Switching countries? Make sure you know the retirement pension systems!

Anyone moving to the U.S. or to Canada should know the respective retirement pension plans in effect.

The U.S. has two funding sources: the Supplemental Security Income (SSI) and Federal Old Age, Survivor and Disability Insurance (OASDI). SSI, funded by government revenue, provides income to low-income persons who are blind and/or disabled. The Federal program, funded by employer/employee contributions, pays benefits based on contributions over a person’s career.

Benefits start at age 67, but a person can apply at age 62 for a reduced benefit. The maximum Federal monthly benefit in 2012 is US$2,513.

Canada has three funding sources: the Canada Pension Plan (CPP), Old Age Security (OAS) Program and Guaranteed Income Supplement (GIS). The CPP is funded through employer/employee contributions and typically starts at age 65 (the age is rising), but a person can apply at age 60 for a reduced benefit. The maximum monthly benefit is now $987.

The OAS, funded from government general revenue, pays qualified retired persons and now starts at age 65, though a clawback applies depending on income levels.

The GIS pays benefits to very low-income Canadians; if your only sources of income in retirement are the CPP and OAS, you likely
qualify for the GIS.

The main difference in our systems is the amount payable in the U.S. It is said to be higher than the government can now afford, and changes are forecast. The Canadian systems, however, are now said to be more sustainable.

This ad appeared in the Richmond News on November 9, 2012.