Wednesday, February 6, 2019

Collecting Canadian (CPP) and US (SS) Pensions

Now that I am getting to nominal retirement age, I am investigating what pensions I might get from the two countries where I worked - USA and Canada.  I worked about 20 years in the USA and 22 years in Canada.  In summary, it's complicated to determine what you might get.


You go to the US SS website, sign in, and you get estimates of your social security pension.  With my earnings record, the pension looked really good.  Then I found out about the WEP - Windfall Elimination Provision.  This reduces your pension if you did not pay into the system for more than 30 years and you are entitled to another pension, like My Canada Pension Plan.  The place to look for information is at this link and you should do your own calculations.  I think my social security pension will be reduced by 20-50% - bummer!  It would be nice to be more precise but the WEP rule is very complicated and not explained well.

This other table seems to indicate that it is limited to a 50% reduction but the maximum decrease is about $400 per month.  I did my own calculations but this seemed to indicate a higher decrease than $400.  The only thing that is certain is that your SS pension will be decreased.

Update (March 4, 2019): A friend alerted me to a document that says that you are NOT subject to WEP if you are covered by a Totalization treaty like the Canada-USA treaty.  The link is here.  So maybe you will not be penalized.  I would recommend bringing this up with the SS administration if they try to impose WEP when you start collected US SS.  Our experience with SS is that the people are hard working, but not skilled when it comes to dealing with non-standard situations like working in two countries like the USA and Canada.


You go to this website and you can get estimates of your pension.  CPP is not very generous so the little number shocked me (less than half my nominal SS pension without WEP).  I don't think they will reduce it.  If I still lived in the USA, I could get the Old Age Security Pension at 65.  In Canada, it is often "clawed back", meaning it is taxed at 100% and you don't get anything.  I guess the small amount we paid in (less than US social security deductions aka FICA) had a downside.


Don't count on a big government pension based on SS and CPP websites if you worked in Canada and USA.  You might want to talk to a SS expert in the USA.  Yes, the system is so complex and hard to navigate that you might need to hire someone to help you.  :-(

photo credit: flickr

Disclaimer: this is not professional investment or retirement advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.

No comments:

Post a Comment

Comments are not moderated prior to posting. Mark