Understanding Canada's retirement income system
Besides your personal savings and investments, do you know how much money you can expect to receive in retirement from Canada's public pension system? To help you better plan for your retirement, it's important to understand the Canadian retirement income system.
The three levels of Canada's retirement income system
First level - the Old Age Security program
The Old Age Security (OAS) program is funded through general tax revenues. It provides a basic monthly pension to more than 95% of Canadian seniors.
Second level - the Canada Pension Plan
The Canada Pension Plan (CPP) is funded through the following ways:
- contributions by Canadian workers;
- contributions by employers;
- contributions by the self-employed;
- earnings from the investment of the Plan's funds.
The CPP provides retirement pensions, disability benefits, survivor benefits and benefits for children.
Third level - private savings
Private savings include employer-sponsored pension plans, Registered Retirement Savings Plans (RRSPs) and other private savings.