Harlequin007

Hi Everyone,

New to the forum and probably going to be posting a ton of questions you've all heard before.

Planning on moving to Canada (Vancouver Island) in August.

I am 52 years old.

I have a private pension plan with a local authority here in the UK, and I am pretty clear on that - they tell me basically nothing changes. I just claim it as normal when the time comes.

What I am more unclear about is the "state pension" circumstance. I have been paying National Insurance contributions in the UK for 30 years, without a break (at least as far as I know - is there a way to verify that?). I understand that 30 years is the amount that entitles me to a full UK state pension.

Obviously by retirement age I will not have been in Canada that long, and whilst I have researched the different state schemes in Canada, what I am unclear about is exactly how the two countries sort out where my pension gets paid from, and how that happens.

My current belief is that I would have to claim a UK pension. If that is true, is the Canadian state pension payment, like NI, compulsory, and if it isn't, is there any reason for me to pay into it? Let me rephrase that, I understand that a dividend payment system (I have my own company) would reduce or obviate the need to pay into it to some extent, so it is more whether I need to pay into it in terms of getting benefit out at the other end.

Does anyone here have definitive answers, and can they point me to where I can find that?

Many thanks

EDITED for clarity

Dashie

You can apply for a pension statement, which will tell you exactly how many years you have contributed, so you know if there is any shortfall to make up.

https://www.gov.uk/state-pension-statement

As far as I'm aware, you can't pay into the CPP (Canada Pension Plan) unless you are earning. I asked at a Service Canada Office if I could make voluntary contributions, the answer was no. I think paying into it is compulsory if you are earning, and yes, you would need to pay into it to receive a pension (also what I was told when I asked about voluntary contributions).

There are people on here with a lot more in depth knowledge than me though, hopefully one of them will be along soon.

JonboyE

Yes, under the current rules 30 years NI contributions qualify you for a full state pension. However, the rules are about to change and I believe it will be incresed to 35 years. There will be a flat rate pension that is higher than the current basic pension.

At the moment you can make voluntary contributions to top up your NI record. I have not seen any suggestion this will change.

I presume that you are aware that you will not get cost of living increases as long as you stay in Canada.

Your UK pension will be paid from the UK, but you can choose to have it paid into a Canadian bank account in Canadian dollars.

There are two state pensions in Canada. Old Age Security and Canada Pension Plan. You qualify for OAS by residence. If you have lived in Canada for at least ten years before you retire you will get a prorated amount. I think the retiremant age will be about 65 1/2 for you so you will get someting like 13/40ths. The full amount is only about $550 a month so it is not a fortune. Still, it's better than a poke in the eye.

You qualify for CPP through contributions on earnings as an employee or self-employed. Contributions are 9.9% of earnings between $3,500 and $52,500. A self-employed person pays the whole premium. An employed person pays half and the employer pays the other half.

You do not pay CPP contributions on dividends so, if you operate through a corporation, you can choose to take salary or dividends and so whether or not to pay CPP.

Is is a good idea to earn dividends and avoid CPP? It depends on your other sources of income in retirement. CPP is properly funded and separated from other government money so it will be there in retirement. There is no requirement to have a set level of contributions to qualify, like NI, so every dollar you contribute will earn some sort of pension. However, if you are confident that your UK private pension will be enough to retire on then you can opt to save cash now.

Me? I pay as much as I can into CPP.

Edo

What if someone has lived/wprked in Canada for less than 10 years? What happens to all the government pension that they've paid from their salary in that case?

JonboyE

The ten year rule is for OAS. You don't pay directly for OAS - it comes from general revenue.

The governemnt pension you pay from your salary is CPP. You get a pension based on your contributions. There is no qualifying time limit for this.

Atlantic Xpat

Can you pay extra into CPP? Buy your 30yrs of contributions if you won't have lived and worked here for 30yrs by the time you come to retire?

Harlequin007

Cool

Thanks for the info folks. I was aware of the OAS and CPP. It seems that what you are saying is that at retirement age (whatever that may be by the time I get there) I will get:

1) A proportion of my UK state pension based upon my years of NI contributions, paid from the UK into my account, but without the inflationary increases from when I start claiming it. Currently 30/30ths, but potentially that could change to 30/35ths with the option to buy extra years.
2) X 40ths of the OAS where X is the number of years that I contribute in Canada
3) Some amount of money from the CPP which is a basic "you get out money based on how much money you put in (in terms of years rather than amount?)" ring-fenced government run pension scheme
4) Money from my personal private pension plan.

These are cumulative, as I understand what is being said.

Thanks

PMM

Hi


No.