The question of how long a Canadian can live outside of Canada without jeopardizing their pension is a common concern. The answer, however, depends entirely on the type of pension benefit you are receiving. Canada's public pension system is comprised of two major components: the Canada Pension Plan (CPP) and the Old Age Security (OAS) pension, plus the low-income supplement, GIS. Each has different rules regarding non-residency and length of time abroad.
Canada Pension Plan (CPP) payments abroad
For the Canada Pension Plan, the rules are straightforward: you will not lose your CPP if you move abroad. This is because the CPP is a contributory plan, meaning your eligibility and payment amount are based on the contributions you made during your working years. The payments are yours, regardless of where you live in the world. To receive your payments outside Canada, you must inform Service Canada of your move, update your banking information for direct deposit (if available in your country), or arrange for cheques. You can even apply for CPP while living outside Canada, though the process is slightly different.
International Social Security Agreements
Canada has social security agreements with many countries, which can be highly beneficial for those who have worked both in Canada and another country. These agreements allow for the coordination of benefits, ensuring you don’t lose out on pension credits accrued in multiple countries. This can help you meet the eligibility requirements for pensions in both countries by combining contribution periods. For example, if you worked in a country with an agreement, you might use your time there to meet the OAS 20-year residency requirement for non-residents.
Old Age Security (OAS) and non-residency
Unlike the CPP, the Old Age Security pension is based on residency, not contributions. The duration of your absence affects eligibility. Generally, if you haven't lived in Canada for at least 20 years after age 18, OAS payments stop after being outside Canada for over six months. However, if you have resided in Canada for 20 years or more after age 18, you can receive OAS indefinitely while living abroad. Partial OAS may be available if you lived in Canada for more than 10 but fewer than 40 years after age 18, calculated based on your years of residency.
Guaranteed Income Supplement (GIS)
The Guaranteed Income Supplement (GIS) is strictly residency-based and ceases if you are outside Canada for more than six months. There's no exception for continued payments abroad. If you return after more than six months, you must re-apply for GIS.
Private vs. Government Pensions
It is important to differentiate between government pensions (CPP, OAS, GIS) and private registered retirement plans like RRSPs when considering living abroad, as their rules differ.
Comparison of Pension Benefits While Out of Canada
| Feature | Canada Pension Plan (CPP) | Old Age Security (OAS) | Guaranteed Income Supplement (GIS) |
|---|---|---|---|
| Benefit Type | Contributory; based on earnings | Non-contributory; based on residency | Supplementary benefit for low-income seniors |
| Payment Abroad | Yes, indefinitely. | Yes, indefinitely, if you have 20+ years of Canadian residence after age 18. | No, stops after six consecutive months outside Canada. |
| Non-Resident Requirements | Must inform Service Canada of your move. | Requires 20 years of residence after age 18 to continue receiving indefinitely. | Must be a resident of Canada to receive this benefit. |
| What Happens If I Leave? | Payments continue as long as you meet eligibility criteria. | Payments stop after six months if you don't meet the 20-year residence rule. | Payments stop after six months. Must re-apply upon return. |
| Tax Implications | Payments may be subject to non-resident withholding tax unless reduced by a tax treaty. | Non-resident tax may be withheld unless reduced by a tax treaty. | Not taxable. Not eligible while abroad. |
| Reporting Requirements | Tax slips issued annually (NR4). | Tax slips issued annually (NR4). Possible OAS recovery tax depending on income. | Not applicable while outside Canada. |
The process for leaving Canada
Notify the Canadian government before an extended absence to prevent issues. Inform Service Canada, arrange direct deposit if possible, check for social security agreements, inform provincial health services (coverage typically ends after six to seven months, requiring private insurance), and plan for taxes. Consult professionals for tax implications.
Conclusion
You can receive CPP indefinitely abroad, but OAS is at risk if you haven't met the 20-year residency rule. GIS stops after six months abroad. Communicate with Service Canada and understand the rules to maintain benefits.
Disclaimer
This article is for general information. Regulations change, so consult Service Canada, a financial advisor, and a tax professional before making decisions about retiring abroad.
Resources
- Service Canada - International Agreements: Provides details on Canada's social security agreements.
- Canada.ca - OAS: While receiving OAS: Outlines rules for receiving OAS abroad.
- Canada.ca - Non-Resident Withholding Tax: Explains tax implications for non-residents receiving Canadian benefits.
- MoneySense - CPP for non-residents: Offers advice on applying for CPP while living outside Canada.
