CPP and OAS while out of country

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travesty
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CPP and OAS while out of country

Post by travesty » 26 Aug 2015 17:39

I'm helping a not-yet-retired retired person figure out what they should do with their financial affairs. This person is a dual citizen and has lived in Canada for about 30 years and the remainder of their time in the US.

She lived in Canada until about five years ago and is now living in the US. I'm not sure how many years of CPP contribution she has but I would estimate about 25.

She is 64 years old and has basically run out of money so I'm looking into this on a relatively urgent basis. They haven't even thought about starting their CPP and are concerned that if they "activate" their retirement that they would, for example, be disallowed from working as a teacher.

My questions are basically:

1) As far as I know getting your CPP sent to you even if you live outside of Canada is relatively painless. It seems as if they will even directed closet into your US bank and to the currency conversion for you. I assume that something close to market rates.

So that hat's not really a question but just a confirmation of what I understood - and if anyone knows anything about this scenario any red flags or anything like that let me know.

2) i'm wondering about the possibility of starting to take the CPP at age 64 preventing you from working at certain places. As far as I know nothing like she is basically independent from private pension plans and won't restrict you from working. Certainly ones you would like to take you may not be able to work at that company for example, and some tensions are integrated with the CPP but I think that's just financial calculation and doesn't mean you would somehow activate your retirement that any company.

Does anyone know different?

3) It seems like you can even get OAS if you don't live here any more - but this doesn't have an early start provision like CPP? I guess that makes sense since it is not a pension, but a means tested supplement (it's not clear though why you get it when you aren't living here any more?)

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Re: CPP and OAS while out of country

Post by CROCKD » 26 Aug 2015 19:49

Two Australian friends of mine from our time in Montreal in the sixties get part pensions, one of them from QPP deposited into his Australian bank account. Makes you wonder about our generous social programs. Australian Government pensions are means tested and neither qualifies for a pension in Australia despite having been back and worked there since the early 70s.
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Re: CPP and OAS while out of country

Post by adrian2 » 26 Aug 2015 20:28

CROCKD wrote:Two Australian friends of mine from our time in Montreal in the sixties get part pensions, one of them from QPP deposited into his Australian bank account. Makes you wonder about our generous social programs. Australian Government pensions are means tested and neither qualifies for a pension in Australia despite having been back and worked there since the early 70s.
CPP/QPP is not a social program. Therefore, it is quite normal for it to be paid anywhere in the world, just as any other pension.

As for OAS, IIRC, the eligibility rule for it being paid outside Canada is a minimum of 20 years residency between the age of 18 and application date (usually 65).
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Re: CPP and OAS while out of country

Post by pmj » 26 Aug 2015 20:41

And the OP may also benefit from this rule re full OAS for people born on or before July 1, 1952:
http://www.servicecanada.gc.ca/eng/serv ... late.shtml
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Re: CPP and OAS while out of country

Post by izzy » 26 Aug 2015 20:52

Retirement savings in Australia are COMPULSORY for employers and employees so there is less need for social assistance such as their "pension" which operates more like the guaranteed income that has been mooted by the NDP .It is NOT confined to the elderly but is also paid to the disabled and impoverished ,"the deserving poor",so it's not really an old age pension as we understand it.
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Re: CPP and OAS while out of country

Post by pmj » 26 Aug 2015 21:00

Here's another interesting problem:
http://www.thestar.com/news/investigati ... roofs.html
http://www.cbc.ca/news/canada/immigrant ... -1.2608624

Our sons, born in the UK, came here as Canadian citizens - so they have no landing papers! Also no passport stamps - and we didn't keep their plane tickets :oops:.

For the child-rearing dropout calc for my wife's CPP, she stated her/their date of arrival - and noted that it could be approximately confirmed by her Child Benefit application. CPP appeared to accept this. But OAS looks to be taking a harder line .... not too long before we find out for sure!
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Re: CPP and OAS while out of country

Post by izzy » 26 Aug 2015 21:58

For the kids wouldn't their school records be some indication? If you and/or your spouse have filed and paid taxes in Canada as a resident every year since arrival you would think that would be enough proof for an adult'!
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Re: CPP and OAS while out of country

Post by brucecohen » 27 Aug 2015 08:42

Travesty, make sure your friend is aware that Canada and the US have a Social Security treaty under which CPP and US Social Security will take credits from both sides of the border into account when calculating her benefit. She should tell SSA about her CPP record. As for taking a retirement benefit and continuing to work, CPP scrapped that restriction a few years ago. I think US Social Security has such a rule but don't know the details. Check their website at ssa.gov.

Here is an on-point web page.

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Re: CPP and OAS while out of country

Post by kukucanuck » 27 Aug 2015 10:17

Here is another question.

A 69 year old single retiree, been in Canada for 43 years, OAS being clawed back - If this individual chooses to move to warmer climates (say US), will he/she receive OAS payments?
If he/she becomes a non resident of Canada, there should be no claw back as he/she would not be filing Canadian taxes. This individual, as a non resident, would also not be eligible for provincial health coverage. However, the OAS payments and lower taxes may offset the cost of additional health insurance costs for this reasonably healthy person.

CPP is not an issue as it is clearly portable.

Does the above scenario make sense or are there flaws in it?

Would appreciate expert advise from the forum members.

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Re: CPP and OAS while out of country

Post by izzy » 27 Aug 2015 17:37

This should help
http://www.servicecanada.gc.ca/eng/serv ... axes.shtml
But remember that Canada imposes a departure tax on emigrants i.e. deemed disposition of capital property and resulting tax on any capital gains.
Doesn't have major implications for a pension or RRIF but if there are retained earnings in a corporation or unrealised capital gains in a non-registered account etc any benefit you might gain on your OAS is likely to be overshadowed by all that tax liability occurring in one tax year, especially if your income would have been high enough to be liable to clawback whilst resident.
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Re: CPP and OAS while out of country

Post by kukucanuck » 28 Aug 2015 09:34

Thanks Izzy!

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Re: CPP and OAS while out of country

Post by Dogger1953 » 02 Sep 2015 18:35

adrian2 wrote:
CROCKD wrote:Two Australian friends of mine from our time in Montreal in the sixties get part pensions, one of them from QPP deposited into his Australian bank account. Makes you wonder about our generous social programs. Australian Government pensions are means tested and neither qualifies for a pension in Australia despite having been back and worked there since the early 70s.
CPP/QPP is not a social program. Therefore, it is quite normal for it to be paid anywhere in the world, just as any other pension.

As for OAS, IIRC, the eligibility rule for it being paid outside Canada is a minimum of 20 years residency between the age of 18 and application date (usually 65).
Adrian - A small correction re the 20-year period for OAS being payable outside Canada. It's 20 years between age 18 and when they leave the country. For instance, someone could have 15 years of residence between age 18 and age 65 and receive a partial OAS of 15/40ths. If they continued to reside in Canada until age 70, they would have accumulated 20 years of residence and while their OAS would remain at 15/40ths for life, it would then become payable anywhere in the world.
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Re: CPP and OAS while out of country

Post by Dogger1953 » 02 Sep 2015 18:40

kukucanuck wrote:Here is another question.

A 69 year old single retiree, been in Canada for 43 years, OAS being clawed back - If this individual chooses to move to warmer climates (say US), will he/she receive OAS payments?
If he/she becomes a non resident of Canada, there should be no claw back as he/she would not be filing Canadian taxes. This individual, as a non resident, would also not be eligible for provincial health coverage. However, the OAS payments and lower taxes may offset the cost of additional health insurance costs for this reasonably healthy person.

CPP is not an issue as it is clearly portable.

Does the above scenario make sense or are there flaws in it?

Would appreciate expert advise from the forum members.
I believe that the OAS clawback (or its equivalent) applies even if someone leaves Canada. Here's a CRA link with more details: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... 3-eng.html
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Re: CPP and OAS while out of country

Post by pmj » 02 Sep 2015 19:13

Someone who is now receiving OAS must have been born before July 1, 1952 - and thus the "years-of-residence/40" factor does not apply in the manner that it does for us younger types:
http://www.servicecanada.gc.ca/eng/serv ... late.shtml
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Dogger1953
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Re: CPP and OAS while out of country

Post by Dogger1953 » 02 Sep 2015 19:50

pmj wrote:Someone who is now receiving OAS must have been born before July 1, 1952 - and thus the "years-of-residence/40" factor does not apply in the manner that it does for us younger types:
http://www.servicecanada.gc.ca/eng/serv ... late.shtml
Peter - In addition to someone having been born before July 1, 1952, they must also have resided in Canada after age 18 and prior to July 1, 1977 or they are also indeed subject to the "years of residence/40" factor.
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Re: CPP and OAS while out of country

Post by pmj » 02 Sep 2015 20:25

Dogger1953 wrote:In addition to someone having been born before July 1, 1952, they must also have resided in Canada after age 18 and prior to July 1, 1977 or they are also indeed subject to the "years of residence/40" factor.
At the linked page, does the statement:
In addition, you must have resided in Canada continuously for the 10 years immediately before the approval of your OAS pension. If you were absent from Canada during that 10-year period, you may still qualify for a full pension if:
... apply only to the last-bulleted "on July 1, 1977" line, or to all three of those lines?

If it applies to all three lines, then would not the "years of residence > 3 x years-of-absence" rule come into effect before moving to the years/40 rule?

OTOH, it seems unfair that immigrants but not natural-born Canadians would have this additional option ....
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izzy
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Re: CPP and OAS while out of country

Post by izzy » 02 Sep 2015 23:18

It's just a grandfathering clause for those of us who qualified under the old rules which applied prior to 1977 to both Canadian born and immigrants,
Last edited by izzy on 02 Sep 2015 23:30, edited 2 times in total.
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Re: CPP and OAS while out of country

Post by izzy » 02 Sep 2015 23:19

By their nature grandfathering clauses are often unfair to those who come after but they are considered necessary when rules change to allow beneficiaries to plan with confidence.
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Re: CPP and OAS while out of country

Post by Dogger1953 » 02 Sep 2015 23:56

pmj wrote:
Dogger1953 wrote:In addition to someone having been born before July 1, 1952, they must also have resided in Canada after age 18 and prior to July 1, 1977 or they are also indeed subject to the "years of residence/40" factor.
At the linked page, does the statement:
In addition, you must have resided in Canada continuously for the 10 years immediately before the approval of your OAS pension. If you were absent from Canada during that 10-year period, you may still qualify for a full pension if:
... apply only to the last-bulleted "on July 1, 1977" line, or to all three of those lines?

If it applies to all three lines, then would not the "years of residence > 3 x years-of-absence" rule come into effect before moving to the years/40 rule?

OTOH, it seems unfair that immigrants but not natural-born Canadians would have this additional option ....
Peter - Yes it applies to all three of the bulleted lines, but someone who entered Canada for the first time after July 1/77 wouldn't meet any of those three bullets (unless they had a visa dated prior to July 1/77 and entered Canada after that date), so the only way someone entering Canada after July 1/77 could receive a full pension is with having accumulated 40 years of residence in Canada, thus their pension is always years/40.
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Re: CPP and OAS while out of country

Post by OhGreatGuru » 08 Sep 2015 15:42

Dogger1953 wrote:
I believe that the OAS clawback (or its equivalent) applies even if someone leaves Canada. Here's a CRA link with more details: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... 3-eng.html
Very interesting. I thought it was just the 25% Part 13 tax that applied. (That's all CRA mentions on their main non-resident tax page). I didn't know about this wrinkle, but it makes sense.

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Re: CPP and OAS while out of country

Post by gsp_ » 30 Sep 2017 08:28

At a family gathering recently I learned that a friend of the family was planning on moving back to southern Europe which he left 40 years ago to come to Canada. Apparently his health is not the best and he has a hard time tolerating our winters. He is 63 which brings up an interesting component of OAS eligibility which I don't really understand. I've tried searching past OAS threads but haven't found this specific topic addressed hence this post.

From the GOC website
How the Old Age Security pension is calculated

Full pension


You may qualify for a full OAS pension in one of two ways:

You resided in Canada for at least 40 years after turning 18; or
You were born on or before July 1, 1952, and
on July 1, 1977, you resided in Canada, or
after turning 18, you resided in Canada for a period of time prior to, but not on July 1, 1977, or
on July 1, 1977, you possessed a valid Canadian immigration visa.
He meets the 40 year criteria but here's the part I don't understand.
In addition, you must have resided in Canada continuously for the 10 years immediately before the approval of your OAS pension. If you were absent from Canada during that 10-year period, you may still qualify for a full pension if:

you resided in Canada for at least one year immediately before the approval of your OAS pension, and
you had periods of prior residence in Canada that were equal to at least three times the period of absence during the 10-year period (three years of residence for every year of absence). For example, an absence of two years between the ages of 60 and 62 could be offset by six years of residence in Canada after age 18 and before age 55.
If he leaves at 63.5 years old, it doesn't sound like he will be eligible for full OAS at age 65 due to the underlined part. Can anyone explain the intent of this additional requirement? What are the ramifications on his OAS payment?

I don't think it matters for this determination but he's a citizen of both countries which have a social security agreement. He's going to retire real soon. Unless the OAS ramifications are significant I doubt he will want to maintain residency here and split time between both countries, skipping our winters. Thanks to anyone who can help.
Last edited by gsp_ on 30 Sep 2017 12:15, edited 1 time in total.

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Re: CPP and OAS while out of country

Post by kcowan » 30 Sep 2017 11:52

I think you should get a clarification from the government. It sounds pretty clear that they are not funding welfare for out-of-country residents.
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Re: CPP and OAS while out of country

Post by gsp_ » 30 Sep 2017 12:21

kcowan wrote:
30 Sep 2017 11:52
It sounds pretty clear that they are not funding welfare for out-of-country residents.
OAS eligibility
If you are living outside Canada, you must:

be 65 years old or older;
have been a Canadian citizen or a legal resident of Canada on the day before you left Canada; and
have resided in Canada for at least 20 years since the age of 18.
He will easily meet all conditions as previously stated no matter where he resides at 65.

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Re: CPP and OAS while out of country

Post by OhGreatGuru » 30 Sep 2017 17:04

The web site has done a terrible job of editing the qualification requirements of the Act. The part about having to be resident in Canada for 10 consecutive years before applying does not apply to persons who meet the 40 year residency (after age 18) rule.

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Re: CPP and OAS while out of country

Post by gsp_ » 02 Oct 2017 07:57

Ok thanks. Indeed reading the act does clarify that the 10 year requirement only applies to those born before mid 1952 and qualifying through the grandfathered criteria.

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