Like several other Canadian policies, its retirement plan is also people-oriented and aims at giving maximum benefits to the country's residents. In fact, Canadian Retirement Planning is one of the most important platforms on which the financial freedom of its people depend. Hence the options which the retirement plan offer, is in the best interest of its people.



The Canada Pension Plan (CPP) and the Old Age Security (OAS) System are the two essential retirement options which a Canadian citizen can have, when they are planning for retirement. Let us look at the salient features of both these plans in greater detail:

The Canada Pension Plan (CPP): The CPP is a plan that allows working people to contribute a portion of their salaries or incomes, which is then matched by their employers. If the person is self employed, then he or she has to make both sides of the contributions into the fund. This plan was made during the time of ex-Prime Minister Lester Bowles Pearson and is now administered by the Human Resources and Social Development Canada in all regions of the nation except in Qubec, where a separate plan known as the Qubec Pension Plan is used.

The plan takes a contribution of 4.95% of the gross salary or income of the worker, if the earnings lie between $3,500 and $43,700. The total contribution made by the person cannot exceed $1,989.90. When the worker makes this contribution, the employer or the individual (if self-employed) will match the contribution.

The benefits of the plan are paid out from the age of 60 years in a reduced manner and from the age of 65 years in their entirety. This is the time when they will begin to get 25% of their average contributed maximum within the last half a decade.

This plan is designed for offering maximum financial security of a Canadian during his autumn years. Run on a monthly basis, the program has a basic value of $502.31 per month. So, for taxation purposes, the earning member turns back a part of their Old Age security. This return of income is called the claw back and it is designed in such a way that if the individual earning is $104, 02, the entire amount would be clawed back.

The OAS plan is used to obtain a monthly full or partial pension whichever is earlier decided by the pensioner. It is also a flexible plan in terms of nationality. Foreign citizens are also entitled to this program provided that they have lived three fourths of their life in Canada in that past ten years or agree to live in Canada after they took the plan.

These two retirement plans are both taxable. These plans apply to any Canadian citizen who is 18 years and above and is an active earner, employed or self-employed. Consider which of these plans best apply to your case and which of the plans will benefit you in the future and grab the opportunity of investing in something that will make sure you are well-provided for in the future.