While Old Age Security and the Guaranteed Income Supplement were designed to provide a basic minimum amount to Canadian seniors, the new Canada and Quebec Pension Plans were contributory social insurance programs established to provide basic death, survivor and disability benefits as well as retirement coverage.
The Canada Pension Plan was compulsory and earnings-related. It would cover the vast majority of workers between the ages of 18 and 70, and there were no residency requirements. Like Old Age Security, the qualifying age for the Canada Pension Plan retirement pension would be reduced to 65 over the five-year period between and Contributions would commence in and were to be made by both employees and employers, with each paying the equivalent of 1.
For the self-employed, the contribution rate would be 3. Retirement benefits would be 25 per cent of the average pensionable earnings a worker earned in his or her lifetime. These earnings were adjusted to inflation, and benefits would be paid monthly. The higher the earnings, the higher the ultimate benefits. In the beginning, for an individual to qualify for a full pension, he or she had to have made contributions for at least ten years.
Therefore, although the first benefits would start on January 1, , full pensions would not be available until If a person took the pension before that time, he or she would receive an amount proportionately below the 25 per cent that had been established as the level in the legislation. Canada Pension Plan contributions were collected through payroll deductions, or at the time of tax return submissions in the case of the self-employed. North American Indians whose income was earned on reserves and therefore not subject to income tax were excluded from the Canada Pension Plan.
For people who were in the Plan, contributions but not benefits would be exempt from income tax. All contributors needed a Social Insurance Number. The Social Insurance Number was introduced in to provide the Unemployment Insurance program with an improved numerical system for record-keeping. Since the Canada Pension Plan and the Quebec Pension Plan would also require an efficient and computer-compatible system for keeping track of transactions with contributors and beneficiaries, and a majority of future Canada Pension Plan and Quebec Pension Plan participants were already registered for Unemployment Insurance, the same nine-digit personal identifier was to be used for both programs.
The CPP was created through federal - provincial negotiations in , as a response to growing poverty among retired Canadians. The CPP was originally financed entirely by payroll taxes or contributions levied on employers, employees and the self-employed.
Benefits depended on current contributions. The CPP now earns investment income, along with payroll contributions, which are split equally between employers and employees, with the self-employed paying the full rate. Plan participants can opt to start receiving their pension anytime between the ages of 60 and 70, with the annual pension amount adjusted down or up on an actuarially-fair basis.
The Plan also features an array of ancillary benefits for survivors, for disability and for death. The cost of the Plan at the end of was 9. In , contribution rates were doubled to 9. The target of covering 25 per cent of a worker's average lifetime earnings was maintained. As Canada's population aged, and its workforce declined relative to the number of retirees, there was concern that current contributions would not be enough to finance retiree benefits. If changes weren't made, the CPP would eventually run out of money.
As a result, rates were doubled to create a reserve fund, designed to increase confidence in the sustainability of the Plan, and to forestall further contribution rate increases. At the same time the Canada Pension Plan Investment Board was established to invest and manage the reserve fund. In , CPP benefits were enhanced to eventually cover 33 per cent of average lifetime earnings, up from the original 25 per cent. At the same time, the ceiling on earnings covered was raised by 14 per cent.
These reforms were designed to be phased in slowly between and Read on to find out how our pensions have evolved and when the key changes were made: The Old Age Pensions Act was enacted, permitting the federal government to give assistance to provinces that provided a pension to British subjects 70 and older.
It replaced the legislation that required the federal government to share the cost of provincially run, means-tested old age benefits. The Old Age Pensions Act was enacted, permitting the federal government to give assistance to provinces that provided a pension to British subjects 70 and older.
The Old Age Security Act came into force, establishing a federally funded pension. Amendments to the Old Age Security Act lowered the eligible age for the OAS pension to 65, one year at a time, starting in at the age of Quarterly indexation was introduced for the Old Age Security program.
0コメント