Financial planning for retirement

Start with the public plans

	Without any planning on your part, you already have a basic retirement income provided by public plans. The federal Old Age Security Program and the Québec Pension Plan form the foundation of the Québec system for financial security at retirement.

For everyone

At age 65, you will be able to apply for your pension under the federal Old Age Security pension (OAS). This program is funded by income taxes paid to the government of Canada. 

The principal conditions of eligibility for the pension:

• be age 65 or over
• be a Canadian citizen or a legal resident of Canada
  
  and
  
  
• have lived in Canada for at least 10 years between ages 18 and 65

Your income is low?

You could be eligible for a Guaranteed Income Supplement, an Allowance (for couples) or an Allowance for the Survivor. Those benefits are paid monthly, as is the Old Age Security pension.

You should know that:

• In general, the amount of the Old Age Security pension is the same for everyone. As of 1 October 2006, it was 491,93 $ a month.
• The Old Age Security pension represents approximately 15% of the income of a worker earning 40 000 $ a year.

• Benefits received under the federal program are indexed every 3 months, that is, in January, April, July and October of each year.

For those who contribute to the Québec Pension Plan

If you have contributed to the Québec Pension Plan (QPP) for at least one year, you could receive a retirement pension beginning at age 60. The pension will represent 25% of the average pensionable employment earnings on which you contributed.

The amount of your retirement pension will vary according to:

• the age at which you retire
• the number of years during which you made contributions
  
  and
  
  

• your employment earnings recorded under the Plan

Employee or self-employed?

Regardless of your situation, you must participate in the Plan if you have employment earnings. You contribute to the Plan on the portion of your employment earnings that exceeds 3 500 $, up to a maximum of 42 100 $ in 2006. To check your years of contribution, consult your Statement of Participation from the Québec Pension Plan.

You should know that:

• The retirement pension is indexed each year according to the cost of living.
• If you apply for your retirement pension between age 60 and 65, the amount will be reduced 0,5% for each month preceding your 65th birthday (6% a year). This reduction will apply for as long as the pension is paid.
• The maximum monthly pension in 2006 is:
  • 591,21 $ at age 60
  • 844,58 $ at age 65

To go further

• See the section Planning your retirement on our Web site.
• Consult the Web site of Human Resources and Social Development Canada.