Canada

Canada’s pension system is built on a three-pillar structure: Old Age Security (OAS), the Canada Pension Plan (CPP), and private savings. This framework provides a mix of public and private income sources to support Canadians in retirement.

🏛️ 1. Old Age Security (OAS)

• Funded by general tax revenues, not individual contributions.

• Provides a monthly income to Canadians aged 65+ who meet residency requirements.

• Maximum monthly payment (2024): ~$700, adjusted for inflation.

• Clawback threshold: High-income earners may see reduced benefits if annual income exceeds ~$86,912.

💼 2. Canada Pension Plan (CPP)

• A mandatory, contributory social insurance plan for employed and self-employed Canadians (except Quebec, which has its own plan).

• Contributions: 5.95% from employees and 5.95% from employers (2024 rate), up to a maximum annual pensionable earning of $67,700. Self-employed individuals pay both portions (11.9%).

• Benefits include:

  1. Retirement pension (starting as early as age 60 or delayed until 70 for higher payouts)

  2. Disability benefits

  3. Survivor and death benefits

• Managed by CPP Investments (CPPIB), one of the world’s largest pension funds with over C$646 billion in assets.

💰 3. Private Savings & Employer-Sponsored Plans

• Includes Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs), and workplace pensions.

• Employer plans may be:

  • Defined Benefit (DB): Guarantees a fixed monthly income based on salary and years of service.

  • Defined Contribution (DC): Final amount depends on contributions and investment performance.

• These plans offer tax advantages and help diversify retirement income.

🧠 Why It Works

Canada’s system is designed to:

• Provide basic income security through OAS and CPP

• Encourage personal responsibility and savings

• Offer flexibility for different employment types and income levels