Lesson 1

Question 1

1.1.a Define social security in the context of government sponsored benefits

Answer 1

Social Security is commonly identified with programs and measures that provide or enhance economic security for individuals.

Question 2

1.1.b Identify 5 basic principles on which government sponsored programs are structured

Answer 2

1) Government has a key role/responsibility in the provision of social security

2) It is socially desirable to redistribute income through intergenerational transfers

3) Programs can operate under a social insurance program

4) The concept of universality is basic to most social security programs

5) It is socially acceptable to use the tax system as a vehicle for funding social security

Question 3

1.2 Explain the key differences between social insurance and normal insurance (3)

Answer 3

1) Social insurance is set up to administer a certain type of government sponsored benefit that is ultimately governed by socioeconomic rather than cost/benefit principles

2) Social insurance does not usually have an actuarial basis that ensures contributions equals benefits paid out

3) Under social insurance programs, the amount of benefits paid and the period of benefit entitlements are matters of public policy

EI and WC are examples of social insurance

Question 4

1.3 Explain the principle of universality

Answer 4

A commitment to provide a benefit/service to a universal (or all of a targeted) population.

In practice universality means that the government, as the provider of the benefits, makes public policy decisions that determine the nature and type of service that is a required standard for the widest possible segment of society and provides access to benefits regardless of an individual’s financial circumstances

Question 5

1.4.a Explain how income or means tests are used in the context of government sponsored benefits

Answer 5

Income and/or means tests are used to determine basic eligibility and the amount of benefits entitlement under some government sponsored programs

Question 6

1.4.b Explain the purpose of an income test in the context of government sponsored benefits

Answer 6

An income test establishes the ability of a claimant to provide for their financial security by measuring specified income against a predetermined standard

Question 7

1.4.c Explain the purpose of an means or wealth test in the context of government sponsored benefits

Answer 7

A means or wealth test established the ability of a claimant to provide for their own financial security by measuring specified wealth levels or possession of enumerated assets against a predetermined wealth standard

Question 8

1.5 Explain what base or foundation level support means in respect of government sponsored benefits

Answer 8

Base or foundation level support means that the government benefit is intended to provide a minimum acceptable level of coverage that individuals are encouraged to augment

Question 9

1.6 Identify the primary sources of funding for government sponsored benefits (2) and indicate which is the largest

Answer 9

1) own source revenue (raised by a government from its own imposition of a tax, license, fee or any other charge)

2) Transfers from other government subsectors (money received directly from another party without being directly imposed by the receiving party)

The largest proportion of program funding is from taxation, but some funding comes from contributions to specific social insurance programs (EI/CPP/WC have direct contributions)

Question 10

2.1 Identify the implications of the Canadian Constitution for the provision of social security

Answer 10

Under the constitution the federal and provincial governments share the responsibility for social security.

Both play important roles in designing, funding, and administering income security and health care programs.

The interpretation of constitutional law has an indirect but substantial influence on all aspects of government sponsored

Question 11

2.2 Identify the mechanisms under which government sponsored income security and health care programs are regulated (5)

Answer 11

1) Laws
2] legislation
3] an act or statute
4) regulations
5) Guidelines and policies

Question 12

2.3 describe the three basic methods of delivering benefits within Canada’s Social Security system.

Answer 12

1. Provide direct cash payments.
2. Provide goods and services directly.
3. Provide support through the income tax system.

Many government sponsored programs used two or three of the methods to accomplish different objectives within the parameters of the total program delivery.

Question 13

2.4 describe the three basic ways the income tax system is used to deliver Social Security benefits.

Answer 13

1) tax credits. Both refundable and nonrefundable.

2) tax deductions all employer premiums for CPP and QPP, EI and WC are tax deductible expenses for employers

3] tax exemptions
GIS benefits are an example of tax exempt monies. WC disability benefits are also tax exempt in most jurisdictions.

Question 14

3.1 explain how benefits under OAS are funded and administered.

Answer 14

OAS benefits are funded on a pay-as-you-go basis. This means the current generation of taxpayers pays for benefits provided to the current generation of recipients.

Question 15

3.2 indicate the age and residence criteria for qualifying for an OAS pension.

Answer 15

An OAS pension is available to an individual aged 65 or over who meets these residency requirements.
1. the individual is a Canadian citizen or legal resident with a minimum of 10 years residence in Canada after reaching age 18

2. If no longer a resident of Canada, the individual must have resided in Canada for at least 20 years after reaching the age of 18.

Question 16

3.3 outline instances were an absence from Canada is not deemed to have interrupted an individuals residence for OAS pension purposes. 3.

Answer 16

1 the absence was of a temporary nature and did not exceed one year.

2 the absence was for the purpose of attending school or university.

3. The absence was required due to employment under a listed organization.

Question 17

3. 3. B List the organizations that employment under does not cause an interruption in OAS residency

Answer 17

1. The United Nations
2. The commonwealth secretary at
3. The OECD
4. The government of Canada
5. A Provincial or municipal government
6. NATO
7. The Canadian Armed Forces.
8. A Canadian firm or corporation if the individual maintains a permanent residence in Canada and returns within six months after the end of their employment outside of Canada.
9. A development or assistance program sponsored or operated by the government of Canada a Provincial agency or Canadian nonprofit.
10. Seasonal work in lumbering harvesting fishing, etc.
11. Seasonal work in transportation the travels between Canada and points outside Canada [aircraft, ships]
    12 and international charitable organization
    13, a missionary with any religious group or organization

Question 18

3.4 explain the requirements and individual must meet to qualify for OAS

Answer 18

1. Having resided in Canada for at least 40 years after the age of 18 and being age 65
2. Is age 65 and has lived in Canada for at least 10 years before applying for OAS OR

Lived in Canada for at least one year before applying for OAS AND has a period of residency in Canada after the reaching the age of 18, but excluding the 10 years immediately preceding their application, which equals at least three times the number of years a person did not live in Canada in the 10 years immediately before applying.

Question 19

3.5 explain how individuals who do not qualify for a full OAS pension can qualify for a partial pension, and how that partial pension is determined.

Answer 19

Individuals, age 65 and over who do not qualify for full OAS pension qualify for a partial pension by having lived in Canada for a period of at least 10 years after the 18th birthday. The partial pension is X/40 of a full pension. Where X is the number of complete years of residence in Canada?

Question 20

3.6 indicate the start date of OAS pension.

Answer 20

The later of a month after an individual 65th birthday and the month in which they have met the residence and legal status requirements. Or the month the individual asks to have the payment start

If an individual applies after the age of 65 and wants to start at age 65 the pension may be paid retroactively to the month after their 65th birthday or the month in which requirements are met which ever comes later,

Retroactive payments are only made for a maximum of 12 months, including the month in which the application is received.

Individuals may defer commencement of an OAS pension, until after the age 65 to receive a larger pension.

Question 21

3.7 describe how OAS and GIS benefits are indexed

Answer 21

OAS pensions are adjusted quarterly as required if they’re increasing cost of living as measured by CPI

Question 22

4.1 outlined the primary objectives of international social security agreements, 3.

Answer 22

1 to ease, or eliminate restrictions, based on nationality, which may otherwise prevent Canadians from receiving benefits under the legislation of other countries

2. Two eliminate situations in which an employee may have to contribute to the Social Security programs of both countries with the same work.

3 To assist immigrants in qualifying for benefits based on the periods, they have lived or worked in each country

Question 23

4.2 identify the two conditions that must be met in order for a country to conclude an international social security agreement with (Canada)

Answer 23

1 the other country must have a public pension system that can be coordinated with the Canadian OAS & CPP system

2 the country must be prepared to Grant reciprocity on such matters as the payment of benefits to persons living in Canada

Question 24

5.1 outlined the criteria that must be met to qualify for GIS benefits.

Answer 24

1 the person must be a resident in Canada

2 their income must be below a qualifying level.

If individuals are married, the combined income of a couple must be below a qualifying level.

Question 25

5.2 explain how GIS benefit amount is determined

Answer 25

Usually by the amount of income in the previous year. If the member just retired and anticipate a substantial drop the GIS entitlement, maybe determined on the basis of an estimate for the current year If the individual is married, this provision also applies to their spouse GIS is calculated the same way as OAS whether it is based on the members in dividual income, or on an estimate of income for the current year.

Question 26

5.3 describe the basic formula for coordinating GIS benefits with other sources of income.

Answer 26

In the case of an unmarried person the maximum monthly benefit is reduced by one dollar for every two dollars of other monthly income In the case of a married couple who are both receiving OAS the maximum monthly benefit is reduced by one dollar for every four dollars of other combined monthly income In the case of a married couple were only one spouse qualifies for OAS. The person is entitled to receive GIS benefits at the higher rate, paid to single persons. The maximum monthly benefit is reduced by one dollar for every four dollars of the couples combined monthly income and the first reduction is only made when the combined yearly income of the couple reaches 12 times the monthly OAS pension plus $48.

Question 27

5.4 define income for GIS purposes.

Answer 27

Income is the same as income for purposes of federal income tax, but excludes; 1 OAS 2 social assistance programs 3 veterans disability pension 4 war veteran allowances 5 CPP and QPP death benefits. If a pensioners married, the combined income of the pensioner and their spouse is taken into account.

Question 28

5.5 indicate when GIS benefits commence.

Answer 28

GIS benefits commence the month an individual is eligible for OAS provided the eligibility requirements with respect to income or satisfied. The GIS benefit is added to the OAS pension every month.

Question 29

5.6 describe the residence requirements for the allowance and the allowance for survivor.

Answer 29

Residence requirements can be met with an individual resided in Canada for 10 years after the age of 18. If not a recipient may still qualify for a benefit if they have resided in or made Social Security contributions to a country with which (Canada) has a Social Security arrangement

Question 30

Describe what the allowance is in the context of Social Security in Canada

Answer 30

The allowance is an income tested monthly benefit payable to 60-64 year old spouse or common-law partners of an OAS pensioner who is entitled to GIS Allowance for survivor is an income tested monthly benefit payable to 60–64 year old surviving spouses or common-law partners of a deceased OAS pensioner who is entitled to GIS. Certain requirements related to residence and legal status in Canada must be met in order to qualify.

Question 31

5.7 outline the basic formula for coordinating allowance, and allowance for survivor benefits, with other sources of income.

Answer 31

The maximum allowance is the sum of the OAS pension plus GIS at the married rate The allowance is reduced by three dollars for every four dollars of a couples monthly income until the OAS portion is reduced to zero After that the GIS portion begins to be reduced at the rate of one dollar for every four dollars of the couples additional income For allowance, the GIS benefit paid to the OAS pension. A spouse is also reduced by one dollar for every four dollars of a couples additional income [a combined reduction of 50% of the couples additional income] For allowance for survivor, the rate of reduction is one dollar for every two dollars of monthly income about the earnings threshold.

Question 32

5.8 indicate when allowance benefits stop

Answer 32

Allowance benefits cease with the payment for June if income in the previous year exceeds the qualifying limit for the July payment. They also cease if recipient dies or is absent from Canada for more than six months. The allowance continues to be paid for three months after the month of separation Allowance benefits cease after the month in which the individual again becomes a spouse either through marriage or common-law relationship. Benefits cease if an individual is incarcerated in a federal penitentiary from two years or longer or in a provincial territorial facility for 90 days or longer Or whenever recipient reaches the age of 65.

Question 33

6.1 describe the tax treatment of OAS & GIS benefits.

Answer 33

For federal income tax purposes, OAS pensions, taxable income GIS benefits are not taxable income

Question 34

Explain the clawback provision of the OAS pension recovery tax

Answer 34

The OES pension, recovery tax acts to recover some or all of the OAS pension, paid to a higher income, OES recipient and is commonly referred to as a claw back. The OAS pension recovery tax applies at a rate of 15% of the individuals net earnings above the earning threshold. If the Quebec amount equals the OAS payment, no payment is made to the pensioner the minimum and maximum earning threshold change annually.

Question 35

6.3 describe the tax treatment of allowance and allowance for survivor

Answer 35

For federal income tax purposes, the allowance and allowance for survivor benefits are not taxable income, but must be reported on the recipients income tax filing