A point that came up while researching the pension totalization treaty between Canada and Japan.
As I understand it, in Canada there are actually three levels of pension. I knew about the “CPP” or Canada Pension Plan. And the “RSPP” which is a contributory, American-style “401k” plan. (You put your money in free of whatever tax Ottawa puts on your income in Canada, and you
pay take the money out at retirement with whatever tax advantages Ottawa offers.)
But I was only vaguely familiar with the “OAS”, which is an old age pension Canadians get just for being a resident of Canada. Each year you are a resident, you earn 1/40 of the check, which currently looks to be about $500 CAD. (So each year is worth $12.50 CAD or so.) In America, we do not exactly have the same kind of free check that you get just for being you. Other programs, but not set up like that.
The other rule about OAS in Canada is you need a ten-year residency period. If you ever want that check sent outside of Canada, you need a 20-year residency. If you want the full check, you need a 40-year residency.
Well, in the Canada-Japan pension treaty, Article 6 makes it clear that if you are a Canadian outside of Canada, you can earn the equivalent residency year as if you were back in Canada only if you are paying into the Japanese pension system!
Here is the link to a pdf printout of the treaty. For some reason, I can only pick it up in Google cache:
The relevant part of Article 6 of the treaty:
3. Where a person has completed a period of residence in Canada of at least one year under the Old Age Security Act or a period of coverage of at least one year under the Canada Pension Plan, but does not have sufficient periods of residence in Canada or periods of coverage to satisfy the requirements for entitlement to benefits under that Act or that Plan, the competent institution of Canada shall take into account, for the purpose of establishing entitlement to benefits under this Article in accordance with paragraphs 4 and 7 of this Article, periods of coverage under the legislation of Japan which do not coincide with periods of residence in Canada or periods of coverage under the legislation of Canada. [Emphasis added.]
I take this to mean that if you don’t have the ten or twenty that is required to pick up at least a partial OAS from Canada, then Canada will give you residency credit for a year in Japan as if you were in Canada, but only if you are covered by (i.e. paying in to) Japan.
So if you are here and dodging the Kokumin Nenkin (for whatever reason), then guess what? You are giving up a piece of your Canada benefit.
The exception in Article 6 seems to be this: Obviously, if you are here and paying into Japan, maybe as a permanent resident, and then go back to Canada for a few years, you can’t get OAS, CPP and Kokumin Nenkin credit at the same time (be PR in Japan, temporarily back in Canada, pay the Nenkin coupon, pay the CPP tax and get OAS credit on top of it.)
I think also Quebec does its own thing in regards to some matters. So the Quebec Pension Plan (QPP) is not part of the deal. I don’t understand Canada politics, but I know there is some “situation” with Quebec, and that is about that.
(We have the same sort of thing with states in the Deep South that thought they were their own country for a while in the 19th century, and still act like it if they aren’t getting their way in America, so . . . )
I imagine the safe harbor for some Canadians on OAS is the fact that Canada counts from age 18, so forty years is to age 58, and the check starts at age 65. So there are seven “gap” years in there before the little check (or, rather, cheque?) shows up with the little maple leaf and Queen Elizabeth portrait. I guess by the time some of you kids collect it will be King William the Fifth, and if global warming goes wild, a palm tree palm.
Two points: there are seven gap years where you need not be a resident of anywhere and you really didn’t lose anything. But beyond that, you are taking a hit on what looks to me like free money.
And number two: Years ago, you probably could say just about anything to explain years where Canada doesn’t have a record of you being there. Canada has a lot of open space, so you could just as well have been a survivalist in the Yukon for 15 years, or searching for Sasquatch on trust fund money. I dunno.
But in the days of computers and a lot of cross-border checking, I’m not so sure you can make your time in Japan into time in the Yukon wild.
I am not Canadian and have no connection to it except friends and border states. So please do your own research, but know that some of this stuff is out there to go find.