Canada's retirement income system

To help you better plan for your retirement, it is important to understand the Canadian retirement income system. There are three main sources of retirement income that you may be able to draw from:

  • your personal savings and investments;
  • government pension benefits; and
  • employer pensions.

Government pension benefits provide a modest base on which to build your retirement income. To maintain their pre-retirement lifestyle, most Canadians will require most of their retirement income to come from personal savings and investments and/or employer pensions. Check out the tools that will help you kick-start your plan.

Personal savings and investments

The savings and investments you accumulate during your working years can include:

  • money in savings accounts;
  • investments in stocks and bonds;
  • Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs); and
  • Tax-Free Savings Accounts.

You may also have accumulated property such as your home, or financial and business assets. You can consider using your property or business assets as sources of retirement income.

Government pension benefits

The Government of Canada provides these pension benefits:

  • the Canada Pension Plan (CPP) retirement pension;
  • the Old Age Security (OAS) pension;
  • the Guaranteed Income Supplement (GIS);
  • the Allowance and the Allowance for the Survivor.

Click here to learn more about these Government pension benefits, including eligibility and how to apply.

The CPP operates throughout Canada, except in Quebec, where the Quebec Pension Plan (QPP) provides benefits. For information about the QPP, visit the QPP Web site.

Employer pensions

Many employers sponsor a registered pension plan to help their employees save for retirement. There are two main types of registered plans:

  • Defined benefit plans provide you with a pre-determined percentage of your working salary when you retire.
  • Defined contribution plans provide you with a pension benefit based on the accumulated contributions and investment income.

If you made contributions to one of these types of plans, you should receive a statement from the plan administrator that tells you the balance of your investment in the plan or how much you can expect to receive as retirement income.

If you participate in a pension plan that is integrated with the CPP, the amount of pension benefits you receive from the plan is reduced when you qualify for CPP retirement benefits.

Other types of retirement savings plans that employers sponsor include deferred profit-sharing plans and group Registered Retirement Savings Plans. If you have contributed to one of these types of plans, contact your employer to find out what type of benefits you can expect to receive from the plan.