If you are a newcomer, whether you are young or already in the prime of your life, here is what you should know to plan your retirement in Quebec.
Changing countries is a major change that requires numerous adjustments. You also need to know how the various public systems in Quebec and Canada work, particularly the pension system.
In this area, certain problems particularly affect newcomers. “To be successful in retirement planning, there are a few steps you need to follow. For people born here this is self-evident, but for those who come from elsewhere this will not necessarily be the case,” warns Hadi Ajab, independent financial planner and financial security advisor and collective savings representative at Services in PEAK Investments.
Limited savings capacity
When you arrive in the country, you may not be able to start working in your field right away. You may need to have your experience and diplomas recognized and possibly return to school.
Given these various hurdles, the first few years may not be very lucrative if you have to fill jobs that require low skills and wait to access other, better-paying positions. This therefore affects your retirement planning options and, if applicable, your pension fund.
“Furthermore, creating a budget and adopting a savings philosophy are not necessarily the reflexes of newbies. They may also not know what a TFSA, RRSP, or RESP is. They know the savings account, but not the other tools,” mentions Hadi Ajab, who adds that there is still a lot of learning to do.
Reduced state pensions
As a newbie, you will also need to familiarize yourself with how government pension programs work: the Quebec Pension Plan (QPP), the Old Age Security Pension (PSV), and the Guaranteed Income Supplement (GIS). ).
“To be eligible for PSV you must have lived in the country for 10 years after your 18th birthday. And to receive the full pension, you have to have lived in Canada for 40 years from the age of 18,” explains Hadi Ajab. Have you lived in the country for less than 40 years? In this case, the amount of your PSV will be calculated pro rata. For example, if you stay for 10 years you are entitled to 25%, for 20 years you are entitled to 50%, etc.
With QPP, the calculation of the pension varies depending on the earned income for which contributions were paid. These are taken into account from the age of 18 until the month before the start of the pension. Therefore, it is very difficult for a newcomer to be entitled to a full pension.
Note that the conditions for the SRG are less restrictive and it is possible to obtain it even if you have not been a resident of Canada for 40 years. “On the other hand, the situation may change if you were sponsored to immigrate and have lived here for less than 10 years after turning 18. You have to check the requirements carefully and have all the elements for retirement planning under control,” recommends Hadi Ajab. This also makes it possible to calculate the additional amounts to be made available in order to compensate for any shortfalls.
Retire, yes, but where?
It can be difficult for newbies to look ahead and predict how things will turn out. As a result, we may find it difficult to estimate the cost of living in retirement, a key factor in deciding how much we can save. Some may also be juggling the idea of retiring in Canada while receiving a pension from their country of origin. They either spend half the year here and the other half in their country of origin, or they return to live there permanently.
In this case, what happens to the pension contributions paid in Canada? “PSV is sent abroad only if the pensioner has lived in the country for more than 20 years. Otherwise it will not be paid out,” specifies Hadi Ajab.
Finally, keep in mind that Canada is a signatory to more than 50 international agreements that may allow you to receive a refund of retirement contributions already paid in your country of origin. Quebec has international social security agreements with 39 countries. These agreements could enable you to receive a pension or a higher pension. Find out!
ADVICE:
· Pay attention to the concept of tax residency. This affects where you are taxed.
· Take stock of your possessions abroad (real estate, investments, etc.). These elements should be integrated into your retirement planning.
· Consult a professional who will help you plan and not forget anything.