Published on July 19th, 2021 | by Sunit Nandi0
Social Security Programs for Canadian Expats
After you have paid your dues to society, what’s next? After working for so many years, you surely have plans of going abroad and spending some time there or move to another country for work, which makes you an expat. The question is: are there security programs for Canadian expats. If so, what are they?
The Social Security Agreement
First things first, you need to be qualified to be able to benefit from the Canadian Social Security Program. You will qualify if you have lived or worked in Canada. You may also be eligible for pensions if you are a survivor of someone who has paid his or her social security contributions.
The social security pension is part of an international agreement between Canada and another country. It coordinates pension programs of the two countries, especially if you have worked for both. If you only worked in Canada but decided to retire somewhere else, then you will only get a pension from the government of Canada. The good news is that Canada has signed this kind of agreement with many countries. What this means is that you have a healthy selection of countries where you can live and get your retirement benefits.
Eligibility for Social Security
The first thing you have to find out is whether you are eligible or not. If you do qualify, you can combine your contributions to Canada with your contributions to the other country you worked at. If not, then your contributions from Canada will be the source of your pension funds.
To be eligible, you must consider these:
- Your contribution periods may be considered as your contribution periods to the Canada Pension Plan; this only applies if you worked in another country and made pension plan contributions from there.
- Your contributions to the pension plan of another country may also be considered as your contribution to the Old Age Security of Canada.
What does this mean?
Let us say you worked for 30 years in Canada, then you moved to Austria and stayed there until your retirement. However, you did not pay social security contributions to Austria, so they will not give you a pension when you get old. Since you made social security contributions to Canada for 30 years, you can expect to get a pension from Canada, even if you are already living in Austria.
What Is the Pension Called?
The pension is called Old Age Security, commonly referred to as OAS. The other benefit is called the Canada Pension Plan, also called CPP.
According to experts, it is better to receive your pension funds in the local currency where you are at. It will save you money because the Canadian equivalent of your pension has already been converted for you. In this case, you no longer have to pay huge fees for conversion and international transfers.
All payments for OAS and CPP are released on the same date as they are released in Canada. Typically, this is released during the last three banking days of the month. You have the option to receive your pension via direct deposit to a local bank account where you are at.
OAS Versus CPP: What Is the Difference?
CPP is not exactly a benefit from the government. The government is not the funding source for your pension plan. Rather, it is a pension derived from your contribution from your salary when you were working in Canada. It is a pension shared between you and your employers.
On the other hand, OAS is one that comes from the government. There is no OAS deduction from your payslip or check. The OAS fund comes from the income tax paid by Canadians. For the taxes collected by the government, a portion of that goes into the OAS funds.
Be Aware of the Clawback
There is something called clawback in the OAS. The CPP, however, does not have this. Those who are receiving OAS but are still high-income earners above the age of 65 must return to their OAS pension. Some of them are even required to pay the entire OAS pension.
How does this work? If you are above 65 and you still have an earning capacity that meets a certain threshold, your OAS pension may be lesser. If you want to live abroad and enjoy, like go to beaches and play at online casino Vegas, you can receive your OAS and CPP payments from Canada. The only thing you have to worry about is that you have to meet the eligibility requirements. If you are out of the country, you have to go to the Canadian embassy to seek assistance.
Note that there are rules such as the clawback so you have to be aware of what you should expect. You can also file for retirement as early as the age of 60, but you must know that your pension amount will also be reduced.