Even before the thought of living in Canada occurred to me, there was always one thing that came to mind when Canada became a topic of conversation. Yes, you guessed right, the COLD WINTERS!!!! Nobody looks forward to the three months of summer like i do, who doesn’t love sunshine and the relief of taking a break from shovelling snow? This reason right here is why some pensioners choose to spend the Canadian winter months abroad in a warm-weather country and eventually make their way back to Canada when it starts to get warm. They are referred to as snowbirds, this is a North American term for a person who migrates from a colder climate during the winter season to a warmer climate such as Florida and California.
For some Nigerians in diaspora especially those in the United States and Europe, rather than being a snowbird they plan to work, raise families abroad and eventually retire back home to Nigeria. This might be because of the lower cost of living or due to other family ties. As Canada is a relatively new settlement destination for Nigerian Immigrants, it is crucial to be aware of how your extended absence from Canada might affect your Canadian pension and benefits.
As a citizen or permanent resident of Canada, you may be eligible for one or more Canadian pension and benefit payments.
Canada Pension Plan (CPP) or Quebec Pension Plan (QPP): CPP/QPP are funded through the contribution of employees, employers and self-employed individuals. To receive this, you must have worked and contributed to the plan as it is not government funded. Contributors and their families are provided with periodic payments in the case of retirement, disability or death. If you decide to retire to Nigeria permanently, you would be classed as a Canadian non-resident for tax purposes. This means that your CPP/QPP income would be taxed at the rate of 25%.
The Old Aged Security (OAS) Program: This program is government funded and is paid to all eligible citizens and permanent residents. Unlike the CPP/QPP, you do not have to contribute to it or have Canadian work history to be eligible. The OAS program includes:
Old Age Security Pension: This is a monthly benefit paid to eligible seniors aged 65 or older.
Guaranteed Income Supplement (GIS): This is a non-taxable benefit is paid in addition to the OAS pension. You must meet the specified low income threshold to be eligible. Note that your GIS payment stops if you leave Canada for more than six months, you are also required to your taxes on time every year in order to get you eligibility reaccessed.
Allowance: Also a monthly benefit, it is available to low-income individuals aged 60 to 64 whose spouse or common-law partner receives the GIS. Allowance payment will stop if you, your spouse or common-law partner leave Canada for more than six months. Payment will resume upon you return to Canada.
Survivor Allowance: This is paid on a monthly basis to eligible low income residents aged 60 t0 64 whose spouse or common-law partner has died. Payments will stop after you remarry, enter a common law relationship or leave Canada for six consecutive months.
Health Care Coverage: Your provincial healthcare coverage will be revoked if you fail to meet the residency requirements as specified by your province.
Being a snowbird rather than permanently relocating to warmer climates enables Canadian pensioners to have the best of both worlds. They are able to spend time in a warmer climate abroad before returning to enjoy the Canadian summer with friends and family. With deliberate and careful planning, they are also able to meet set Canadian pension and benefits residency requirements.
As Nigerians in Canada, deciding whether to temporarily (snowbird) or permanently retire back home is a tough choice to make, however being aware of the tax, pension and benefit implications would definitely help to make an informed decision. Also note that when it comes this, it is not a situation of one size fits all as each individual’s circumstance varies. As a current or future resident of Canada, which country would you live in retirement? Share your thoughts in the comment section below.
Disclaimer: This article has was written in the opinion and views of the publisher, you are advised to seek professional advice from a financial advisor or retirement expert and also keep yourself up to date on constant changes to pension and benefit regulations by the Canadian Government.