How are my estimated government benefits calculated?
Old Age Security (OAS) and Canada Pension Plan (CPP) The platform assumes the member begins these benefits at the indicated age of accessing these benefits. Benefit calculations for both CPP and OAS are adjusted upward or downward to factor in this age, based on the factors used by the government of Canada (for CPP, increased by 8.4% for every year past age 65 and decreased by 7.2% for every year before age 65; for OAS, increased by 7.2% for every year past age 65). In the event there is a difference between the retirement age and the age at which CPP and OAS begins, the dollar amount in the projected retirement income bar chart is averaged out to the amount the member will receive over their retirement period. For OAS, we assume the member would live in Canada going forward. If the member’s projected retirement income is above the level at which OAS benefits are clawed back, we estimate the clawed back amount using rules provided by the Government of Canada as well as the remaining OAS amount, if any. For CPP, we assume that the member has and will continue to contribute to CPP. For those members whose inputted incomes are above the Year’s Maximum Pensionable Earnings (YMPE), we assume they will receive maximum CPP. For those whose inputted incomes are below the YMPE, we adjust their projected CPP benefits down proportionally. The CPP projection incorporates enhanced CPP, making a simplifying assumption that contributions before 2022 are subject to the base CPP benefit, and contributions in 2022 and beyond are subject to the enhanced CPP benefit. CPP benefits are assumed to be calculated based on the 40 years of income and CPP contributions before a member retires. Guaranteed Income Supplement (GIS) The plan assumes that members who are eligible to receive GIS in their retired years will receive it, and estimates amounts based on marital status and past and future contributions to a TFSA or RRSP. In the case of a married person, we assume the household income to be double of the individual annual income as provided by the member, and the calculated household income is used to compute the GIS. We also estimate that GIS will be clawed back based on any projected retirement income from CPP, RRSP, RRIF, RPP or other savings.
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