Just the Facts - Pensions, Benefits and Seniors
HRSDC Just the Facts – a feature to help dispel myths and misconceptions as well as raise awareness about HRSDC programs.
Canada Pension Plan and Old Age Security rates
Issue
Canada Pension Plan (CPP) and Old Age Security (OAS) rates increases.
Facts
Canada Pension Plan benefits are revised annually. As of January 1, 2012, the benefits will increase by 2.8 percent (for those already receiving CPP benefits), reflecting the change in the Consumer Price Index (CPI) over the last year. Since the CPI has increased by 2.8 percent in the past year, Canadians already receiving CPP benefits saw their benefits increase by that amount.
The maximum CPP retirement benefit for new recipients will increase from $960 to $986.67 per month on January 1, 2012. This is calculated based on the Average Yearly Maximum Pensionable Earnings for the past five years.
Old Age Security benefits, consisting of the basic pension, the Guaranteed Income Supplement (GIS), the Allowance and the Allowance for the Survivor, are reviewed quarterly (in January, April, July and October) and revised as required to reflect increases in the cost of living as measured by the CPI. On January 1, 2012, OAS benefits will increase by 0.4 percent from the October to December rates.
As of January 1, 2012, the maximum basic OAS pension, paid to people 65 years of age and over, will be $540.12 per month. GIS and Allowances payments will also increase by 0.4 percent.
Since July 1, 2011, seniors with little or no income also receive a GIS and Allowances top-up benefit of up to $600 for single seniors and $840 for couples. For more information concerning this GIS top-up benefit, visit Service Canada’s website.
The annual CPP and OAS indexation rates differ slightly in percentage because they are calculated at different periods during the year.
The current CPP rates will be in effect until December 31, 2012; OAS rates will be reviewed and revised, if required, as of April 1, 2012.
The Consumer Price Index, set by Statistics Canada, provides a broad measure of the cost of living in Canada. It is derived from prices charged for a standard “basket of goods,” which includes common and popular household items and expenses, such as food, shelter, clothing, transportation and health care.
Public Pensions and the Consumer Price Index (CPI)
Issue
Between 2001 and 2006, Statistics Canada understated the Consumer Price Index (CPI), the tool used for measuring inflation and calculating pension benefits for seniors.
Fact
In accordance with the legislation that governs the Canada Pension Plan and Old Age Security, Human Resources and Social Development Canada (HRSDC) uses the Consumer Price Index, or CPI, published by Statistics Canada, to index benefits.
The CPI is an indicator of changes in the price of a basket of commodities commonly purchased by Canadian households (e.g. food, clothing, shelter, transportation and other services).
Over a five-year period, Statistics Canada understated the CPI, the tool used for measuring inflation and calculating pension benefits for seniors. The impact of this error was one-tenth of one percent (0.1%) between 2001 and 2006. The error was limited to only one area of the index: hotel and motel rates in the travel industry.
Statistics Canada corrected the CPI as of April 2006, and since that time, HRSDC has been using the corrected figures to determine rate increases.
If the CPI were subject to revision, changes could occur from time to time resulting in both underpayments as well as overpayments. This is why Statistics Canada does not revise the CPI retroactively when an error of this nature occurs. This practice is in keeping with similar agencies around the world.
The position of Statistics Canada – not to revise CPI – is shared by most major statistical agencies, and was confirmed in a recent resolution on CPI adopted by the International Labour Organization.
The CPI continues to serve as Canada's best and most accurate tool to measure inflation.
Improving Access to Pension Benefits and Other Initiatives for Seniors
Issue
Canada Pension Plan (CPP), Old Age Security (OAS) and Guaranteed Income Supplement (GIS) benefits are key components of Canada’s public pension program. Canadians must apply to receive these benefits and the Government of Canada undertakes various initiatives to encourage Canadians to apply.
Fact
Service Canada’s goal is to provide all Canadians, including seniors, with one-stop, personalized service they can access any way they choose: by Internet, telephone or in person.
Currently, seniors have access to over 600 points of service across Canada. These consist of Service Canada Centres, outreach sites and community offices. Services are also available online at http://www.servicecanada.gc.ca/eng/audiences/seniors/index.shtml and via 1 800 O-Canada (1-800-622-6232).
Here are some examples of how the Government of Canada reaches out to individual Canadians directly:
- The Government can identify Canadians who are approaching the age of 65 based on information related to their CPP contributions. Using this data, the Government mails CPP and OAS applications to Canadians who may be eligible for each benefit. In 2008–2009, the Government mailed out 285,639 applications.
- Through the tax system, the Government can identify low-income seniors who are not receiving the GIS. A GIS application form is then mailed to these individuals. Seniors only need to apply for the GIS once; as long as they file an annual income tax return, they will never have to reapply.
- In the past eight years, CPP Statements of Contributions were mailed to seniors over the age of 70 on six separate occasions. These packages informed seniors that it might be in their best interest to apply for a CPP retirement pension, since their benefit amounts do not increase after the age of 70. As a result of these mailings, more than 32,000 seniors over the age of 70 applied.
The Government of Canada: Working hard to help improve the lives of seniors
Budget 2009 brings progress on many fronts—from tax relief and stretching retirement savings to assisting older workers, building safer communities and protecting our most vulnerable seniors.
Over the past few years, the Government of Canada introduced measures that provide about $1.9 billion annually in tax relief for seniors and pensioners. For example, the Government has increased the amounts for the age credit and pension credit, introduced pension income splitting, increased the age limit for maturing RRSPs and reduced the required minimum RRIF withdrawal for 2008.
The Government of Canada has also increased the GIS earnings exemption to put more money in the pockets of working, low-income seniors. For example, a pensioner earning $3,500 or more can keep up to an additional $1,500 in annual GIS benefits.
Focusing on the needs of Canadian seniors
The federal government is addressing the needs of Canadian seniors through these and other important measures that include
- inspiring seniors to bring their leadership, energy and skills to projects that benefit our communities by funding thousands of projects in communities across Canada under the New Horizons for Seniors Program;
- enabling 1.8 million low-income seniors to benefit from increased monthly benefits available under the GIS;
- enabling seniors to build their retirement savings in Registered Pension Plans and Registered Retirement Savings Plans for an extra two years until age 71;
- appointing the Honourable Marjory LeBreton to the position of Minister of State (Seniors); and
- Creating the National Seniors Council
Elder Abuse Awareness / Seniors
Issue
Raising awareness of elder abuse.
Fact
The Government of Canada is committed to the well-being of seniors and has undertaken various initiatives to combat elder abuse in all its forms, including physical, financial and emotional abuse.
On June 15, 2009, a date recognized globally as World Elder Abuse Awareness Day, the Government of Canada launched a nation-wide advertising campaign called Elder Abuse: It’s Time to Face the Reality. The day provided an opportunity to raise awareness of the abuse and neglect faced by older adults, and to speak with one voice against it.
In Budget 2008, the Government of Canada introduced several measures to support seniors, including $13 million over three years to help raise awareness of elder abuse and to provide seniors with assistance in dealing with it. As part of that support, a call for proposals under the Federal Elder Abuse Initiative was launched on June 15, 2009, inviting professional associations to apply for funding to prepare and disseminate elder-abuse materials throughout their organizations. Administered though the New Horizons for Seniors Program (NHSP), this initiative will fund up to 10 professional associations to a maximum of $200,000 per project (over a project period of up to 24 months).
In addition, in February 2009 the Government of Canada announced $4 million in new NHSP funding for 16 projects across Canada to raise awareness of elder abuse.
These measures are in addition to investments made in seniors’ programs announced in Budget 2007, which included raising available NHSP funding to $35 million, an increase of $10 million.
In March 2007, the Government of Canada created the National Seniors Council to advise on the issues that matter to Canadian seniors. One of the Council’s first priorities was to explore ways to raise awareness about and combat elder abuse.
The Government of Canada also participates in the Federal–Provincial–Territorial Working Group on Safety and Security for Seniors. This group has developed materials to help raise awareness of elder abuse. These resources may be found on the Canadian Network for the Prevention of Elder Abuse website.
For more information about HRSDC programs and services for seniors please visit www.hrsdc.gc.ca/en/corporate/seniors/index.shtml.