Canada's two main pension programs
Canada's public pension system primarily comprises two distinct programs: the Canada Pension Plan (CPP) and Old Age Security (OAS). Although both provide income to seniors, their eligibility criteria differ fundamentally.
- Canada Pension Plan (CPP): The CPP is a contributory program tied to your work history and mandatory contributions from earnings. To qualify for a retirement pension, you must be at least 60 and have made at least one valid contribution to the CPP. The pension amount depends directly on the length and amount of your contributions, not your years of residency in Canada.
- Old Age Security (OAS): OAS is a federal government-funded pension you don't directly pay into. Eligibility is based on your legal residency in Canada, not your work history. You can qualify for OAS even if you've never worked.
CPP eligibility: It's about contributions
For CPP, your work duration affects your contributions, which in turn determine your pension amount, but not basic eligibility. A single valid contribution is sufficient to qualify for some benefit. However, a longer contribution history generally leads to a larger pension.
Achieving the maximum CPP payment at age 65 typically requires making maximum allowable contributions for at least 39 years. However, you can still receive a proportional pension with fewer contributions. Service Canada may also exclude up to eight years of your lowest earnings to enhance your benefit.
Can you receive CPP if you live abroad?
Yes, as CPP is contribution-based, you can receive payments regardless of your worldwide residence, provided you met the basic eligibility while working in Canada. Keeping Service Canada informed of address changes is essential for uninterrupted payments.
OAS eligibility: It's about residency
OAS eligibility depends entirely on your legal residency in Canada after age 18, with no work history requirement.
- Minimum eligibility (living in Canada): To receive a partial OAS pension while living in Canada, you must be 65 or older, a Canadian citizen or legal resident, and have resided in Canada for at least 10 years since age 18.
- Full pension eligibility: A full OAS pension requires living in Canada for at least 40 years since age 18.
- Eligibility for expats (living outside Canada): If residing outside Canada, you need at least 20 years of Canadian residency since age 18 to receive OAS payments. With less than 20 years of residency, payments stop if you're outside Canada for over six months.
What if I worked in Canada and another country?
Canada has social security agreements with nearly 60 countries. These agreements can help you qualify for pensions from both Canada and the other country, even if you don't meet the minimum requirements in one country alone. For instance, an agreement might allow combining work or residency periods in both countries to meet the 10-year OAS residency requirement.
Comparison: CPP vs. OAS requirements
The table below highlights the key differences in eligibility requirements between CPP and OAS.
| Feature | Canada Pension Plan (CPP) | Old Age Security (OAS) |
|---|---|---|
| Basis of Eligibility | Contribution-based | Residency-based |
| Minimum work/residency | At least one valid contribution | At least 10 years of residency since age 18 (for partial pension while in Canada) |
| Maximum benefit | Based on contributions over lifetime (up to ~39 years) | 40 years of residency since age 18 |
| Automatic Enrollment | No; must apply | Yes, for some; others must apply |
| Location for payment | Can be paid outside of Canada indefinitely | Can be paid outside of Canada for more than 6 months only if 20+ years of Canadian residency |
| Payment start age | As early as 60 (reduced) or as late as 70 (enhanced) | As early as 65; can be deferred to 70 for an increase |
How to apply for your pension
Applying for both CPP and OAS is necessary. While some receive automatic OAS enrollment, many do not, so confirming with Service Canada is advisable.
- Obtain a Service Canada Account: Create a My Service Canada Account online to access information and apply for benefits.
- Verify Contribution/Residency Records: Request a statement of contributions from Service Canada for your CPP record. For OAS, Service Canada will verify your residency history.
- Apply for Benefits: Applications can be submitted online via your My Service Canada Account or by mail. Applying a few months prior to your desired payment start date is recommended.
- Confirm Payment Details: Ensure Service Canada has accurate banking and address details for direct deposit. If living abroad, update contact information with international details.
Conclusion
Qualifying for a Canadian pension depends on the program. CPP requires just one valid contribution, with the pension amount based on your lifetime contribution history. OAS eligibility, conversely, is based on Canadian residency, typically requiring 10 years for a partial pension and 40 years for a full pension if living in Canada. A 20-year residency minimum applies for OAS if living abroad. Understanding these distinct criteria is crucial for retirement planning in Canada.
