CPP Canada Pension Plan
DPSP Deferred Profit Sharing Plan
GIS Guaranteed Income Supplement
LIFE Life Income Plan
LIRA Locked-in Retired Account
LRIF Locked-in Retirement Income Fund
OAS Old Age Security
RRIF Registered Retirement Income Fund
RRSP Registered Retirement Savings Plan
YBE Year’s Basic Exemption
YMPE Yearly Maximum Pensionable Earnings
Allowance: another supplement to ensure that retired Canadians do not live in poverty. Under
this provision, a pensioner’s spouse or common–law partner, widow or widower aged 60- to 64 who has resided in Canada
for at least 10 years since reaching age 18 ( and taking into account reciprocal agreement with other countries),
and who qualifies under the net income test, is eligible for a monthly allowance. Almost 93,000 people received an
Allowance in 2000.
Assignment of CPP Retirement Pensions: an income splitting process whereby spouses or common-law
partners choose to share their Canada Pension Plan retirement pensions with each other to minimize their tax burden.
Base Income: equals net income, excluding OAS benefits, of the previous year.
Canada Pension Plan (CPP): a federal government program designed to provide monthly pensions to
contributors in retirement, to disabled contributors and their children, and to the widows, widowers and orphaned children
of deceased contributors.
Clawback: reduction of social security benefits based upon net income.
Common-law Partner: a person who cohabits with taxpayer in a conjugal relationship and who has either
so cohabited for at least one year, or who is the parent of the taxpayer’s child. This also provides for termination of the
common-law relationship if the partners cease cohabitation for a period of at least 90 days because of a breakdown in their
Contributory Earnings: all employment earnings above a basic exemption level up to
a yearly maximum, upon which Canada Pension Plan premiums are payable.
Contributory Period: the period, which commences on the later of January 1, 1966 or
a person’s 18th birthday, and which extents to age 60, or to age 70 if the individual continues to work and
does not apply for a retirement pension.
CPP Pension Credits: the taxpayer’s pensionable earnings, and the contributions
the taxpayer pays on them over the years.
Credit Splitting: the division of the CPP pension credits which the couple built up during
the time they lived together can be divided equally between them when a relationship ends.
Death Benefit(Pension): a lump sum benefit of a maximum of $2,500 payable under the Canada Pension Plan
to the spouse or common-law partner or estate of a deceased contributor.
Dependent Child: a child who is under the age of 18,or who is between the ages of 18 and 25 and
who is full-time attendance at an approved educational institution.
Guaranteed Income Supplement(GIS): provides additional benefits to low-income pensioners who meet
a basic income test and reduced by $1 for every $2 of income excluding OAS benefits.In additions to their OAS benefits,
approximately 1.5 million low-income pensioners who meet a basic income test also qualify for the federal guaranteed income
supplement, or GIS. This income test can result in a reduction of social security benefits based upon net income. This
reduction is generally referred to as a clawback. The clawback of GIS and Allowance is based upon the pensioner’s base
income, which is net income, excluding OAS benefits, of the previous year. The net income amount, at which the social
security benefits are entirely clawed back is referred to as the income level cutoff.
Income-level Cutoff: the net income amount at which the social security benefit is entirely clawed back.
Old Age Security (OAS) Program: one of three public pension benefits, which provide seniors with
a basic income guarantee.
Canada’s Old Age Security is a government program that provides all individuals who meet certain
residency requirements with universal access to a basic level of retirement income, regardless of their past employment or
income. The Old Age Security system provides a basic guaranteed level of retirement income to all qualifying Canadians.
The program includes three public pension benefits – Old Age Security (OAS), Guaranteed Income Supplement (GIS) and the
The flat rate of OAS pension is payable commencing at age 65, and it is increased quarterly to match increases the Consumer
A person must file an application with the income Security Programs division of Human Resources Development Canada in order
to receive an OAS pension. If the application is made after a person reaches age 65, the application may be approved
retroactively to age 65, up to a period of no greater than one year.
Provided that the recipient has lived in Canada for at least 20 years after reaching the age of 18, OAS payments will continue
even if that individual leaves Canada. However, if a person receiving OAS benefit does not meet this 20 year residency requirement
and he subsequently leaves Canada for six consecutive months, exclusive of the month he left Canada, then payment for any period
after six months may be suspended. Payment will resume in the month that he returns to Canada.
OAS Clawback: a special tax introduced in 1989 requiring the payment of OAS benefits by high-income
earners. The clawback is 15% of income that exceeds the 2004 threshold of $59,790. The OAS clawback threshold is indexed annually
for a change in the CPI.
OAS Clawback Rate: the rate, currently 15%, at which net income in excess of the OAS clawback threshold is
subject to repayment.
OAS Clawback Threshold: the amount below which the OAS need not be repaid ($59,790 in 2004).
Orphan Benefits: a flat rate monthly pension payable under the Canadian Pension Plan to the
dependant child of a deceased contributor.
Pensionable Employment: employment that generates income subject to Canada
Pension Plan contributions; any employment in Canada that is not specifically exempt under the
Canadian Pension Plan.
Pensionable Employment Earnings: earnings from pensionable employment.
Substantially Ceased Working: describes as individual under age 65 who has earnings
that are less than the certain current maximum CPP pension payable at age 65.
Survivor’s Pension: a pension payable under the Canadian Pension Plan to the surviving spouse
or common-law partner of a deceased contributor.
Tax Assistance for Retirement Savings: a system to defer taxation on both the original amounts
saved and the investment earnings on them.
Widow: for OAS, a widow includes widower, and means a person whose spouse or common-law partner has died,
and who has not thereafter become the spouse or common-law partner of another person.
Yearly Maximum Pensionable Earnings (YMPE): the upper ceiling on pesnionable earnings, beyond
which no additional Canada Pension Plan premiums are required. This amount is indexed annually to changes in the CPI.
Year’s Basic Exemption (YBE): a minimum level of earnings set at $3,500, below which no Canada
Pension Plan premiums are required.