS payment depend on. 2
Marital status
Income
How often is GIS recalculated
Quarterly
Is gis taxable
No
Is GIS payable outside of Canada
No
How is GIS reduced
By other income over $3500.
$1 for every other monthly income, therefore 50% over 3500
Qualifications for allowance 5
Spouse who receives OAS and GIS
Between 60 and 64
Canadian or legal resident at time approved
Annual combined less than maximum allowable annual threshold
Lived in Canada since 18 for at least 10 years
At what income is GIS totally eliminated
$8,600
Allowance for survivors
Low income and spouse passed away
Is allowance indexed
4 x a year with CPI
Is OAS included as income for allowance
No
Process to get allowance
Must be applied for
