11 Pension Plan FAQs Asked By Canadians Retiring Abroad

Retiring abroad is an exciting adventure, but it also involves important financial considerations, especially regarding pension plans. Canadians who plan to live overseas often have questions about how their Canada Pension Plan (CPP) benefits will be affected. Understanding the process and rules surrounding CPP payments can help ensure that retirees continue to receive the financial support they need, no matter where they are in the world.

There are countless amazing places where Canadians retiring abroad can enjoy a peaceful and fulfilling life. However, before making your decision, read our blog to find answers to the most frequently asked questions about receiving your Canadian pension while living overseas. From eligibility and payment methods to tax implications, we cover all the essentials to help you manage your Canada Pension Plan benefits effectively while enjoying retirement in a different country.

1. Can I receive my Canada Pension Plan (CPP) payments while living outside Canada?

Yes, you can receive your Canada Pension Plan (CPP) payments while living outside Canada, as long as you meet the eligibility requirements. The CPP is a contributory plan, meaning you must have made sufficient contributions during your working years in Canada to qualify for benefits. Once eligible, your payments can continue no matter where you live, as long as you provide the necessary details to Service Canada.

When applying for Canada Pension, make sure you update your address and banking information to facilitate smooth payments. If you’re moving abroad, it’s essential to inform Service Canada of your relocation to avoid any disruptions in your pension payments. Payments are generally made in Canadian dollars, but in some cases, they can be converted to the local currency of your new country. You can also receive pension in your Canadian account and convert CAD to USD, AUD, JPY, or other to transfer money. Remember that the tax implications of receiving CPP payments abroad may vary depending on your country of residence. Canada has tax treaties with many countries to prevent double taxation, so review your situation to maximize your benefits.

2. What are the eligibility requirements for Old Age Security (OAS) payments outside Canada?

You must meet specific eligibility criteria to qualify for Old Age Security (OAS) payments while living outside Canada. Generally, you must have been a Canadian citizen or legal resident and have lived in Canada for at least 20 years since turning 18. Alternatively, if you lived or worked in a country with which Canada has a social security agreement, the combined time spent in both countries can count toward the 20-year requirement. These agreements help retirees access government retirement benefits without interruptions when they move abroad. If you do not meet the 20-year threshold, OAS payments will stop if you are outside of Canada for more than six months after the month you leave. 

Additionally, the Guaranteed Income Supplement (GIS) is not available for individuals who are out of the country for more than six months. As part of your financial planning, it’s wise to complement OAS with life insurance plans for retirement to ensure a stable income stream and safeguard against unexpected expenses. Understanding your entitlements under OAS and exploring other retirement strategies can help you achieve financial security during your retirement years abroad.

3. How do I apply for a Canada Pension Plan?

Applying for Canada Pension (CPP) is vital in securing your retirement income. The process involves submitting a Canada Pension application through Service Canada, either online, by mail, or in person. To ensure a smooth application process, gather all required documents, such as your Social Insurance Number (SIN), proof of age, and records of employment.

You should apply for Canada Pension Plan payments several months before your intended start date to ensure timely disbursement. Many individuals also choose to simultaneously apply for Old Age Pension (OAS) to maximize their government retirement benefits. This approach ensures you have a more stable retirement income, especially for those relying on both CPP and OAS as key sources of financial support.

Additionally, if you are a Canadian pension living abroad, you can still apply for and receive CPP payments. Ensure your address and banking information are updated with Service Canada. Consulting a financial advisor can help optimize your benefits and retirement income strategy.

4. Are there tax implications for receiving Canadian pensions while living overseas?

Yes, there are tax implications when receiving Canadian pensions while living overseas. While the Canada Pension Plan (CPP) payments are generally not subject to Canadian income tax if you're living abroad, you may still be required to pay taxes in the country where you reside. Canada has tax treaties with many countries to prevent double taxation, which can help reduce or eliminate the tax burden in both countries. However, the specific tax treatment will depend on the country you live in and the terms of the treaty.

For those receiving Canadian pensions living abroad, it’s crucial to understand how local tax laws may affect your government retirement benefits. Some countries may tax foreign pension income, while others might provide exemptions or lower rates for pensioners. It’s advisable to consult with a tax professional or financial advisor familiar with both Canadian and international tax laws to ensure compliance and optimize your pension benefits. This can help you plan your retirement more effectively and avoid any unexpected tax liabilities.

5. Will my Guaranteed Income Supplement (GIS) payments continue if I move abroad?

No, your Guaranteed Income Supplement (GIS) payments will not continue if you move abroad for more than six months. GIS is a supplementary benefit designed to provide financial assistance to low-income seniors who are residents of Canada. According to the rules governing GIS, if you leave Canada for more than six months, you will lose eligibility for this benefit. If you're planning on moving abroad, it’s essential to be aware of this six-month limitation and understand the impact it could have on your finances. 

For those who are applying for Canada Pension or other benefits, it's important to inform Service Canada of your move to ensure your payments are adjusted accordingly. Unlike the Canada Pension Plan (CPP), which continues payments for Canadian pensioners living abroad, the GIS is strictly tied to Canadian residency. If you are part of a defined benefit pension plan or receiving other retirement benefits, consider these payments as part of your retirement income strategy when planning your relocation abroad. Always consult a financial advisor to plan effectively for retirement overseas.

6. Can I transfer my CPP contributions to another country’s pension plan?

You generally cannot directly transfer your Canada Pension Plan (CPP) contributions to another country’s pension plan. However, Canada has social security agreements with several countries to help you qualify for government retirement benefits when living abroad. These agreements allow the time you spent working and contributing to the Canadian pension system to be counted toward the pension benefits of another country, and vice versa. This can help bridge the gap if you don’t have enough work history in either country to qualify for full pension benefits. 

If you're a Canadian pension living abroad, these agreements are particularly helpful because they ensure you don’t lose out on your retirement benefits. For example, if you lived and worked in a country with a social security agreement with Canada, you may receive a prorated pension from both countries based on the time you spent working there and in Canada. It’s also important to complement your savings plan for retirement with additional strategies, like private retirement accounts, to ensure a secure income in retirement. Additionally, if you receive your pension in Canadian account, make sure to learn how to send money abroad to avoid conversion costs and hidden fees. 

7. How much do I contribute to the Canada Pension Plan (CPP)?

Your contributions to the Canada Pension Plan (CPP) depend on your income. As an employee, you pay a percentage of your pensionable earnings, matched by your employer. In 2025, the CPP contribution rate for employees is set to approximately 5.95% of earnings between the minimum and maximum thresholds. The contribution rate is doubled for self-employed individuals, around 11.9%, since they are responsible for both the employee and employer portions. 

The contribution amount directly impacts your future CPP payments. Higher contributions during your working years generally result in higher monthly payments during retirement, up to the maximum benefit limit. It’s important to note that CPP is a defined-benefit plan, meaning your retirement payments are calculated based on your contributions and the number of years you’ve worked. Unlike a defined benefit retirement plan offered by employers, CPP is managed by the government and provides lifelong income adjusted for inflation. Understanding your contributions and how they relate to Canada Pension Plan payments can help you better plan for retirement. Use tools like the Canadian Retirement Income Calculator to estimate your contributions and benefits for a more accurate financial picture.

8. Are there penalties for delaying CPP payments while living abroad?

No, there are no penalties for delaying your Canada Pension Plan (CPP) payments while living abroad. Deferring your CPP payments can significantly increase your monthly benefits. If you delay starting your CPP payments past the standard age of 65, your benefits will increase by 0.7% for each month of deferral, up to a maximum of 42% more if you wait until age 70. This strategy can be particularly advantageous for retirees who have other income sources or a solid savings plan for retirement.

For individuals receiving government retirement benefits while living overseas, deferring CPP can provide a higher, inflation-adjusted income, ensuring greater financial security in the long term. If you are a Canadian pensioner living abroad, it's important to evaluate factors such as your life expectancy, living costs in your new country, and any potential tax implications. By strategically planning when to start your CPP, you can maximize your retirement income. Consulting financial advisors and using tools like the Canadian Retirement Income Calculator can help you decide if deferring your CPP aligns with your overall retirement goals.

9. How can the Canadian retirement income calculator help me plan for retiring abroad?

You may have several countries on your wishlist for retiring abroad, but before making the move, it's crucial to plan your finances carefully. Using a retirement income calculator can help you estimate what income you’ll receive and determine which countries align with your budget after retirement. The Canadian retirement income calculator helps you estimate your retirement income from various sources, including the Canada Pension Plan (CPP), Old Age Security (OAS), and any additional retirement savings or employer-sponsored plans. The calculator provides a clear projection of your potential income by inputting details such as your work history, contributions, and anticipated retirement age.

For those considering applying for Canada Pension while living overseas, the calculator can help you understand how much you may receive based on your CPP contributions and whether deferring your payments could increase your monthly amount. It also considers any eligibility requirements for OAS and the impact of social security agreements with other countries. This tool is particularly useful for assessing whether your income will meet your retirement needs in a new country, where living costs and taxation might differ. Using the Canadian retirement income calculator as part of your financial planning ensures you have a comprehensive understanding of your retirement income and can make informed decisions about your future abroad.

10. What happens to my CPP retirement benefits when I die?

When a contributor to the Canada Pension Plan (CPP) passes away, their benefits may continue to provide financial support to their surviving spouse, common-law partner, or eligible dependents. CPP offers three primary death-related benefits. The Death Benefit is a one-time lump sum payment of up to $2,500, made to the estate of the deceased. This payment is designed to help with funeral costs and other related expenses. The Survivor’s Pension is a monthly payment provided to the surviving spouse or common-law partner, with the amount depending on the deceased's contributions to the CPP and the survivor's age. Additionally, the Children’s Benefit offers monthly payments to dependent children under 18 or up to age 25 if they are enrolled in full-time education.

Planning for these contingencies alongside life insurance plans for retirement ensures comprehensive financial security for loved ones, reducing potential financial stress during a difficult time. To access these benefits, survivors must submit a claim with the necessary documentation through Service Canada. Taking these steps can help ensure timely support for those left behind.

11. Can I split my CPP retirement pension with my spouse or partner?

Yes, you can split your CPP retirement pension with your spouse or common-law partner, a strategy known as pension sharing. This option allows couples to share their Canada Pension Plan payments, potentially reducing the overall tax burden if one partner is in a lower tax bracket. To qualify, both partners must be at least 60 years old and receiving CPP benefits.

Pension sharing is especially beneficial for couples who also rely on a defined benefit retirement plan or other private retirement income. By distributing CPP income more evenly, couples can manage their financial resources more effectively during retirement. For those who are Canadian pensioners living abroad, pension sharing is still available if both partners meet the eligibility criteria. To apply, both spouses or partners need to submit a joint application to Service Canada, detailing their consent for the arrangement. This tax-efficient strategy can significantly enhance retirement planning and ensure a more balanced distribution of income for long-term financial security.

Transfer your pension abroad easily with MTFX

When it comes to transferring your pension abroad, MTFX offers a reliable, cost-effective solution that ensures your money reaches its destination quickly and securely. With decades of experience in international money transfers, MTFX provides competitive exchange rates and low transfer fees, allowing you to maximize your pension income without losing a significant portion to high transaction costs.

MTFX offers personalized services tailored to your needs, with a user-friendly platform that makes transferring funds simple and hassle-free for seniors. Whether you're receiving Canada Pension Plan (CPP) payments or Old Age Security (OAS) benefits, MTFX ensures smooth, timely transfers to your bank account in your new country of residence. Additionally, our dedicated customer support team is always available to assist you, making MTFX the best choice for your international money transfer needs.

Receive your pension abroad and enjoy a fulfilling retirement

Retiring abroad offers exciting opportunities, but it also comes with important financial considerations, especially when it comes to managing Canadian pension benefits. Understanding how the Canada Pension Plan (CPP) and Old Age Security (OAS) work internationally ensures that retirees can maintain their financial security, no matter where they reside. From eligibility requirements to tax implications, it's crucial to stay informed and plan ahead to optimize retirement your income. Utilizing tools like the Canadian retirement income calculator and consulting with financial professionals can help make this transition smoother. 

Create an account on MTFX and receive expert assistance in transferring your pension funds abroad securely and efficiently.