Money & Career
Are you missing out on retirement benefits?
Money & Career
Are you missing out on retirement benefits?
In all, says Richard Shillington of Tristat Resources, a Manotick, ON-based social policy research firm, the missed benefits could amount to hundreds of millions of dollars a year. The exact figures are somewhat fuzzy, but Shillington estimates that as many as 50,000 retirees entitled to CPP retirement benefits aren't getting them.
Are you missing out?
"In 2006, some 3,000 seniors applied for CPP retirement benefits after age 70," he says.
"About 350 applied after age 85, and about 290 of those 350 were women. Many thousands of other Canadians are missing out on CPP retirement benefits."
"For the Quebec Pension Plan (QPP), the number of entitled individuals missing their benefits is virtually zero," Shillington adds. "I'm told that officials in Quebec use computers to identify those eligible seniors, who are phoned or even visited to ensure that they apply for their benefits."
"Most of the cases I see with missing CPP benefits are actually about CPP survivor benefits," Shillington says, "so one could estimate that there are hundreds of thousands who are missing this benefit."
Learn what you're entitled to
And that's just those who are missing out on CPP entirely. Shillington suggests that a vast, unknown number of others are getting less than their full entitlement from these programs, in many cases simply because they don't know the rules.
"Many who are getting their CPP benefits aren't getting the full amount they are due," he says. "Usually, seniors are underpaid because they don't know about provisions like the child-rearing drop-out."
The figure for missed GIS and OAS benefits is even higher than for CPP. Shillington estimates that up to 150,000 people who are entitled to GIS aren't getting it, and an equal number are missing their OAS entitlements, in many cases again because of a lack of knowledge of the rules.
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"With GIS there's no easy way to double-check and see what you should actually be getting," he says. "The rules are complicated, and there are all sorts of little wrinkles. It starts with the net income figure from your tax return, but special provisions apply to dividend income, for example, and to capital gains, to Employment Insurance, and to CPP benefits. It gets very tricky to figure out what you should be getting."
The government's outreach initiatives
The government believes the figures are lower now, thanks to various outreach initiatives in recent years.
Speaking on the government's behalf at a December 2007 hearing of the Standing Senate Committee on National Finance, Tory senator Terry Stratton said: "The government has launched a comprehensive nation-wide print, radio, and television advertising campaign to help seniors apply for and receive benefits.
• We proactively contact seniors to directly inform them of benefits available to them by sending 268,000 application packages for the CPP and OAS in the year 2006 alone.
• Every March we proactively contact seniors who did not file a tax return to remind them of their benefits.
• We have mobile services to better reach seniors where they live.
• We have fact sheets in over 20 languages that are available to seniors at Service Canada locations across the country. Seniors may call a special number, 1-800-277- 9914, at any time to be given information on their benefits," Stratton added.
Make sure you tick the right boxes
Addressing the actual impact of these measures in response to an information request during another committee's March 2010 meeting, Liseanne Forand, senior associate deputy minister of Human Resources and Skills Development Canada (HRSDC), wrote that from 2001 to 2006 "eligible recipients in Canada as a whole declined from 194,600 to 145,500. Potentially eligible seniors who have not applied for the GIS are sent pre-filled applications and this endeavour has, since 2002, resulted in approximately 410,000 new recipients. Efforts continue to increase take-up of GIS benefits through various outreach programs."
One of those new programs, incidentally, is the inclusion of a tick box on your OAS application form, asking if you also wish to apply for GIS every year; if you tick the box, you'll no longer have to apply for GIS benefits every year – they'll be calculated automatically and forwarded to you for life.
Foregone benefits will be lost forever
Shillington acknowledges that there has been progress as a result of these efforts, but the government's own figures still point to hundreds of thousands not getting their entitlements, plus countless more who may not be getting the amounts they should be getting.
Page 2 of 4 – Discover when you can apply for retirement benefits on page 3.
And to add insult to injury, those foregone benefits will be lost forever. "You can only get 11 months retroactivity on the benefits that you've missed," Shillington says. "It's the same with CPP as it is with OAS and GIS, and CPP isn't even government money – it's money you yourself have contributed over a lifetime of working, and the government is supposed to be its trustee. Where do they get off, taking your own money just because you don't apply for it soon enough?"
He adds that QPP has a much more generous five-year retroactivity provision. Shillington also acknowledges that outreach programs of the type the government has undertaken, while helpful, are still not a complete solution. "There's a lot of confusion out there about these programs," he says, adding that it's not just the disadvantaged who don't understand.
When can you apply for your benefits?
"When I first discovered [many eligible seniors were not receiving GIS], I pictured people who didn't speak English or French, people in nursing homes, quite marginalized; I could not have been more wrong. I talked to hundreds of seniors. They were bank tellers, et cetera, people who were simply unaware.
"A good friend of mine hadn't applied for the Canada Pension Plan – and he was 68 years old – because he thought he had to be retired," Shillington continues.
"He was still working. This man has a postgraduate degree and lived in Canada his whole life. The rule was that you can't collect CPP before age 65 unless you're retired or at least quit for a month, but after age 65 the rules change. He thought he couldn't apply for CPP because he was still working. Some people think it's the same rule for Old Age Security; that you must be retired before you can apply.
"I sometimes wonder how many don't realize they're eligible because their life changes," Shillington muses. "A family member dies, their income changes because markets or interest rates are down… Lots of people are still missing their benefits, and there's a new crop every year."
Page 3 of 4 – Are you close to retirement or are you already collecting retirement entitlements? Find out how to maximize your benefits on page 4.
Should the government be more proactive?
Shillington believes the government should be even more proactive in ensuring everyone is getting his or her rightful benefits, and points to Quebec's success in achieving 100- per cent uptake with its QPP programs as evidence that it's not hard to do.
Rather, he suggests bureaucratic inertia hampers progress in that direction for federal programs. "These are good people," he says of the staff at Human Resources and Skills Development Canada (HRSDC administers our federal retirement programs). But it's the institution that seems to say, 'Who cares? If we spend less there, we can spend more here.'
"The government knows who these missing people are or can find out easily enough," Shillington adds. "It's well known in Ottawa that thousands of seniors are not getting the amount they are due, but they're afraid of setting a precedent, in that if they're obligated to inform people who are missing their OAS benefits, then a whole bunch of other programs may be subject to the same standard."
Of course, some of the oversight can also be attributed to personal inertia – some people simply won't make the effort to ensure they're getting the benefits to which they're entitled.
Shillington cites an instance in which tens of thousands of pre-filled OAS application forms were mailed by HRSDC to people who should have been receiving the benefit but weren't, and only half the applications were signed and returned by the recipients.
Take initiative so you get what you deserve
While the government is stepping up efforts to ensure all eligible beneficiaries of CPP, OAS, or GIS are getting their due, no amount of outreach can overcome personal inertia.
It's still up to you to make the small effort required to at least sign and send off those pre-filled forms. And while you're at it, you should take a look at the many provincially-administered programs that may also be available to you. Because there are so many and changes frequently occur, you should check with your own provincial government to ensure you're not missing out on additional benefits to which you're entitled.
If you're a family member of someone who's retired and has limited income, you might want to check that he or she is getting his or her full entitlements. In the end, the government can do only so much. Canada has a very generous retirement "safety net," but it's all of little value if no effort is made at the receiving end to ensure everyone is fully benefiting.
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