Module 11

Question 1

low income in old age

Answer 1

there are still a number of older adults who live below or just above the low income line
- Low income: the income below which a family is likely to spend 20% points more of its income on food, shelter, and clothing than the average family

Question 2

certain groups pf older adults are more likely to live below the poverty line

Answer 2

• Peole with low income/low education backgrounds
  
  • People living in rural areas
  • Immigrants/minority group members
  • Women
  • Unattached indididuvlas
  • The very old

Question 3

canadas pension system

Answer 3

• The first public pension benefits in canada were introduced in 1927 under the old age pensions act
  
  • Current pension system is 3 tiers
    ○ Government tansfers
    ○ Public pension plans
    ○ Private savings, income and investments

Question 4

teir 1 government transfers

Answer 4

○ Old age security (OAS), garunteed income supplement (GIS) and the allowance (ALW)
○ No direct contributions are required to receive benefits from the first teir; the federal gov pays for these benefits through tax revenue
§ Must have lived in canada for > 10 years
§ Older adults with income above 73756 you must repay OAS at a rate of 15 cents for every dollar of your income over this amount
○ Low income adults get 77% of their income from OIS/GIS and other government transfers

Question 5

teir 2 CPP and QPP

Answer 5

○ Public pension plans that supplement teir one and save the federal gov money in GIS/ALW payments
○ Benfits are based on the amount you have paid in over your working life
○ Strnegths of CPP
§ Plan adjusts for inflation and are indexed to cost of living
§ Covers almost all workers and applies same rules for men and women
§ Plan can be moved between jobs and locks in contirbutions
§ Pays up to 1/4 of pre retirement pensionable earnings
§ Provides survivor and disability benefits
§ Allows for early (60) or late (70) retirement

Question 6

teir 3; private income, investments and savings

Answer 6

○ Income from working in later life
○ Private pensions
○ RRSPs
○ Subsidies availible in old age
- Private pensions are pension plans that are offered to you by your empolyer separate from CPP
- Defined benefit: guranteed monthly benefit in retirement based on years of service and highest salary
Defined contribution: defines what a person will pay in, but does not specify return

Question 7

RRSPs

Answer 7

• Allows indidivulas to deposit income inot the RRSP account and defer paying taxes on it until it is withdrawl during retirement
  
  • Must be covereted to a registered retirement income fund by the time you reach 71 and after that minimum yearly withdrawls muct be made
  • Wealthier people more likely to use RRSPs, and receive greater beenfits from them
  • Low income people gain little benfit from RRSPs and mat in fact lose benefits (GIS)if they have an increase in income from RRSPs

Question 8

saving for retirement

Answer 8

• General guidleine for retirement is that you need enough income to replace 70% of your annual income in your three highest earning years of employment
  
  • Actaul amount varies based off of desired lifestyle, health, resources availible, living arrangements
  • Overtime inflation will decrease the value of your savings and increase the cost of necessities
  • The CPP and OAS/GIS/ALW are adjusted for inflation, but other savings ad pensions may not be

Question 9

pension system reforms

Answer 9

• CPP now allows deductions of some years outside the workforce and also credit splitting (can split pension credits between devorced couple)
  
  • Joint life/ last survivor benefit for private pension plans
  • Outreach and simplification of GIS application process

Question 10

is canadas pension system sustainable?

Answer 10

yes