Government-Sponsored Retirement Income Programs



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 relationship.

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 Allowance.
The flat rate of OAS pension is payable commencing at age 65, and it is increased quarterly to match increases the Consumer Price Index.
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 pensionable 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.