Lisa MacColl is a writer, investor and former compliance consultant in the group retirement and individual wealth management fields. Lisa has written about personal finance for 14 years and currently writes about investing and investment providers for Wealthsimple. Lisa's past work has been published in Canadian Money Saver, Advisor’s Edge, CBC, and CreditCards.ca. She was a nominee for the 2015 Oktoberfest Women of the Year, Professional Category. Lisa holds an M.A. and B.A. from the Wilfrid Laurier University.
Even though 65 is the oft-cited retirement age, there’s no such thing as a mandatory retirement age in Canada — human rights laws outlaw it. (Unless you happen to be a judge.) So no matter how old you are, your employer can’t force you to trade work for shuffleboard.
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There, are, however, good reasons why 65 is a number often associated with retirement. This is the age at which you’ll be eligible to begin collecting Old Age Security pension (OAS), a government program available to any Canadian 65 or older who have lived in the country for a minimum of ten years. How much you receive depends on how long you’ve lived in Canada since you turned 18; high earning individuals — won’t be eligible to collect OAS. You can check the maximum income threshold here While it's normally over $100,000 the exact amount changes each year. Low-income retirees will receive a bit more in their OAS check per month, provided by the Guaranteed Income Supplement (GIS.)
Sixty-five is also significant since this is the age when retirees can also look forward to benefits from the Canada Pension Plan (CPP). Unlike OAS, CPP payments are directly related to how much you personally contributed over the years. Unless you’re an immaculate record keeper, the easiest way to figure out how much you’ve contributed to CPP is a CPP Statement of Contributions, available from Service Canada at 1-800-277-9914.
Federal benefits Upon Retirement
You are eligible to begin receiving full Canada Pension Plan (CPP), Old Age Security (OAS) benefits at age 65. You can apply to receive these benefits at age 60, but your benefit will be reduced by 0.6% for every month prior to age 65 you receive the pension. (that’s a 36% reduction if you take it at 60 instead of 65.)
Conversely, if you delay taking your CPP/OAS until age 70, your CPP benefit will be 42% higher. It increases by 0.7% for each month you delay or 8.4% per year. Once you reach age 70, there is no additional benefit. You can find out more information about federal benefits here.
If you are under age 65 and have a severe and prolonged illness, you may qualify for a disability benefit, if you had made contributions to CPP in 3 of the previous 6 years if you had contributed for 25 years or more (CPP deductions begin when you begin working and earn more than $3500 a year), or 4 of the last 6 years. You must have a severe and prolonged disability, and you must complete medical documentation. You can find out more about the disability benefit here. Disability benefits switch to regular CPP benefits at age 65.
Mandatory Retirement Age - Corporate Employment
Mandatory Retirement Age is the age at which employees must retire from employment with a company. Until December 31, 2009, the mandatory retirement age in Canada was 65. At age 65, an employer could terminate your employment for the simple reason of being 65. The Federal government prohibited mandatory retirement in 2009, and most of the other provinces followed suit. There are a couple of exceptions. Supreme Court justices must retire at age 75, and there is a mandatory retirement age (between 70-75) for judges, magistrates and justices of the peace in provincial courts as well.
New Brunswick has provisions in its Human Rights Act that allow employers to specify a mandatory retirement age in their pension plan document. The New Brunswick Pension Benefits Act specifies that the mandatory retirement age is 65. For employees whose pension plan is governed by the rules of New Brunswick, they must retire at age 65.
Normal Retirement Age
The Normal Retirement Age (NRA) is the age that employees are eligible to retire from employment and begin to receive a full pension.
Pension plans have “vesting” and “locking-in” provisions. When an employee meets the “vesting” requirements, they are entitled to receive the employer contributions made on their behalf into the pension plan. When an employee meets the “locking-in” provision, if that employee terminates employment and leaves the company before retirement, the funds that have accumulated in the pension plan for that employee may only be used to fund a pension at the normal retirement date specified in the pension plan document.
While provinces no longer require a Mandatory Retirement Age, Normal Retirement Age is specified in most pension plan documents. It determines when an employee will be eligible to receive the “locked-in” funds and begin to receive a pension benefit. For companies with a Defined Benefit (DB) plan, employees do not normally contribute to the pension plan, so employers are legally required to ensure there are adequate funds in the pension plan to pay future pension obligations to employees.
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Early Retirement Age
The earliest age an employee is able to retire and begin to receive pension benefits, but there is often a deduction in the amount available.
Here is a chart with Normal and Early Retirement Dates. For provinces that do not specify a NRA, ask your human resources department or pension plan administrator for more information. This chart does not consider public sector employees.
|Jurisdiction||Legislation||Normal Retirement Age||Early Retirement Age||Mandatory Retirement Age||Further Information|
|Federal CPP||Canada Pension Plan||65||60 (7.2% reduction for each year prior to age 65)||No.||Get more information here.|
|Federal Employees||Public Service Superannuation Act||65, or you can receive full pension if age + years of service =85.||55. No reduction if age plus years of service=85.||No.||Get more information here.|
|Federal OAS||Old Age Security||65. If age 60-64 and spouse receiving OAS, might be eligible to receive OAS.||No.||No.||Get more information here.|
|Federal||Pension Benefits Standards Act||Not specified. Employer pension document must state one.||Within 10 years of retirement date specified in plan document.||No||Get more information here.|
|British Columbia||Pension Benefits Standards Act||Not specified. Employer pension document must state one.||Within 10 years of retirement date specified in plan document.||No||Get more information here.|
|Alberta||Employment Pension Plans Act||Not specified. Employer pension document must state one.||Within 10 years of retirement date specified in plan document.||No||Get more information here.|
|Saskatchewan||Pension Benefits Act||Not specified. Employer pension document must state one.||Within 10 years of retirement date specified in plan document.||No||Get more information here.|
|Manitoba||Pension Benefits Act||Not specified. Employer pension document must state one. It can be no later than 1 day after the month a member is entitled to receive unreduced CPP benefits.||Within 10 years of retirement date specified in plan document.||No. 21 (7.1) No pension plan shall compel retirement at normal retirement age or any other age.||Get more information here.|
|Ontario||Pension Benefits Act||Yes. Pension plans registered after January 1, 1988: NRA 1 year after age 65 for contributions earned after January 1, 1988. Pension plans registered before January 1, 1988: NRA not later than one year after age 65. In either case, plan documents may specify earlier date.*||N/A||No||Get more information here.|
|Quebec||Supplemental Pension Plans Act||No later than the first month after the month the employee reaches age 65.||Within 10 years of NRA. There is also a provision for phased in retirement benefits for employees in a defined benefit plan who are at least age 55 and would be entitled to an early retirement benefit. Employees are eligible for a phased retirement benefit that cannot exceed 60% of the full pension entitlement. Employees on phased-in retirement do not continue to accrue pension benefits.||No. However judges must retire at age 70 and police officers must retire at age 65.||Get more information here.|
|New Brunswick||Pension Benefits Act||No later than one year after the year employee reaches age 65.||Within 10 years of NRA.||No||Get more information here.|
|Prince Edward Island||N/A||N/A||N/A||N/A||PEI has no pension legislation.|
|Nova Scotia||Pension Benefits Act||Yes. Pension plans registered after January 1, 1988: NRA 1 year after age 65 for contributions earned after January 1, 1988. Pension plans registered before January 1, 1988: NRA not later than one year after age 65. In either case, plan documents may specify earlier date.*||Within 10 years of NRA and entitled to receive a full pension.||No.||Get more information here.|
|Newfoundland and Labrador||Pension Benefits Act||No later than the date an employee reaches age 65.||Age 55, or an earlier date permitted in the plan document.||No||Get more information here.|
|Nunavut, Yukon, Northwest Territories||See Federal Pension Benefits Standards Act||See Federal Pension Benefits Standards Act||See Federal Pension Benefits Standards Act||No||Get more information here.|
Ontario has an amendment pending to the Pension Benefits Act that will add Phased Retirement for employees with a Defined Benefit Pension plan. Employees who are age 55 and entitled to an unreduced pension (plans with a formula of age plus years of service, for example) or at least age 60 and who has not yet reached NRA may enter into an agreement with the employer to begin reduced work hours when phased retirement benefits begin. The employee will continue to accrue pension benefits, and the phased-in retirement option cannot be more than 60% of the full pension entitlement. This amendment has not been proclaimed into force yet.
Earliest retirement age in Canada
Unless you are expecting a large inheritance that will allow you to live a life of leisure for the rest of your days, you can expect to work until at least age 50 if you work for an employer with an age plus years of service formula for retirement. Otherwise, age 55 seems to be the early retirement magic number for most pension plans.
One thing to keep in mind, though. Many pension plans now allow employees to continue to work past the normal retirement age and allow you to continue to contribute. Working longer means you might be able to defer your CPP, and that adds up to big bucks (8.4% more for every year you defer past age 65).
Average retirement age in Canada
According to Statistics Canada, the average retirement age in Canada is just over 63 and a half years. For self-employed people, it's 68, and for federal employees, it's age 61 and a half years. Private sector employees tend to work almost to age 65. In contrast, in 2013, the average retirement age was 63, for self-employed people it was almost 67, federal employees retired around age 61 and private sector workers hung on until they were just over 64 years.
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