What is Old Age Pension?

Old Age Security Pension is a monthly benefit for Canadian citizens who are 65 years old and above provided they meet the legal status and residence requirements.
This article tackles the features and benefits of the Canada Pension Plan, benefits and features of the Plan and the Old Age Security benefit.

What is the Canada Pension Plan?

Wikipedia defines Canada Pension Plan as a contributory and earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security. The other components of Canada's retirement system are private pensions, either employer-sponsored or from tax-deferred individual savings. This is known in Canada as a Registered Retirement Savings Plan.

The CPP program authorizes all employed Canadians, who are 18 years of age and above, to contribute a certain portion of their income to a pension plan administered by the government. This agency is called the Human Resources and Social Development Canada. This supervises employees in all provinces and territories except Quebec, which operates an equivalent plan, the Quebec Pension Plan. Any modifications in the program require the approval of at least 2/3 of Canadian provinces representing at least 2/3 of the country's population. In addition, under section 94A of the Canadian Constitution, pensions are a provincial responsibility, so any province may establish a plan anytime.

What is the Funding Source of the Canada Pension Plan?

The Canada Pension Plan is funded on a so-called "steady-state" basis, with a fixed contribution rate so that it will remain constant for the next 75 years. It maintains a reserve fund sufficient to stabilize the assets, expenditures and funding ratios over time. The system is a mixture between a fully funded one program and a "pay-as-you-go" plan. This means that assets held in the CPP fund are not adequate to pay for all future benefits accrued to date. However, this is sufficient to prevent contributions from increasing further. It is not like any other public or private sector pension plans. As of June 2011 the Canada Pension Plan Investment Board announced that it has accumulated $153.2 billion in assets under management.

What is Old Age Security?

The Canadian Government revealed that almost all of today’s senior citizens receive income from Canada’s two principal public pensions namely, the Canada Pension Plan and Old Age Security. The CPP and OAS provide a modest base upon which Canadians can build their retirement income. Basic financial support is also available to survivors and to people with disabilities as well as their legitimate dependents or children.

Service Canada delivers close to $72 billion in benefits this year to millions of Canadians through the Human Resources and Skills Development Canada (HRSDC). The following are the tools and services used for this purpose:

• Application for Canada Pension Plan (CPP) Retirement Pension
• Canada Pension Plan Statement of Contributions Online
• Canadian Retirement Income Calculator
• View and Update Personal Information

What is the Comparison between Old Age Security and Canada Pension Plan?

Please see the comparison below between the two programs:
Canada Pension Plan
The Canada Pension Plan (CPP) provides contributors and their families with retirement, disability, survivor, death and children’s benefits.
• The CPP retirement pension is a monthly payment available to CPP contributors as early as 60 years of age.
• The disability benefit is a monthly benefit available to qualified CPP contributors and their dependent children.
• Survivor benefits are paid to a deceased contributor’s estate, surviving spouse or common-law partner and dependent children.
• Amendments to the Canada Pension Plan

Old Age Security

Old Age Security (OAS) is available to most Canadians when they reach the age of 65. OAS provides additional benefits to eligible low-income seniors:
• Guaranteed Income Supplement (GIS) – for OAS pensioners
• Allowance – for 60- to 64-year-old spouses or common-law partners of pensioners
• Allowance for the survivor – for 60- to 64-year-old widowed spouses or common-law partners

Distinguishing between Canada Pension Plan and Old Age Security

Once senior citizens have fully understood the merits and features, as well as, benefits of these Old Age Pension programs, it will now be easier for them to determine which particular plan to get. It is also important to know the benefits that the federal government grants to citizens above the age of 65 years.

References

wikipedia.org
hrsdc.gc.ca