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Tag: pensions

  • How to plan for taxes in retirement in Canada – MoneySense

    How to plan for taxes in retirement in Canada – MoneySense

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    The impact of your marginal tax rate

    It’s important to clarify, Ken, that if you have a minimum RRIF withdrawal with no tax withheld, that does not mean that income is tax-free. When you report your RRIF and other income sources on your tax return for the year, you may still owe tax.

    Canada has progressive tax rates so that higher levels of income are taxed at higher rates. For example, in Ontario, the first $12,000 or so you earn has no tax. The next roughly $3,000 has 15% tax. And the next $36,000 of income after that has about 20% tax. The type of income you earn may change these rates, as will tax deductions and credits. But if we kept going to higher incomes, there would be incremental increases in tax rates.

    If you have a higher income, your entire income is not taxed at the higher tax rate. Incremental tax rates lead to income being taxed at different rates as you move up through the tax brackets.

    This is why retirees tend to have tax owing. If you have a $10,000 pension, you may have no tax withheld at source. But if you have $60,000 of other income, you might owe 30% tax on that pension income.

    Getting ahead of tax installment requests

    If you owe more than $3,000 of tax in two consecutive years (or $1,800 in tax for two years in Quebec), the Canada Revenue Agency (CRA) (or Revenu Quebec) will start asking you to prepay your tax for the following year. This is called a quarterly income tax installment request.

    Installments—along with OAS clawbacks—tend to be the two cursed tax issues for retirees.

    You can reduce your installments by requesting higher withholding tax on your CPP, OAS, pension or RRSP/RRIF withdrawals, Ken. This optional tax withholding might be preferable if you would rather not owe tax or prefer to limit your installment requirements. If you can get your withholding tax rate estimated accurately, you may be able to better spend money coming into your bank account because it is all yours, and not accruing a tax liability.

    The choice is yours

    Many retirees do not have sufficient tax withheld by default. So, quarterly tax installments are common at that stage of life. But owing tax does not have to be a given if you prefer to increase your optional withholding tax.

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    Jason Heath, CFP

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  • What to do with a small pension in Canada – MoneySense

    What to do with a small pension in Canada – MoneySense

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    Many Canadian employers see DB plans, where retirees receive a guaranteed payout every month (sometimes indexed to inflation), as too expensive. And while the average time spent working for the same employer has actually risen over the last five decades, according to Statistics Canada data, spending a lifetime at one job—and collecting decades of pensionable earnings in the process—is a rarity these days. 

    “My dad worked for a bank for 35 years. That was the only job he ever had,” says Kenneth Doll, a fee-only Certified Financial Planner based in Calgary. “Those days are gone.” 

    Many Canadians must make do on partial pension coverage: either a small pension based on a decade or so of service, a defined (DC) contribution plan—where employers don’t provide backup funding if a plan underperforms—or a group registered retirement savings plan (RRSP), possibly with matching funding from their employer. Some Canadians don’t have a pension at all. “There is a massive decrease over the past 30 years in the number of defined-benefit pensions,” says Adam Chapman, financial planner and founder of YESmoney in London, Ont. 

    These pensions won’t pay all the bills like a traditional defined-benefit plan. So, what can people with insufficient pension coverage do? Ultimately, the answer lies in balancing the small (or not so small) guaranteed income from a pension and pushing the limits of other income streams. 

    How to plan your retirement now

    Every Canadian’s circumstances are different, and financial planners avoid speaking in generalities. But the earlier you start planning for retirement, the better. This applies whether you have nothing except the Canada Pension Plan (CPP) and Old Age Security (OAS), a DB plan indexed to inflation and guaranteed for life, or something in between. 

    First of all, sit down and figure out how much you plan to spend on life in retirement. Joseph Curry, a financial planner and president of Matthews Associates in Peterborough, Ont., says that when clients come to him, he maps out these details—as well as their expected income from CPP and OAS. All other income sources, including any pension income, are thrown in there, too. 

    “We have clients who would spend as little as, you know, $2,000 a month, all-inclusive,” Curry says. “And we have clients who would be spending in excess of $200,000 a year in retirement.” 

    One trick that works well is to max out any RRSP contribution room, then take the tax savings and throw them into a tax-free savings account (TFSA) for future retirement income. This can be tricky for Canadians with existing pensions, because their own and their employer’s pension contributions are deducted from their RRSP contribution room. For robust defined-benefit plans like the Ontario government’s Public Sector Pension Plan, it can remove thousands of dollars worth of contribution room a year. 

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    Brennan Doherty

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  • How to consolidate your registered accounts for retirement income in Canada – MoneySense

    How to consolidate your registered accounts for retirement income in Canada – MoneySense

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    There is a spousal attribution rule with spousal RRSPs that applies if you take withdrawals within three years of your spouse contributing. This may result in the withdrawals being taxed back to the contributor.

    When you combine an RRSP and a spousal RRSP, whether you like it or not, the new account must be a spousal RRSP. As a result, you would typically transfer an RRSP into the existing spousal RRSP. 

    There are no tax differences between an RRSP and a spousal RRSP for withdrawals, other than the aforementioned attribution rules. 

    Even if you separate or divorce, your spousal RRSP cannot be converted to a personal RRSP. 

    As a result, Steve, your wife could combine her RRSP and her spousal RRSP by converting them both to a spousal RRIF. I would be inclined to do this. 

    Combining LIRAs with other registered accounts

    Locked-in RRSPs have different withdrawal and consolidation rules than regular and spousal RRSPs. The locking-in provisions of your wife’s locked-in retirement account (LIRA) are meant to prevent large withdrawals. These funds would have come from a pension plan she previously belonged to. Pension money is treated differently from personal retirement savings, such that locked-in accounts have maximum withdrawals as well as minimum withdrawals. 

    In some provinces, an account holder may be able to unlock their locked-in account if the balance is below a certain threshold. This may apply for your wife, Steve, as you mentioned the account is small. Some provinces also allow a one-time unlocking of a portion of the account when you convert a LIRA to a life income fund (LIF), which is essentially a RRIF equivalent for a LIRA. 

    As a result, Steve, your wife may be able to get some or all of her LIRA account transferred to the same RRIF as her RRSP and spousal RRSP. If not, she will have to settle for having a RRIF and a LIF. 

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    Jason Heath, CFP

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  • New to Canada and no pension: How to save for your retirement – MoneySense

    New to Canada and no pension: How to save for your retirement – MoneySense

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    The difficulties facing newcomers to Canada with respect to retirement planning are particularly acute. Given how Canada’s immigration points system works, economic immigrants are usually in their late 20s or early 30s—and they face unique challenges:

    1. Depleted savings: If you’re a 30-year-old newcomer, chances are you’ve used a large portion—if not all—of your savings to set up your new life in Canada. So, you’re behind in the retirement savings game. If retirement savings were a 100-metre race, lifelong Canadians have a 20- to 30-metre head start over newcomers.
    2. Lower income: If you’re a newcomer to Canada, you’ve probably had to restart your career a few rungs lower on the corporate ladder because of your lack of Canadian work experience. This means you’re not earning as much as others your age who have similar experience. Consequently, your ability to save for retirement is lower.
    3. Lack of knowledge: You need to understand Canada’s financial and tax systems to maximize its retirement planning opportunities, and gathering this knowledge takes time.
    4. Reduced contributions: Joining the Canadian workforce later in life than their Canadian-born peers, immigrants have fewer years to contribute to the Canada Pension Plan (CPP) and build up registered retirement savings plan (RRSP) and tax-free savings account (TFSA) contribution room. For this reason, they rely on less tax-efficient unregistered savings and investment vehicles to sustain their retirements to a greater degree than their neighbours.

    But there’s good news. As Toronto-based financial advisor Jason Pereira points out, “Canada’s retirement system does not discriminate against newcomers. The rules are the same for everybody.” So, with the right knowledge and expertise, you can work towards building a strong retirement plan. 

    How to start retirement planning as an immigrant

    To plan for retirement, you need to know:

    • How much money will you need each month in retirement? The simplest method to estimate your income requirement in retirement is to consider it to be 70% to 80% of your current income. For example, if you earn $75,000 a year today, 70% of that is $52,500—that’s $4,375 per month—in today’s dollars. Alternatively, you could estimate the amount you’d need in retirement using this tool.
    • How much you’ll receive from government pension and aid payments: You need to estimate approximately how much you’ll get from the Canada Pension Plan (CPP) and other government programs: Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). The tool at this link will help you do so. Ayana Forward, an Ottawa-based financial planner, notes that “some home countries for newcomers have social-security agreements with Canada, which can help newcomers reach the eligibility requirements for OAS.”
    • How much you’ll receive from your employer-sponsored retirement plan: Workplaces without a defined benefit pension plan sometimes offer a registered investment account (usually a group RRSP), with contributions made by you and your employer or only your employer. If you have a group RRSP from your employer, what will its estimated future value be at the time of your retirement? You could use a compound interest calculator to find out.
    • How to make up for a shortfall: The CPP, OAS, GIS and your group RRSP likely won’t be enough to fund your retirement. You’ll need to make up for the shortfall through your personal investments or additional sources of income.

    Sample retirement cash flow for a 35-year-old (retirement age 65)

    This table illustrates the types of income you could have in retirement. The amounts used in the table are hypothetical estimates. (To estimate your retirement income, try the various tools linked to above.)

    Amount (today’s value) Amount (inflation adjusted)
    A Amount needed $52,500 $127,400
    B Government pension and aid payouts
    (CPP, OAS, GIS)    		 $22,000 $53,400
    C Employer-sponsored pension plan
    (group RRSP)    		 $8,000 $19,400
    D B + C $30,000 $72,800
    E Shortfall (A – D) $22,500 $54,600
    F Needed value of investments in the year of retirement (E divided by 4%, based on the 4% rule) $562,500 $1,365,000
    G Needed flat/constant monthly investment amount from now to retirement $969

    In the example above, the person faces an annual shortfall of $22,500. In other words, this person needs to generate an additional $22,500 per year to meet their retirement income needs, after accounting for the typical government pension or aid payouts and their employer-sponsored retirement plan. To do this, they’d need to invest about $969 per month, assuming an 8% annual rate of return from now to retirement 30 years later. How could they fill this gap and meet their shortfall? Enter self-directed investments, real estate and small-business income.

    Build your own retirement portfolio

    An obvious and tax-efficient way to cover your retirement income shortfall is to build your own investment portfolio from which to draw income in your retirement years. These investments can be held in registered or non-registered accounts. Registered accounts, such as the TFSA and RRSP, offer useful tax advantages—such as a tax deduction and/or tax-free or tax-sheltered gains, depending on the account—but the amount you can contribute to these accounts is limited. Non-registered accounts have no contribution limits but offer no tax advantages. 

    Newcomers often have lower TFSA and RRSP contribution room compared to their peers because they’ve lived and worked in Canada for a shorter period. “TFSA contribution room starts accruing the year of becoming a resident of Canada,” Forward explains. “RRSP contribution room is based on earned income in the previous year.”

    Your TFSA and RRSP contribution room information is available on your Notice of Assessment from the Canada Revenue Agency, which you’ll receive after you file your tax return. To check your TFSA limit, you can also use a TFSA contribution room calculator.

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    Aditya Nain

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  • How to plan for retirement when you have no pension – MoneySense

    How to plan for retirement when you have no pension – MoneySense

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    Retirement

    OAS payment dates in 2024, and more to know about Old Age Security

    Here’s how Canada’s Old Age Security pension program works, who’s eligible for OAS, when you can start receiving OAS,…

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    Michael McCullough

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  • How to manage as a single parent with no pension – MoneySense

    How to manage as a single parent with no pension – MoneySense

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    “If someone’s not lucky enough to have a company pension, it’s that much more crucial for them to be building up savings on their own,” says Millie Gormely, a Certified Financial Planner at IG Wealth Management in Thunder Bay, Ont. “But that’s really hard to do when you’re supporting yourself and your kids, because you’re having to stretch that income that much further.”

    As of 2022, there were about 1.84 million single-parent families in Canada, and they face unique financial challenges. For starters, the primary caregiver may be covering more than their share of the responsibility and cost of raising their kids, footing bills for everything from food to clothing and childcare. And, thanks to inflation, we all know the cost of living has gone way up in recent years. Plus, a single parent may also be shouldering the burden of saving for their kids’ education (read about RESP planning), taking on medical expenses and more. And then there’s the fact that single parents tend to have less income to work with in the first place. According to Statistics Canada, lone-parent families with two kids report an average household income that’s only about a third of what dual-earner families of four bring in. (Not half, a third.) 

    All this financial strain can be a serious hurdle to retirement planning, but it doesn’t mean it’s impossible to save for your future. 

    Pinpoint your goals

    The first step is to identify your long-term goals (consulting a financial planner can help with this part). You’ll want to figure out your desired income in retirement and how much saving you’ll need to do to reach your goal. The next step is to take a hard look at your spending habits and your budget to find funds you can set aside for your retirement. 

    You may wish to review past bank and credit card statements to get a clear picture of what you’re spending on essentials (which can include rent, groceries, transportation and daycare). You’ll also want to get a clear picture of your debts like credit card balances, personal lines of credit and mortgage instalments to help you identify your fixed costs. All of this will help you figure out a budget you can live with—and what you have left over for retirement savings.

    If what’s left isn’t much, don’t despair. Even a small monthly savings will help you in the long run, says Gormely. “Contributing something rather than nothing on a regular basis is going to put you so much further ahead than if you just throw up your hands,” she says.

    Assess potential sources of retirement income

    You may have more options than you realize. A registered retirement savings plan (RRSP) is a long-term investing account that is registered with the Canadian federal government and helps you save for retirement on a tax-deferred basis. It allows for plenty of room to help your money grow. For example, your RRSP contribution limit for 2024 is equal to 18% of your 2023 earned income (or $31,560, whichever is lower). You also can tap into unused contribution room from past years.

    A tax-free savings account (TFSA) is another option. Like an RRSP, a TFSA can hold any combination of eligible investment vehicles, including stocks, bonds, cash and more, and the growth will be tax-sheltered. “In general, for someone at a lower income level, they might be better off maxing out their TFSA first, and then looking at their RRSP as a source of retirement income,” says Gormely.

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    Karen Robock

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  • 40 and no pension: What do you do? – MoneySense

    40 and no pension: What do you do? – MoneySense

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    It’s not as big a problem as you might think. The key is to try to mimic the pay-yourself-first approach by setting up an automatic contribution to your registered retirement savings plan (RRSP) to coincide with your payday. A good rule of thumb to strive for is 10% of your gross income. Remember, in most cases the employees blessed with a defined-benefit pension are contributing around the same 10% rate (sometimes more) to their pension plan. You need to match those pensioners stride-for-stride.

    How much to save when you’re 40 and have no pension

    Let’s look at an example of pension-less Johnny, a late starter who prioritized buying a home at age 35 and has not saved a dime for retirement by age 40. Now Johnny is keen to get started and wants to contribute 10% of his $90,000-per-year gross income to invest for retirement.

    He does this for 25 years at an annual return of 6% and amasses nearly $500,000 by the time he turns 65.

    Source: getsmarteraboutmoney.ca

    Keep in mind this doesn’t take any future salary growth into account. For instance, if Johnny’s income increased by 3% annually, and his savings rate continued to be 10% of gross income, the dollar amount of his contributions would climb accordingly each year.

    This subtle change boosts Johnny’s RRSP balance to just over $700,000 at age 65.

    How government programs can help those without a pension

    A $700,000 RRSP—combined with expected benefits from the Canada Pension Plan (CPP) and Old Age Security (OAS)—is enough to maintain the same standard of living in retirement that Johnny enjoyed during his working years.

    That’s because when his mortgage is paid off, he’s no longer saving for retirement, and he can expect his tax rate to be much lower in retirement.

    40-year-old Johnny spends $40,000 per year, plus mortgage until the mortgage is fully paid off at age 60. Johnny retires at age 65 and continues spending $40,000 per year (inflation-adjusted) until age 95.

    CPP and OAS will add nearly $25,000 per year to Johnny’s annual income (in today’s dollars), if he takes his benefits at age 65. Both are guaranteed benefits that are paid for life and indexed to inflation. 

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    Robb Engen, QAFP

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  • Which types of pension income can be split with your spouse in retirement? – MoneySense

    Which types of pension income can be split with your spouse in retirement? – MoneySense

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    Here, we’re focusing on splitting pension income, which can include income sources that are not from traditional pensions.

    Can you split your income?

    Here’s a quick table for when you can and when you can’t split your income. Tap the pension income type to keep reading for the why and how.

    Income splitting for DB pensions

    When people think of pensions, they typically think of defined benefit (DB) pension income. DB pensions are calculated based on a formula that generally considers annual income and the number of years as an employee with the employer offering the pension, along with other factors, too. Most DB pensions will not make payments until age 55, but it may be possible to collect a pension earlier.

    DB pension income qualifies to split with your spouse or common-law partner. You can move up to 50% of the income to your spouse on your tax returns. You claim a deduction and they claim an income inclusion. You would only split pension income if it resulted in a net advantage, whether a reduction in combined tax payable or an increase in government benefits.

    Can you split income for SERPs?

    Supplemental executive retirement plans (SERPs) are non-registered plans for executives or other employees. And it bears mentioning that a supplemental DB pension, or top-hat executive pension, with payments that exceed the registered pension plan (RPP) maximums will not qualify for splitting.

    These pensions include a registered portion and an unregistered portion. The registered portion can be split, but the unregistered portion can only be reported on the recipient spouse’s tax return. The split between registered and unregistered will be reported on the pensioner’s government-issued tax slip so should be clear.

    What about RRSPs?

    Most people’s retirement savings are in their registered retirement savings plan (RRSP) account, including defined contribution (DC) pensions. RRSP withdrawals do not qualify for pension income splitting. However, if you convert your RRSP to a registered retirement income fund (RRIF), subsequent withdrawals will qualify starting when the account holder reaches age 65.

    You do not have to convert your RRSP to a RRIF until December 31 of the year you turn 71, with withdrawals beginning at age 72. But the ability to split RRIF withdrawals at 65 may cause someone to consider converting their account by age 64.

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    Jason Heath, CFP

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  • CPP payment dates this year, and more to know about the Canada Pension Plan – MoneySense

    CPP payment dates this year, and more to know about the Canada Pension Plan – MoneySense

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    About the Canada Pension Plan (CPP)

    The Canada Pension Plan is a retirement pension that offers replacement income once a person retires from working life. The CPP is a social insurance plan, and it’s one “pillar” of the retirement income system for Canadians—the other three are Old Age Security (OAS), the Guaranteed Income Supplement (GIS) and personal savings. The CPP is funded by contributions from workers, employers and self-employed individuals. It’s not paid for by the government, despite what many Canadians may think.

    A federally administered program, the CPP is mandatory, meaning that all Canadian workers and employers must contribute. The plan covers all of Canada except for Quebec, which has the Quebec Pension Plan (QPP) for residents of that province. Below are the remaining 2024 CPP payment dates.

    CPP payment dates for 2024

    • January 29, 2024
    • February 27, 2024
    • March 26, 2024
    • April 26, 2024
    • May 29, 2024
    • June 26, 2024
    • July 29, 2024
    • August 28, 2024
    • September 25, 2024
    • October 29, 2024
    • November 27, 2024
    • December 20, 2024

    Where does the CPP money come from?

    Unlike OAS and the GIS, the CPP is funded by employers and employees, and by self-employed people. These contributions, which show up as deductions on a paycheque, are aggregated and invested. For self-employed people, the CPP owed on your net business income is added to your tax bill. The principal plus any revenue earned goes back into the program.

    In January 2024, CPP contributions were raised as part of a seven-year government initiative, started in 2019, to increase retirement income. Read more about the CPP enhancement to see how much more you will pay as an employee or a freelancer.

    Who manages the CPP’s investment portfolio?

    The pension plan’s investments are managed by CPP Investments, a Crown corporation operating at arm’s length from the government. Every three years, the Office of the Chief Actuary of Canada evaluates the sustainability of the plan; the next review will be in 2025. “The CPP is projected to be financially sustainable for at least the next 75 years,” CPP Investments states on its website.

    Am I eligible for CPP?

    If you’re at least 60 years old and have made at least one contribution to the CPP, you are eligible to receive CPP payments. You may also be eligible if you’ve received CPP credits from a former partner or spouse who paid into the plan. CPP benefits are available to Canadian citizens, permanent residents, legal residents or landed immigrants.

    Should I apply for CPP or QPP?

    If you contributed to both the CPP and/or the QPP in Quebec during your working years, your residency at the time of your application determines which plan you’re eligible for—if you’re a Quebec resident, you apply for your pension from the QPP. Otherwise, you apply to the CPP.

    When you can start receiving your CPP

    You’re eligible to start receiving your pension anytime between the ages of 60 and 70 years old, but the younger you are when you begin receiving CPP, the smaller your monthly payouts will be. Many Canadians choose to begin receiving payouts at age 65.

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    Keph Senett

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  • How much money should I have saved by age 40? – MoneySense

    How much money should I have saved by age 40? – MoneySense

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    All the while, you’ve got a serious case of FOMO every time you check social media—all those friends who are jetting off on lavish vacations, buying new cars and splurging on cottages. How are ordinary Canadians actually doing this? And how can you get ahead and save more?

    What’s the average savings for Canadians in their 30s? How much should they have saved?

    A lot of Canadians are managing to save, despite the above financial challenges and obligations. According to Statistics Canada’s 2019 figures (the most recent available), the average person under age 35 had saved $9,905 towards retirement (RRSPs only) and held $27,425 in non-pension financial assets. For Canadians aged 35 to 44, these numbers are $15,993 and $23,743, respectively.

    The table below shows the average savings for individuals and economic families, which Statistics Canada defines as “a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common-law union, adoption or a foster relationship.” In 2019, the average household savings rate was 2.08%.

    Financial assets, non-pension No private pension assets, just RRSPs Private pension assets and RRSPs
    Individual under age 35 $27,425 $9,905 $25,263
    Economic family under age 35 $105,261 $140,662 $60,305
    Individual aged 35–44 $23,743 $15,993 $39,682
    Economic family aged 35–44 $131,017 $138,488 $399,771
    Source: Statistics Canada

    The pandemic had a positive effect on savings; the disposable income of the average Canadian rose by an additional $1,800 in 2020, according to the Bank of Canada. That meant most Canadians were able to save an average of $5,800 that year.

    Despite this pandemic silver lining, most Canadians aren’t saving enough for their age groups. When CIBC polled Canadians in 2019 on how much money they’d need in retirement, on average they guessed they would need $756,000. The actual amount you’ll need depends on many factors—to estimate your own number, check out CIBC’s retirement savings calculator.

    How to prioritize financial goals and obligations in your 30s

    With so much going on in your 30s, it can be very challenging to save when you have so much to pay for. After all, you may be carrying a lot of debt due to student loans, a car loan or a mortgage. In the third quarter of 2023, Canadians aged 26 to 35 owed an average of $17,159, and Canadians aged 36 to 45 owed $26,155, according to a report from Equifax.

    Maybe debt is less of a concern for you, but you’re saving for a big goal—like a down payment on a home—and you’re feeling the strain of a high interest rate and inflation. Perhaps you’d like to start a family, but you’re worried about the costs of raising a child. Or you’ve dabbled a bit in the stock market and want to make a few more investments.

    Whatever your situation, talking to a financial planner about your finances and your priorities can help you map out a customized financial plan that factors in your immediate goals—as well as long-term savings and retirement strategies. This might include focusing on paying off high-interest debt, putting aside money for a home, shopping around for life insurance and ensuring that you save each month.

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    Anna Sharratt

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  • China’s retirees don’t outnumber workers (yet)

    China’s retirees don’t outnumber workers (yet)

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    China’s population is poised to age dramatically in the coming years, posing financial strains to retirement pensions. But in recent remarks, President Joe Biden said this pain had already occurred.

    Biden, speaking to supporters in Seattle on May 12, said the U.S. maintains its strong economic position in part because of its openness to outsiders. “We’re not xenophobic,” he said. “We allow people to come in and work. We grow our economy.”

    He contrasted the United States’ demographics to China, the world’s second-biggest economy and arguably the U.S. biggest economic rival. 

    “Look at China,” Biden said. “China’s in a situation where they have more retired than working. They don’t know what to do about it.”

    This reversal is poised to happen — but in the early 2050s, about a quarter century from now.

    For now, “China’s aging crisis is still less severe than that of the United States, so unsurprisingly, its economic growth rate is still higher,” Fuxian Yi, a senior scientist in obstetrics and gynecology at the University of Wisconsin-Madison and a specialist on Chinese demographics, told PolitiFact. 

    But within a decade or so, “all of China’s demographic parameters will be worse than those of the United States, and its economic growth rate will begin to be lower than that of the United States,” Yi said.

    The White House did not provide additional information when we inquired. Biden said something similar at least once before, during a February 2021 town hall in Milwaukee with CNN’s Anderson Cooper. 

    Yi’s data show that today, China is home to 816 million people ages 16 to 59, and almost 283 million who are age 60 and older. That’s about 2.9 working-age people for every 60-or-older person. 

    China has different retirement ages — 60 for men, 55 for white-collar women and 50 for working-class women. So, changing the age groups used in this calculation can modestly shift the year these numbers reach parity.For these age brackets, the numbers equalize in 2052. 

    But whatever the age groups used, “President Biden’s remarks are indeed overstated and premature,” Yi told PolitiFact.

    By contrast, the United States has about 193 million people ages 19 to 64, compared with more than 56 million people age 65 and older. In the U.S., the full retirement age is 66 or 67 years old, depending on the person’s birth year.

    Other ways of slicing the data also foretell the coming fiscal squeeze on pensions in China, which has been exacerbated by the country’s one-child policy that was enforced from about 1980 to 2015.

    China’s median age — which had been under 20 in 1971 — is currently about 43. But it’s set to reach 60 in 2060, and 64 by century’s end.

    And the ratio of Chinese workers supporting each retiree is set to plunge.

    Today, China has about 4.4 working-age people (that is, aged 18 to 64) for every person who is 65 or older. That ratio is set to fall below 2-to-1 by 2040 and below 1-to-1 by 2081. 

    By comparison, the United States is in worse shape than China on this metric today; the current U.S. ratio of workers to retirees is about 2.6-to-1. But the U.S. curve is projected to level out rather than fall like China’s. China’s worker-to-retiree ratio is poised to sink below 2-to-1 in 2041 — a level that the U.S. is not forecast to fall below through the end of this century.

    China’s demographic quandary will have economic consequences, Yi said.

    “In the future, the economic gap between elderly China and middle-aged United States will again widen,” he said. “If the United States is overtaken as the world’s largest economy, it will be by India, not China.”

    Our ruling

    Biden said, “China’s in a situation where they have more retired than working.”

    That’s not the case today; it’s projected to happen about a quarter century from now, depending on which age brackets are used for the calculation.

    We rate the statement False.

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  • “Should I delay my CPP if I’m not contributing to it?” – MoneySense

    “Should I delay my CPP if I’m not contributing to it?” – MoneySense

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    Ask MoneySense

    Do all the advice articles about waiting to take CPP at age 70 take into account the calculation of your eligible amount if you stop working and contributing at, say 60 years old, and therefore have 10 years of no contributions?

    –Gary

    An applicant can begin their Canada Pension Plan (CPP) retirement pension as early as age 60 or as late as age 70. The earlier you start your pension, the lower your payments. Deferring CPP will result in higher monthly pension payments, albeit for a shorter period of time—fewer total months of payments—over the rest of your life. 

    Retiring at 60 or earlier

    If someone retires at age 60, Gary, their CPP contributory period that began when they turned 18 could be as much as 42 years. I say “as much as” because periods of disability or when your income was low because you were the primary caregiver for your children may be eligible to drop out from the CPP calculation. 

    This contributory period is important because if you do not make the maximum contributions during this period, you will generally not receive the maximum CPP retirement pension.

    What do most people receive from CPP?

    Most people do not receive the maximum. In fact, the average monthly CPP retirement pension payment at age 65 as of January 2024 was only $831.92, well below the maximum of $1,364.60. That means the average applicant is receiving less than 61% of the maximum. 


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    General dropout and zero-income years after 60

    There is a general dropout period from the CPP calculation of 17% of the years in your contributory period, which would be about seven years at age 60 for someone with no periods of disability or child-rearing eligibility. Let us build on this example, Gary. 

    If you are 60 and defer CPP to age 61 while not working, this may result in one more year of zero contributions and a contributory period (after the general dropout) that increases to 36 years. One divided by 36 equals about 2.78%. That could be the reduction in your CPP for deferring while having no income. 

    However, deferring CPP results in a 0.6% monthly increase in your pension, or 7.2% per year. This is regardless of your contributory period. 

    So, in our example, a year of deferring results in a 7.2% deferral increase but a 2.78% zero-income decrease. The net benefit is still a 4.42% increase in your pension plus the annual inflation adjustment. 

    A year of no income for someone with less than the maximum required contributions between 60 and 65 does have a small negative impact on the benefit of deferring, Gary. But deferring still results in a higher pension in this example. 

    Deferring CPP after 65

    If you defer CPP past age 65, you can drop up to five additional years from your contributory period for the years between 65 and 70. That means years with no earnings after age 65 will not impact your retirement pension when you defer after age 65. 

    CPP deferral after age 65 will boost your pension by 0.7% per month or 8.4% per year plus an annual inflation adjustment. Statistics show few people defer CPP after age 65. Generally, in recent years, less than 5% have waited until age 70.

    Ultimately, CPP timing should be a somewhat personal decision based on contributory history, life expectancy, investment risk tolerance and, of course, income needs. Healthy seniors, especially women (who tend to live longer than men) and those with a lower investment risk tolerance, may benefit from deferring CPP.


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  • RRIF and LIF withdrawal rates: Everything you need to know – MoneySense

    RRIF and LIF withdrawal rates: Everything you need to know – MoneySense

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    You do not have to wait until age 71 to convert your RRSP. Most people consider doing so once they have retired.

    RRIF withdrawal rates

    The minimum age at which you can convert an RRSP to a RRIF varies by province: it’s 50 in some, and 55 in others. But starting the year after conversion, you must begin to make minimum withdrawals from your RRIF. The table below includes the minimum withdrawal rates for all RRIFs set up after 1992. It shows the percentage of the account balance (at the previous year-end) that must be paid out in the current year.

    Age at end of previous year Withdrawal rate for current year Age at end of previous year Withdrawal rate for current year
    55 2.86%   76 5.98%
    56 2.94%   77 6.17%
    57 3.03%   78 6.36%
    58 3.13%   79 6.58%
    59 3.23%   80 6.82%
    60 3.33%   81 7.08%
    61 3.45%   82 7.38%
    62 3.57%   83 7.71%
    63 3.70%   84 8.08%
    64 3.85%   85 8.51%
    65 4.00%   86 8.99%
    66 4.17%   87 9.55%
    67 4.35%   88 10.21%
    68 4.55%   89 10.99%
    69 4.76%   90 11.92%
    70 5.00%   91 13.06%
    71 5.28%   92 14.49%
    72 5.40%   93 16.34%
    73 5.53%   94 18.79%
    74 5.67%   95 or older 20.00%
    75 5.82%  
    Source: Rates calculated using the CRA’s prescribed factors formulas.

    Locked-in retirement accounts (LIRAs)

    The withdrawal rates above represent the minimum percentages that must be withdrawn, but account holders can make larger withdrawals if they need to or want to, as long as the account is not locked in.

    Why do some Canadians have locked-in accounts? When a pension plan member leaves a pension, they may have the opportunity to transfer funds from their pension to a locked-in retirement account (LIRA). If they have a defined contribution (DC) pension, they may transfer the investments to a locked-in account. If they have a defined benefit (DB) pension plan and elect to receive a lump sum commuted value and to forgo their future monthly pension payments, they may be eligible to transfer some or all of the funds to a locked-in account.

    A locked-in RRSP may also be called a LIRA. LIRA is the term used in B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, New Brunswick, and Newfoundland and Labrador.

    You can withdraw from an RRSP, but you cannot withdraw from a locked-in RRSP. The latter must be converted to the locked-in equivalent of a RRIF: a life income fund (LIF) is most common, although Newfoundland and Labrador has locked-in RIFs (LRIFs) and Saskatchewan and Manitoba have prescribed RRIFs.

    LIF withdrawal rates

    LIFs have the same minimum withdrawal rates as RRIFs. But they also have maximum withdrawal rates, which vary by province and territory, to prevent former pension plan members from spending their pension funds too quickly. The table below shows the maximum withdrawal rates for LIFs.

    Age at end of previous year LIF/LRIF withdrawal rates:
    B.C., Alta., Sask., Ont., N.B., N.L.     		LIF withdrawal rates:
    Manitoba, Quebec, Nova Scotia    		 LIF withdrawal rates:
    federal, Yukon, Northwest Territories, Nunavut
    55 6.51% 6.40% 5.16%
    56 6.57% 6.50% 5.22%
    57 6.63% 6.50% 5.27%
    58 6.70% 6.60% 5.34%
    59 6.77% 6.70% 5.41%
    60 6.85% 6.70% 5.48%
    61 6.94% 6.80% 5.56%
    62 7.04% 6.90% 5.65%
    63 7.14% 7.00% 5.75%
    64 7.26% 7.10% 5.86%
    65 7.38% 7.20% 5.98%
    66 7.52% 7.30% 6.11%
    67 7.67% 7.40% 6.25%
    68 7.83% 7.60% 6.41%
    69 8.02% 7.70% 6.60%
    70 8.22% 7.90% 6.80%
    71 8.45% 8.10% 7.03%
    72 8.71% 8.30% 7.29%
    73 9.00% 8.50% 7.59%
    74 9.34% 8.80% 7.93%
    75 9.71% 9.10% 8.33%
    76 10.15% 9.40% 8.79%
    77 10.66% 9.80% 9.32%
    78 11.25% 10.30% 9.94%
    79 11.96% 10.80% 10.68%
    80 12.82% 11.50% 11.57%
    81 13.87% 12.10% 12.65%
    82 15.19% 12.90% 14.01%
    83 16.90% 13.80% 15.75%
    84 19.19% 14.80% 18.09%
    85 22.40% 16.00% 21.36%
    86 27.23% 17.30% 26.26%
    87 35.29% 18.90% 34.45%
    88 51.46% 20.00% 50.83%
    89 or older 100.00% 20.00% 100.00%
    Source: Office of the Superintendent of Financial Institutions and Empire Life.

    There may be situations where locked-in account holders can make withdrawals that exceed the annual maximum. In Ontario, for example, there may be unlocking options for people experiencing financial hardship from:

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  • Dallas Continues To Look for a Long-Term Plan To Fix Its Pensions

    Dallas Continues To Look for a Long-Term Plan To Fix Its Pensions

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    For many, having a pension means having security. Both uniformed and non-uniformed employees in Dallas have pensions, but their plans have been in trouble for some time, making their future seemingly less secure.

    Dallas’ pensions are underfunded by billions of dollars, and the city is looking for a fix. The police and fire pension has faced financial trouble since 2015, almost folding in on itself in 2017 before the state got involved. Failure to fix pensions could make it difficult to attract or retain employees in the city, including police and firefighters. We’re going to try to break it down for you here.

    Jack Ireland, Dallas’ chief financial officer, aimed to explain it all to members of the Ad Hoc Committee on Pensions earlier this month. The committee is made up of several Dallas City Council members, and even some of them had trouble keeping up with Ireland at times.

    State of the City’s Pensions

    Ireland explained that the city has two primary employer benefit pensions that provide retirement, disability and death benefits for permanent city employees. There’s the Dallas Police and Fire Pension System for uniform employees. Then, there’s the Employees’ Retirement Fund for civilian and non-uniformed employees. The Texas Pension Review Board oversees all of the state’s public retirement systems for soundness and compliance with state reporting requirements.

    The Texas Pension Review Board funding guidelines require that both pensions be fully funded within 30 years. But both of the city’s pensions are underfunded and exceed the Texas Pension Review Board’s 30-year requirement, Ireland said. As of Jan. 1, 2022, the Dallas Police and Fire Pension system was projected to be fully funded in 68 years. It’ll take the Employees’ Retirement Fund 51 years to be fully funded, as of Dec. 31, 2022. The police and fire pension is short some $3 billion, and the employee pension is short more than $1 billion.

    “I don’t know how we can retain or even attract employees,” City Council member Paula Blackmon said when asked what would happen if the pensions didn’t get fixed.

    “If you can’t meet your obligations, and this is an obligation, then I don’t know why anybody would come work at the city,” Blackmon, a member of the Ad Hoc Committee on Pensions, said. “So, that’s what’s at stake, I guess, with our organization to some degree.”

    The boards of the two pensions and the city are working to come up with a funding soundness restoration plan to comply with the 30-year requirement. These plans must be submitted prior to Sept. 1, 2025, in accordance with state law.

    However, legislation passed in 2017 aimed to stabilize and improve the Dallas Police and Fire Pension requires its board to adopt a funding plan to comply with the 30-year requirement and submit it to the pension review board by Nov. 1, 2024.

    Originally established in 1916, the Dallas Police and Fire Pension now has 5,085 active employees. About 18% of them are Dallas residents, and the rest come from outside of the city. Their average salary is about $88,740. The retiree and beneficiary headcount for the pension is at 5,289. About 8% of those individuals live in Dallas. Their average annual retirement benefit is about $51,732. 

    “I don’t know how we can retain or even attract employees.” – Dallas City Council member Paula Blackmon

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    The Employees’ Retirement Fund was established in 1944 and now has 7,464 active employees. About 44% of them are residents of Dallas and they make an average salary of $60,816. The pension’s retiree and beneficiary headcount is slightly higher at 7,766. The average annual retirement benefit is $40,883. The Employee Retirement Fund is about 73% funded as of Dec. 31, 2022.

    Why are the pensions so underfunded?

    One reason the police and fire pension is underfunded is poor real estate investments. The pension sunk more than $1 billion in ill-advised direct real estate investments from 2005 to 2009. The 2008–09 real estate decline obliged the pension to write down these assets by hundreds of millions of dollars, resulting in its first report of financial challenges in 2015.

    Before 2017, the pension board also authorized Deferred Retirement Option Plan provisions that severely harmed the fund, Ireland explained. The Deferred Retirement Option Plan had several harmful provisions: there was a floor of 8% interest annually; it allowed deferral of monthly deposits in the Deferred Retirement Option Plan after retirement; there was no limit on time in the plan; and it allowed active members to take unlimited distributions from the plan.

    Deferred Retirement Option Plan balances grew to more than $1.5 billion, or 58% of total assets by 2016. Members began to worry about losing access to Deferred Retirement Option Plan accounts. So, a “run-on-the-bank” occurred with more than $600 million being withdrawn from the plan before it was closed for withdrawals in 2016.

    A decrease in the number of employees beginning in 2008 and projected payroll growth compared to actual payroll growth affected the Employees’ Retirement Fund’s funding. The active employee headcount is 11% lower than it was in 2008, and payroll growth assumptions are based on projected number of active employees and changes in pay.

    In December 2016, changes were made to the employee pension to improve funded percentage and projected years to reach full-funding. Those changes are projected to result in $2.15 billion in savings through 2055.

    How did the city and state respond to the pension problems?

    In 2017, the Texas Legislature passed House Bill 3158 to address near-term issues and provide a long-term solution for the police and fire pension by 2025. The Police and Fire Pension Board also went through some changes as a result of the legislation. Instead of being dominated by police and fire personnel and council members, it would have six mayoral appointees and five trustees elected by members. Changes were made to employee contribution rates and the city’s fixed-rate contributions. Future benefits were reduced for active employees, retirees and beneficiaries. The bill also reduced the unfunded liability by $1 billion and increased the funding ratio to 49% with full funding projected for 44 years.

    Additionally, the bill mandated an independent review of the police and fire pension and plan changes to be submitted to the Pension Review Board by Nov. 1, 2024.

    What can the city do about its pension woes?

    The financial analysis firm Cheiron Inc., selected to review the police and fire pension, had several preliminary recommendations. It said the city’s fixed-rate contribution needs to move to an actuarially determined contribution. According to the Texas Comptroller, an actuarially determined contribution is the total contribution rate needed to pay for the normal cost of benefits and pay down any unfunded liabilities over a certain period of time.

    The firm noted that member contributions should not be increased, and may need to be decreased over time. And it recommended granting some cost of living adjustments sooner to protect the adequacy of retirees’ lifetime income and to remain competitive with other public safety plans. Under current plans, cost of living adjustments won’t be available until the pension is 70% funded, which could take until 2073.

    But city staff have some concerns about Cheiron’s recommendations, Ireland explained. For one, providing cost of living adjustments before 2073 could increase the unfunded liability and make achieving the 30-year-timeline more costly. The firm’s analysis assumes 2.5% growth in payroll but does not recognize pay increases provided through meet and confer agreements or intentions to increase staffing for either Dallas Fire-Rescue or the Dallas Police Department.

    At the request of the city, a study group made up of local financial experts came up with its own list of recommendations. It suggested the city make contributions in addition to its current annual contributions of 34.5% of regular pay plus $13 million. The city’s additional contributions would begin with fixed incremental payments that increase by $20 million per year over the first three years of the plan period. The study group advised that the city’s fixed-rate contributions could be changed to an actuarially determined contribution beginning in 2028 to achieve full funding within 30 years. Another recommendation included cost of living adjustments once the pension is 70% funded. The city could also seek additional funding by monetizing its assets.

    There are several options on the table for the Employees’ Retirement Fund to become fully funded in 30 years. It could eliminate the maximum contribution cap of 36% of pay starting in January 2025. Eliminating the contribution cap would require voter approval, a point of contention for at least one City Council member, Cara Mendelsohn. She doesn’t want residents to vote on changes to the employee pension before there’s a plan for the police and fire pension.

    “I have no intention of voting to put this on a ballot when we don’t have a solid plan for the police [and] fire pension fund,” Mendelsohn said, according to The Dallas Morning News. “I think it’s extremely objectionable that we would even dare to do that when our most desperate staffing in this entire city is the police and fire departments, and we’re currently not meeting our staffing goals.”

    Mendelsohn later told the Observer she’d like to know other options for fixing the Employees’ Retirement Fund. “There are options we have not yet considered like converting to a 401k plan or similar individual retirement account system with an employer contribution or evaluating a move of this pension to the state retirement system,” she said.

    Higher contributions from the city could be phased in at 2% per year over five years, Ireland said. The city would use an actuarially determined contribution rate from there. It could increase the employee contribution rate to a maximum of 14%. A lump sum contribution by the city would have a positive impact on the actuarially determined contribution and Dallas’ future annual contributions.

    From there, the city could submit its plans to the pension review board by August or September.

    Blackmon said the city is looking for long-term solutions. “You don’t want to put something in place that is a stop gap measure,” she said. “You really want something in place that has long-term effects. I believe that’s what the council is looking for. What is that long-term plan that makes these pensions funded, not just in five years or in 30 years, but in 60 years?”



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  • Macron goes all in with high-stakes reshuffle to combat far right

    Macron goes all in with high-stakes reshuffle to combat far right

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    PARIS  — French President Emmanuel Macron has propelled rising star Gabriel Attal center stage in a high-risk gamble aimed at stopping the far right’s surge ahead of the European election.  

    In a surprise move on Tuesday, Macron appointed his former education minister and one of France’s most popular politicians as the country’s youngest-ever prime minister in a bid to re-energize his flagging presidency — at the risk of hastening the end of his own reign.

    Macron has been under pressure to jump-start his presidency as the far-right National Rally outstrips the centrists in polls ahead of the EU election in June, and in the wake of two brutal fights last year over immigration and pensions. 

    In contrast to the no-holds-barred election campaign led by 28-year-old Jordan Bardella, the National Rally’s lead candidate, Macron’s presidency has struggled to project any energy and vitality after seven years running France, and talk of a lame-duck presidency has become widespread in political circles.

    Despite his short political career, the 34-year-old Attal has earned himself a reputation as an obstinate attack dog or a “word sniper” against the far right, having already crossed swords with Bardella in past election debates, and a deft operator fluent as government spokesperson during the Covid pandemic and as education minister. 

    “It’s a great media coup,” said a conservative Les Républicains heavyweight, who was granted anonymity to discuss a sensitive topic. Macron “is doing it because [Attal] will lead the European election campaign … he was the only one who could hold his own against Bardella,” he said. 

    Several political insiders told POLITICO the battle of the European election was one of the main reasons Macron chose Attal.

    “Gabriel Attal and Jordan Bardella are of the same generation, it’s obvious. Attal has political acumen, knows how to deliver a punchline, with substance, so it’s someone who can face off with the National Rally,” said an aide to Macron. But it’ll be thanks to “his action” that he’ll be able to beat the National Rally, he added.

    The nomination of a pugnacious politician with his own ambitions also carries a sizeable risk for the president, who has in the past favored more self-effacing, technocratic figures as his lieutenants. An Attal premiership may accelerate conversations on what comes after Macron as the French president cannot run for a third term. 

    The meteoric rise of Attal, not unlike Macron himself, is also ruffling feathers among Macron’s heavyweight allies who look askance at the young uber-achiever taking over the reins of government. Macron was “forced to work hard” to get the nomination accepted when it was supposed to be “a slam dunk,” said an ally of the president on Monday. 

    Macron’s Mini-Me on the campaign

    The upcoming European election will be the last time Macron faces off with his nemesis Marine Le Pen before the end of his mandate in four years. A far-right victory would resonate for years and poison the president’s legacy. 

    The clash comes at the worst possible time for the president, however. Not only does the National Rally lead his centrist alliance by almost 10 points in polls, but Macron’s presidency has hit rock bottom. 

    EUROPEAN PARLIAMENT ELECTION POLL OF POLLS

    For more polling data from across Europe visit POLITICO Poll of Polls.

    The president’s troops have emerged battered after his much-hardened immigration bill was passed with the support of the far-right, an episode that almost splintered his centrist alliance. The immigration battle came on the heels of acrimonious debates last spring over the reform of French pensions which sparked weeks of nationwide protests.

    Macron is languishing in poll ratings according to POLITICO’s Poll of Polls with only 30 percent approval ratings.

    His outgoing Prime Minister Élisabeth Borne was criticized as a technocrat who lacked charisma and political agility, worn out by successive struggles to pass legislation following Macron’s defeat in parliamentary elections last year. She also lost a lot of political capital when she failed to anticipate or prevent a shock defeat in parliament, when the National Assembly rejected the immigration bill without a vote in December.

    Attal, on the other hand, is a fresh hand at the helm. 

    “It’s great news, we’re going to have a government head who is a political operator, and capable of embodying Macron’s pro-European vision,” said Alexandre Holroyd, an MP from Macron’s Renaissance Party.

    “To stop the far-right, which is rising not just in France but across Europe, we have to show that political action is efficient,” and talking to the general public is one thing Attal is good at, he added. 

    Strategically, Attal’s nomination may also help secure the support of center-left voters, as leftwing MEP Raphaël Glucksmann emerges as a competing candidate ahead of the European election. Attal, a former Socialist Party member and the first openly gay prime minister, espouses progressive ideas and has made cyber-bullying and homophobia prominent causes. 

    What’s really changed?

    Macron himself has tasked Attal with the “regeneration” of his government, with “audacity” and “in the spirit of 2017,” his first election year, he wrote on X.

    But while Attal is a fresh face, Macron’s margin of maneuver on the domestic front is shrinking, and it’s unlikely the new premiership will be plain sailing. The centrists still lack a majority in parliament, so passing legislation will remain a painful, humiliating process as the government seeks ad hoc alliances with opposition MPs. 

    Macron is also struggling to find inspiration for his second mandate, and has piled up vague initiatives, such as the “100 days” last year, the “Saint Denis meetings” with opposition leaders, and this month “the meeting with the nation.”

    But the nomination does partially resolve an issue that has dogged Macron’s camp for weeks: who will run as Macron’s lead candidate in the European election? The far right has been hitting the campaign trail for weeks and Macron, a notorious procrastinator, has still not chosen a lead candidate for France’s Renew campaign.

    With many heavyweights in government reluctant to lead a difficult campaign, the names floated in Paris — Europe Minister Laurence Boone or Renew Group leader Stéphane Séjourné — appeared to lack sufficient clout to stand up to the far-right.

    Gabriel Attal carries more than just the European campaign on his shoulders | Pool photo by Ludovic Marin via AFP/Getty Images

    With this week’s reshuffle, Renew’s lead candidate in France could play more of a supporting role. 

    But Attal carries more than just the European campaign on his shoulders. As one of the stars of “Génération Macron,” young politicians who straddle the left-right divide and came to power with the French president, Attal will save or hasten the end of Macronism and its centrist, pro-European political offer.

    It’s the “last bullet before the end of his mandate,” said the same conservative heavyweight cited above.

    Pauline de Saint Remy contributed reporting 

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  • OAS entitlement and deferral rules for immigrants to Canada – MoneySense

    OAS entitlement and deferral rules for immigrants to Canada – MoneySense

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    You generally need 40 years of residency in Canada after the age of 18 to qualify for the maximum OAS pension. The maximum monthly payment as of the fourth quarter of 2023 is $707.68 for someone who started their OAS at age 65. Someone aged 75 or older would be entitled to up to $778.45.

    Exceptions to the OAS residency requirement

    There may be situations where you qualify for the full pension without meeting the 40-year residency requirement. One example would be if you were over 25 and lived in Canada or had an immigration visa on or before July 1, 1977.

    Another instance where you may qualify for a higher pension is if you lived in a country with a social security agreement with Canada. Time spent in other countries may count towards your OAS residency formula. If you worked outside Canada for the Canadian Armed Forces or an international charitable organization, this time might also count.

    Deferring OAS to increase residency requirements

    If you have under 40 years of residency, your pension is pro-rated. You need to have lived in Canada for at least 10 years after the age of 18 if you apply for OAS as a Canadian resident. If you live outside of Canada when you apply, you need 20 years of residency.

    Interestingly, Amin, you can defer your OAS pension after age 65 to increase your residency requirements. This can work well for someone who is trying to get to 10 or 20 years, respectively, to qualify for the pension at all. In your case, the deferral will not have an impact on the residency calculation. I will explain why.

    The reason is an OAS recipient deferring their pension after age 65 can only benefit from one of two enhancements: one, the years of residency; or two, the age-based increase. If you defer OAS to after age 65, your age 65 entitlement increases by 0.6% per month or 7.2% per year of deferral. You can start it as late as 70 for a maximum 36% increase.

    If you get an extra year or 1/40th of residency, that amounts to a 2.5% boost in your OAS.

    Unfortunately, Amin, you cannot get the 2.5% residency boost and the 7.2% age boost for deferring. You get the higher of the two, which is obviously the age-based adjustment of 7.2%.

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    Jason Heath, CFP

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  • GM settles strike at Canadian plants | CNN Business

    GM settles strike at Canadian plants | CNN Business

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    New York
    CNN
     — 

    A strike at General Motors’ Canadian plants is over less than a day after it started, according Unifor, the union that represents more than 4,000 autoworkers at the company.

    The strike had begun 11:59 pm Monday when Unifor said GM had refused to agree to a deal similar to the one the union previously reached with Ford. That kind of deal is known as a pattern agreement.

    The union said the company quickly gave in to union demands once the strike started.

    “When faced with the shutdown of these key facilities General Motors had no choice but to get serious at the table and agree to the pattern,” said Unifor National President Lana Payne. “The solidarity of our members has led to a comprehensive tentative agreement that follows the pattern set at Ford to the letter.”

    The union said strike actions are on hold to allow the membership to vote on the tentative agreement. The strike could resume if the rank-and-file members fail to ratify the deal.

    But it’s uncertain whether it will win approval of membership. Only 54% of Unifor members at Ford voted in favor of the deal.

    The Unifor strike occurred while GM as well as rivals Ford and Stellantis were already dealing with strikes by the United Auto Workers union. That strike had started September 15 against targeted facilities of each company. More than 25,000 UAW members are now on strike at the three companies, with nearly 10,000 of those at GM.

    “This record agreement, subject to member ratification, recognizes the many contributions of our represented team members with significant increases in wages, benefits and job security while building on GM’s historic investments in Canadian manufacturing,” said GM’s statement.

    Details of the Unifor deal were not immediately available. But the deal with Ford included a wage increase of 10% in the first year of the agreement, followed by a 2% and 3% increase over the next two years of the contract. It also restored the cost-of-living adjustments (COLA) to protect workers from rising prices.

    The Ford agreement also returned to a pension plan — rather than just 401(k)-style retirement accounts — for Unifor members hired at Ford in recent years. And it converted temporary staff who work full-time shifts into permanent employees.

    Autoworkers in both Canada and the United States used to all have COLA clauses in their contracts as well as traditional pension plans that pay retirees a set amount every month as long as they live. But the automakers got unions on both sides of the border to give up the COLA for all members and traditional pensions for new hires when the companies were in financial distress in 2007 through 2009.

    Restoring those concessions have been a major negotiation demand of both Unifor and the UAW.

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  • Call to arms: Thousands of Revolutionary War stories are waiting to be told. A new project asks the public to help uncover them | CNN

    Call to arms: Thousands of Revolutionary War stories are waiting to be told. A new project asks the public to help uncover them | CNN

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    CNN
     — 

    The National Park Service and US National Archives and Records Administration are calling on Americans to help reveal the untold stories of the United States’ first veterans to commemorate the upcoming 250th anniversary of American independence.

    The Revolutionary War Pension Files Transcription Project aims to transcribe approximately 2.3 million original documents that correspond with more than 83,000 individual soldiers. The information spans 150 years, from wartime records to 20th century inquiries made by veterans’ descendants.

    The goal of the project is to unearth personal stories from the battlefield and home front, using information included in federal pension applications from Revolutionary War veterans and their widows, according to the National Park Service. And they need the public’s help to do it.

    “We’re asking the public in the next three years, as we lead up to the 250th anniversary of the United States, to help us transcribe the pension files to be able to unlock these stories of our first veterans,” Suzanne Isaacs, community manager for the National Archives Catalog, said.

    While the Continental Army issued signed discharge papers, veterans who served in the militia had to give oral testimonies and provide witnesses to corroborate their stories. As a result, thousands of court records have yet to be digitally transcribed in the National Archives Catalog.

    These verbal attestations were an opportunity for veterans to tell their stories in vivid detail. When pension acts were put in place in the early 19th century, many veterans were elderly and illiterate, so they gave detailed accounts in hopes of recording their life stories.

    However, relying on oral testimonies also allowed for embellished tales that were difficult to disprove.

    For example, William Shoemaker testified that he spent 18 months as a prisoner of war to receive pension pay. Historian Todd Braisted discovered, more than two centuries later, that Shoemaker joined a loyalist unit and was captive for only two months.

    When requirements for pension pay loosened in the 1830s, widows who were married before the conclusion of the war became eligible to apply. To receive funds, widows had to give oral testimonies about their husbands’ service and provide proof of their marriage.

    That means the National Archives files also include documents such as marriage licenses, wartime letters and soldiers’ diaries.

    Judith Lines applied for widow’s pension in 1837 using one of the rarest kinds of documents – a correspondence from her husband written during his service under Gen. George Washington. John Lines’ 1781 note is the only known preserved letter penned by a Black Continental soldier.

    With the help of volunteer archivists, these rare, firsthand stories from the Revolutionary War will be more accessible to the public and archived in the National Archives. Volunteers can register for a free account with the National Archives Catalog. No prior experience is required.

    “This project is a way to help make accessible the records of our first veterans, the veterans of the Revolutionary War,” Isaacs said.

    The veterans and their families might never have imagined that their accounts of the war and its effects on their lives could be so readily available to the nation. The documents included in this project offer a personal perspective that, before now, was largely unknown.

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  • Goodbye child care centers, hello elderly homes: South Korea prepares for aging population | CNN

    Goodbye child care centers, hello elderly homes: South Korea prepares for aging population | CNN

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    Seoul, South Korea
    CNN
     — 

    South Korea is getting older – and its care facilities are changing to match.

    The number of child care facilities in the country has shrunk by almost a quarter in just a few years, reflecting authorities’ unsuccessful campaign to encourage couples to have more babies.

    In 2017, there were more than 40,000 child care facilities, according to new government figures released Friday – by the end of last year, that number had fallen to roughly 30,900.

    Meanwhile, as the population rapidly ages, the number of elderly facilities has boomed from 76,000 in 2017 to 89,643 in 2022, according to the country’s health and welfare ministry.

    Elderly facilities include senior care homes, specialized hospitals, and welfare agencies that help the elderly navigate social services or protections. Meanwhile, the child care facilities listed include public services as well as private and corporate ones.

    The shift illustrates a years-long problem South Korea has thus far failed to reverse. It has both one of the world’s fastest aging populations and the world’s lowest birth rate, which has been falling continuously since 2015 despite authorities offering financial incentives and housing subsidies for couples with more babies.

    Experts attribute this low birth rate to various factors, including demanding work cultures, stagnating wages, rising costs of living, the financial burden of raising children, changing attitudes toward marriage and gender equality, and rising disillusionment among younger generations.

    By the late 2000s, the government had begun warning that policy measures were needed to encourage families to grow. Last September, South Korean President Yoon Suk Yeol admitted that more than $200 billion has been spent trying to boost the population over the past 16 years.

    But so far nothing has worked – and the effects have been increasingly visible in the social fabric and day-to-day life.

    Many elementary, middle and high schools are closing around the country due to a lack of school-age children, according to Korean news agency Yonhap, citing the education ministry. Figures from the country’s official statistics body show the overall number of middle and high schools have remained stagnant for years, only rising by a few dozen since 2015.

    In Daejeon, south of Seoul, one such abandoned school has become a popular spot for photographers and urban explorers; images show eerily empty hallways and a school yard overgrown by wild grass.

    A photographer outside an abandoned school near Daejeon, South Korea, on March 22, 2014.

    Similar crises have been seen in other East Asian countries with falling birth rates. One village in Japan went 25 years without recording a single birth. The arrival of a baby in 2016 was heralded as a miracle, with elderly well-wishers hobbling to the infant’s house to hold him.

    Meanwhile, South Korea’s expanding elderly population has meant an explosion in demand for senior services, placing strain on a system scrambling to keep up.

    South Korea has the highest elderly poverty rate among the OECD nations (Organisation for Economic Co-operation and Development), with more than 40% of people over 65 years old facing “relative poverty,” defined by the OECD as having income lower than 50% of median household disposable income.

    “In Korea, the pension system is still maturing, and current generations still have very low pensions,” the OECD wrote in a 2021 report.

    Experts point to other factors such as global economic trends, the breakdown of old social structures that saw children looking after their parents, and insufficient government support for those struggling financially.

    That means a number of homeless elderly people – part of a generation that helped rebuild the country after the Korean War – having to seek assistance from shelters and soup kitchens.

    The rapid rise in elderly facilities in recent years may help alleviate some of these problems. But longer-term concerns remain about the future of Korea’s economy, as the number of young workers – who are crucial in propping up the health care and pension systems – slowly dwindle.

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  • After the riots, Macron must fix a broken France

    After the riots, Macron must fix a broken France

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    PARIS — France is slowly catching its breath after days of large-scale urban unrest but a greater challenge looms for President Emmanuel Macron: How to tackle the root problems the riots have exposed.

    Macron has walked a thin line between showing empathy and sending out a message of toughness after a police officer shot and killed teenager Nahel M. last week, leading to days of riots. He flooded the streets with police officers in an effort to contain the violence.

    This weekend there were fewer arrests than on previous nights and the unrest appears to be waning, at least temporarily.

    But the series of incidents have fanned the flames around police brutality and the treatment of racial minorities into a broader, violent rejection of French institutions.

    Overnight on Saturday, attackers rammed a car into the house of the local mayor in L’Haÿ-les-Roses, a suburb south of Paris, injuring the official’s wife as she tried to flee with her young children.

    Elsewhere in France, the violence triggered by the teenager’s death has targeted many symbols of the French Republic: schools, police stations, libraries and other public buildings.

    “An unprecedented movement has hit territories that were not previously affected [by violence]. Public buildings were damaged which was not the case during the last wave of protests in 2005,” said a French government official, who was granted anonymity to discuss sensitive issues more openly, referring to an outbreak of violence that rocked France’s banlieues for weeks in 2005.

    Over the past few days, Macron has sought to strike a delicate balance between showing compassion and resolve. He has described the shooting of 17-year-old Nahel M. as he was fleeing the police last week as “inexcusable” and “inexplicable.” But Macron has slammed the riots as “the unacceptable manipulation of a death of a teenager,” as well.

    On Tuesday, he is expected to meet mayors from more than 200 towns and cities hit by violence. The aim of the meeting is to gather first-hand accounts from local officials, work on solutions and relay that the government is backing local officials.

    “The president wants to listen,” the French official said.

    After cutting short his visit to a European summit last week, Macron tried to show he is at the helm of the country, regularly calling crisis cabinet meetings, and issuing orders to his prime minister and ministers. On Saturday, he called off a long-planned state visit to Germany.

    Permanently in crisis mode

    The roster of meetings at the Elysée Palace is a familiar sight and a sign that the government is in crisis mode — once again.

    The French president has barely emerged from a deep political crisis over pension reforms this spring and his government now is faced with more turmoil. Macron’s first term was equally rocky, as he faced Yellow Jackets protests, the COVID-19 pandemic and the ever-present threat of terrorism in France.

    Macron has accumulated “difficult, painful crisis situations” that have “perplexed” the outside world, said Bruno Cautrès, a politics researcher with the Sciences Po institute.

    “It’s as if France was a pressure cooker, [each crisis] reveals tensions, a conflict in society, tensions over the respect owed to our institutions … Our country is constantly invoking Republican values, but it appears entire segments of the population don’t feel this matters to them,” he said.

    The outpouring of shock and anger over the death of Nahel M., who was of North African descent, has also forced many in France to do some soul-searching over issues of discrimination, integration, and crime in immigrant-heavy suburbs around French cities.

    Public pressure to more closely examine French policing practices and allegations of racism in the security forces beyond re-examining rules of engagement is mounting. In 2017, for example, police officers were given the right to shoot in several hypothetical scenarios, including when a driver refuses to stop and is deemed a risk to life.

    Beyond alleged discrimination by the police, fixing the growing rift between the suburbs’ disadvantaged youth and French institutions will likely require more money for policies aimed at addressing root causes and reducing social inequalities in areas such as education and social housing.

    But addressing issues in the banlieues is difficult at a time when the government is attempting to reduce spending. After resisting calls to back down in the face of peaceful protests over his flagship pensions reforms, Macron reaching for the checkbook shortly after the recent days’ protests might be seen as rewarding rioters.

    The need to reconcile the country and embody law and order at a time when his margins for maneuver are limited after losing a parliamentary majority last year is no small task for Macron.

    He will have to keep a sharp eye on opposition parties as crime, identity and immigration — long issues the far-right has campaigned on — take center stage. If far-right leader Marine Le Pen has held back from fueling a backlash against rioters, sticking to her strategy of embracing mainstream politics, her trusted lieutenant Jordan Bardella has led the charge against “criminals” who owe “everything to the Republic.”

    The recent unrest had exposed “frailties” that could “encourage a populist discourse,” the same government official admitted.

    “[Our] political response must be a reasonable one, that addresses the reality and daily lives of the French,” he added. That’s easier said than done.

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    Clea Caulcutt

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