When planning for old age, you must weigh all options to safeguard your future and that of your loved ones. Canadian old age pension plans help you achieve this. The rates and benefits associated with these plans have increased dramatically since they began in 1927. By fully understanding the dynamics and benefits of these Canadian pension plans, citizens can plan effectively.
There are two major types of Canadian public pension plans: the Canada Pension Plan (CPP) and Old Age Security (OAS). When combined, these two ensure that seniors are able to enjoy old age upon retirement. The benefits accrued from these plans continue to increase. Among the latest, effective January 1, 2010, was a 0.4 percent increment in CPP rates. The OAS plan remained unchanged, although its provisions guarantee a secure future for seniors over 65 as well as their spouses and survivors. As of 2010, monthly OAS payments were $516.96, for seniors of all income levels. Each year, administrators calculate overall benefits for both pension plans, using cost of living information.
The CPP allows contributors to retire at 60 years of age. There are three major benefits associated with this plan. First, monthly payments to the contributor; second, disability benefits for those with disabilities provided to the senior and dependents; and third, survivor benefits. Upon the contributor's demise, survivor benefits provide a monthly payment to the spouse, a monthly payment to any dependent children and a one-time payment to the estate of the deceased.
Older Canadians receive three benefits associated with the OAS. First, the guaranteed monthly income supplement at 65; second, an allowance for contributor's spouses aged 60 to 64; and third, in the event of the contributor's death, a set allowance to a surviving spouse between the ages of 60 to 64. All who are Canadian residents for at least 10 years are eligible for OAS. Low-income seniors may be eligible for supplementary benefits as early as age 60. The government deducts CPP contributions in determining the amount of OAS benefits.