Canada's+Retirement+Income+System

Canada's Retirement Income System

**﻿ Introduction: ** The Canadian's Retirement Income System is different from other countries. This system is based on three levels, which are:
 * The personnal savings and investments
 * The government pension benefits
 * The employer pension



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I/ The personnal savings and investments

The person savings and investments. It holds all the money that you can accumulate during your working years. We can define the personnal savings and investments as follow :

__ //1 -Money in saving accounts // __ __//2-Investments in stocks and bonds //__ __//3-Registered Retirement Savings Plans (RRSP) and Registered Retirement// ____//Income Funds (RRIF//) __

3-1/RRSP definition: It is an account for holding savings and investments assets. It was introduced in Canada in 1957, and we have three types of RRSP:

3-1-1/. Individual RRSP It is associated with only a single individual. It is an account holder. <span style="color: #0000ff; font-family: 'Comic Sans MS',cursive;">3-1-2/ Spousal RRSP <span style="color: #000000; font-family: 'Comic Sans MS',cursive;"><span style="color: #000000; font-family: 'Comic Sans MS',cursive; font-size: 120%;">It allows a higher earner, called a spousal contributor. In this case, the spouse who is the account holder. <span style="color: #0000ff; font-family: 'Comic Sans MS',cursive;">3-1-3/ Group RRSP <span style="color: #000000; font-family: 'Comic Sans MS',cursive; font-size: 120%;">In this situation, the employer arranges for employees to make contribution through a sheduled of regular payroll deductions.

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<span style="color: #0000ff; font-family: 'Comic Sans MS',cursive; font-size: 130%;">3-2/RRIF definition: <span style="color: #000000; font-family: 'Comic Sans MS',cursive; font-size: 120%;">It is a tax deferred retirement plan under canadian tax law. Individuals use RRIF to get income from the savings accumulated under their RRSP. <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">A RRIF is a retirement fund that you establish with a carrier that the goverment registers. Establishing a RRIF can be done at anytime, but must be done before the annuitant turns 71. Since a RRIF is established, we can't change anything. With a RRIF, starting the year after the plan is opened, an annual minimum payement ( from RRSP ) should be taken each year and is considered taxable income.

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 * **Age** || **Minimum Annual Withdrawal (%)** || **Age** || **Minimum Annual Withdrawal (%)** ||
 * **55** || **2.86%** || **75** || **7.85** ||
 * **56** || **2.94** || **76** || **7.99** ||
 * **57** || **3.03** || **77** || **8.15** ||
 * **58** || **3.13** || **78** || **8.33** ||
 * **59** || **3.23** || **79** || **8.53** ||
 * **60** || **3.33** || **80** || **8.75** ||
 * **61** || **3.45** || **81** || **8.99** ||
 * **62** || **3.57** || **82** || **9.27** ||
 * **63** || **3.70** || **83** || **9.58** ||
 * **64** || **3.85** || **84** || **9.93** ||
 * **65** || **4.00** || **85** || **10.33** ||
 * **66** || **4.17** || **86** || **10.79** ||
 * **67** || **4.35** || **87** || **11.33** ||
 * **68** || **4.55** || **88** || **11.96** ||
 * **69** || **4.76** || **89** || **12.71** ||
 * **70** || **5.00** || **90** || **13.62** ||
 * **71** || **7.38** || **91** || **14.73** ||
 * **72** || **7.48** || **92** || **16.12** ||
 * **73** || **7.59** || **93** || **17.92** ||
 * **74** || **7.71** || **94+** || **20.00** ||

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<span style="color: #008000; font-family: 'Comic Sans MS',cursive; font-size: 140%;">//__4.Tax-Free Savings Accounts (TFSA)__//

<span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">The Tax-Free Savings Accounts (TFSA) was announced in the 2008 Federal Budget, is an account for Canadian residents. They can have their savings that are growing with tax-free. Since 2009, eligible contributors can deposit as maximum $5 000 to their TFSA and they can get withdrawls for free tax. To be eligible to a TFSA, the government of Canada imposed these requirements:
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">be at least 18 years of age
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">have a social insurance number
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">reside in Canada

<span style="color: #008000; font-family: 'Comic Sans MS',cursive; font-size: 160%;">II/The government pension benefits

//<span style="color: #008000; font-family: 'Comic Sans MS',cursive;">1-__The Canada Pension Plan (CPP) retirement pension__ // //<span style="color: #000000; font-family: 'Comic Sans MS',cursive;">It is the Canada Pension Plan for all people who are 18 years and above to participate with a prescribed portion of their wages income to a nationally administered pension plan. This plan is administered by Human and Social Development Canada for all the employees in Canda except Quebec. So the pensions are the provincial responsability. //

** //<span style="font-family: 'Comic Sans MS',cursive;">The Historical Growth of CPP // ** []
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">**Date** || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">**Net Asset Value (CAD)** || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">**Rate of Return (annual)** ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2003 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$55.6 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">-1.1% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2004 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$70.5 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">+10.3% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2005 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$81.3 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">+8.5% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2006 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$98.0 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">+15.5% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2007 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$116.6 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">+12.9% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2008 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$122.7 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">-0.29% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2009 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$105.5 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">-18.6% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2010 || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$127.6 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">+20.9% ||
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">Mar 2011 (Projected) || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">$140.1 Billion || <span style="font-family: 'Comic Sans MS',cursive; font-size: 130%;">9.8% ||

//<span style="color: #008000; font-family: 'Comic Sans MS',cursive;">2-__The Old Age Security (OAS) pension__ // <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">This system provides the retired person a modest pension at age 65 if he has lived in Canada for at least 10 years, and It is a taxable monthly social security payment available to most Canadians 65 years or older. To be eligible for the Old Age Security pension the person should
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Be 65 years of age or older.
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Live in Canada and be a Canadian citizen or a legal resident at the time the goverment approves his/her pension application.
 * <span style="font-family: 'Comic Sans MS',cursive;">Lived in Canada for at least 10 years after turning 18.

<span style="color: #ff0000; font-family: 'Comic Sans MS',cursive;">__**OR**__
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Be 65 years of age or older.
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Be a Canadian citizen or a legal resident of Canada the day before he/she left Canada.
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Lived in Canada for at least 20 years after turning 18.

//<span style="color: #008000; font-family: 'Comic Sans MS',cursive;">3-__The Guaranteed Income Supplement (GIS)__ //

<span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">The Guaranteed Income Supplement provides additional money, in addition of a OAS to low-income seniors living in Canada. To be eligible for the GIS benefit, you must be receiving the Old Age Security pension and the eligibility also depends on the combined income of you and your spouse or common-law partner.

<span style="font-family: 'Comic Sans MS',cursive; font-size: 140%;">//<span style="color: #008000; font-family: 'Comic Sans MS',cursive;">4-__The Allowance and the Allowance for the Survivor__ // <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">The Allowance provides money for low-income seniors who :


 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">His/her spouse or common-law partner receives or have the right to receive the Old Age Security pension and the Guaranteed Income Supplement;
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Is 60 to 64 years of age;
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Is a Canadian citizen or a legal resident at the time your Allowance is approved or when you last lived in Canada; and
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Has lived in Canada for at least 10 years after turning 18, (and is still living in Canada).
 * <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Lived in Canada for at lest 20 years after turning 18, (for the person who left Canada).

<span style="color: #008000; font-family: 'Comic Sans MS',cursive; font-size: 160%;">III/ ﻿The employer pension

<span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">Employer pension plans is a defined benefits or on defined contributions.

<span style="font-family: 'Comic Sans MS',cursive;"><span style="color: #0000ff; font-family: 'Comic Sans MS',cursive;">1. Defined-benefit : <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">In defined-benefit plans, benefits are usually calculated on the basis of a fixed percentage of employment income for each working year. The goal is to replace about 60 to 70 percent of pre-retirement employment income.

<span style="color: #0000ff; font-family: 'Comic Sans MS',cursive;">2.Defined contribution: <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">In defined-contribution plans, the level of the pension is not predetermined. The value of the pension is determined by the funds accumulated in the employee's account when he or she retires.

<span style="color: #008000; font-family: 'Comic Sans MS',cursive; font-size: 160%;">Conclusion <span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">To sum up, the Canadian retirement income system is performing well, providing Canadians with an adequate standard of living upon retirement. In some cases the situation is opposed for several factors are job losses, inadequate saving discipline, losses in wealth due to bad luck or poor investment choices and late migration to Canada without much saving.

<span style="color: #0000ff; font-family: 'Comic Sans MS',cursive; font-size: 150%;">__//Biography//__ [] [] [] [|http://en.wikipedia.org/wiki/Tax-Free_Savings_] [] [|Account] [] [] @https://srv111.services.gc.ca/INT_01.aspx?lang=e