Government benefits and RRSP

Registered Retirement Savings Plans (RRSPs)

The Income Tax Act (Canada) limits the amount individuals can contribute to an RRSP. Every year you receive new RRSP contribution room which is equal to 18% of your previous year's earned income, subject to a dollar limit (RRSP limit), reduced by your Pension Adjustment (PA).

The Pension Adjustment is the value of the pension you earned in the previous year under the University of Waterloo pension plan and is reported in box 52 on your T4 slip. If you transferred pension benefits into Waterloo’s pension plan from your previous employer’s Registered Pension Plan, you might also have a past service pension adjustment that would also reduce your new RRSP contribution room in the year of the transfer.

If you do not make the maximum contribution to an RRSP that you are allowed each year, the unused portion of that year’s new RRSP contribution room is carried forward to future years. The federal government provides a written record of your cumulative or total RRSP contribution room on your personal income tax assessment they send you after you have filed your personal taxes.

You can contact Canada Revenue Agency (CRA) at 1-800-267-6999 to request this information or by visiting the CRA website.

Government of Canada retirement benefits

Canada Pension Plan (CPP) is an earnings-based pension that is calculated based on how long and how much you have contributed to CPP while you work. Your CPP pension will increase each January 1 based on the consumer price index. It is paid to you from the Government of Canada.

You can start collecting your CPP pension at age 65. However, you can take a reduced CPP pension as early as age 60 or an increased CPP pension as late as age 70.

It is important to note that CPP pensions are payable anywhere in the world subject to postal delivery.

The CPP has other features including disability pensions, death benefits, surviving spouse benefits, pension splitting, etc. Details can be obtained from Service Canada at 25 Frederick Street, Market Square, Suite 200, Kitchener, ON, or by calling 1-800-277-9914.

Old age security (OAS) is the Government of Canada's largest pension program. It is funded out of general revenues, which means you do not make direct contributions to it.

It is a flat rate pension paid to Canadians who meet the Canadian legal status and residence requirements.  Quarterly increases are applied to OAS pensions based on the consumer price index.

The OAS pension becomes payable at age 65 or you can delay receiving it for up to 60 months in which case the OAS pension will be increased. 

OAS income is subject to claw back at higher income levels.

There are some specific residency requirements for OAS to be paid outside the country. In addition to the OAS pension, there is the Guaranteed Income Supplement, OAS Allowance and OAS Allowance to the Survivor as well. Details can be obtained from Service Canada at 25 Frederick Street, Market Square, Suite 200, Kitchener, ON, or by calling 1-800-277-9914.

There is also a website for Service Canada.