Saving for your golden years (a.k.a. your retirement) is an important aspect of building up your savings. Most employment in Canada does not come with retirement pension packages. There are exceptions, such as certain government or union jobs, but most Canadians are on their own when it comes to retirement savings.
Canada Pension Plan
If you work in Canada in a job that pays into the Canada Pension Plan (CPP), you will be eligible to receive some benefits after retirement. The amount depends entirely on how much you put into it.
The way CPP works is your employer will deduct a monthly premium from your paycheque and match it, equalling about 10 per cent of your insurable earnings. The plan is fully portable, so no matter whom you work for or where you work, all your contributions go into your CPP account with the government. (Quebec administers its own pension plan called the QPP.)
Currently, the average amount is about $500, so nowhere near enough money to live on in Canada. So most people work to build their savings through RRSPs and other forms of long-term investments. RRSP, RESP, TFSAs.
Old Age Security
The Canadian government also offers the Old Age Security (OAS), a monthly payment to every citizen or legal resident who reaches the age of 65, as long as he/she has lived in Canada for at least 10 years after the age of 18 and doesn’t have a high income. You can apply for this benefit, and the CPP, when you turn 65. The age of eligibility for the OAS pension and the Guaranteed Income Supplement (GIS) will gradually increase between the years 2023 and 2029, from 65 to 67.
Full benefits are paid to those who have resided in Canada for at least 40 years after the age of 18. Partial benefits are paid to those who have lived in Canada for less than 40 years.
Guaranteed Income Supplement
The Guaranteed Income Supplement (GIS) is designed for seniors over the age of 65 who have little or no income. The amount you receive depends on your total family income during the previous year.