If you are approaching age 65 and want to retire, here are the steps you need to take to receive your pensions from both levels of government.
What steps must be taken to receive the Old Age Pension (OAS), the Quebec Pension Plan (QPP) and, if applicable, the Guaranteed Income Supplement (GIS)? Hadi Ajab, independent financial planner and financial security advisor, collective savings representative at PEAK Investment Services, takes stock of the matter.
The QPP
It is up to you to apply to Retraite Québec to receive your QPP pension. Remember that this amount can be paid to you from the age of 60, but it will be reduced if you claim it before the age of 65. However, if you wait longer, the amount increases.
The QPP you receive depends on the amount of your contributions during your working life and the age at which you receive your pension. “The declaration of participation issued by Retraite Québec is a goldmine of information. “It indicates the amount of QPP that will be paid to you based on the contributions made since you turned 18,” specifies the financial planner.
In 2023, a 65-year-old person eligible for the maximum pension can receive $1,306.57 per month. At age 60 we are talking about a maximum of $836.20 and at age 70 it is $1855.33. “But on average, Quebecers receive about $760 a month because many claim it before the age of 65 or have not contributed the maximum amount during their working life,” adds Hadi Ajab.
Retraite Québec recommends doing this one to three months before the date you want to receive your first payment. How do I apply? Fill out a form and send it by mail or go online, which is quicker and easier.
“You can take the steps up to 12 months before you receive your first payment. From the age of 65, it is also possible to submit a retroactive application up to 12 months in advance. Once you have applied for your pension, you have six months to change your mind and cancel the pension. However, you have to pay back the amounts you have already received,” mentions Hadi Ajab.
Good to know: The QPP is indexed and increases in January of each year.
OAS
Generally, Service Canada will automatically enroll you in OAS and you will receive notification within one month of your 64th birthday. If certain information is missing, you may have To yourself.
“The amount you receive depends on the number of years you have lived in Canada since you turned 18. To receive the full pension, you must have lived there for 40 years. A pro-rata calculation is made below this,” explains Hadi Ajab, adding that the amounts are adjusted quarterly.
Currently, the full pension for Canadians aged 65 to 70 is $707.68 per month and $778.45 for those over 75.
It is possible to start receiving OAS from the age of 65, but it can be postponed until the age of 70, which may increase the amount. From the moment you receive your pension, you then have six months to change your mind and cancel your pension.
Are you approaching your 64th birthday and already know that you intend to postpone your OAS past your 65th birthday? In this case, notify Service Canada immediately to avoid being automatically registered and having to take laborious deletion steps. Once you’ve determined when you want to receive your first payment, you should plan at least 12 months in advance, but 18 months in advance would be better. You can complete these steps by connecting to the My Service Canada account online.
The SRG
Registration for the Guaranteed Income Supplement is not systematic and you may need to complete the process yourself with Service Canada. “The criteria are more restrictive and income-dependent. For a single, divorced or widowed person, they cannot exceed $21,456 per year,” explains Hadi Ajab. This amount does not include OAS, but does include QPP, RRIFs, pensions and earned income, excluding the first $5,000 for the latter. The maximum SRG in 2023 is $1,023.88 per month.
ADVICE:
· If you receive a benefit from a public (SAAQ, CNESST, Régime de rentes du Québec) or private organization, before applying for your QPP pension, check what impact this has on the amount of benefit you already receive. For example, the disability pension could be reduced.
· The pension paid by an employer pension fund is often intended to decrease at age 65, such as the RREGOP, regardless of whether you claim your RRQ or not.
· Please note that there is an income limit above which a refund tax will be charged on the OAS. In 2022, the net income threshold not to be exceeded was $81,761. The tax rate is 15% and only applies to amounts above the prescribed threshold.