Returning to work after retiring is an individual decision. For some, returning to work makes economic sense. On the other hand, some retirees return to work simply because they enjoy it. Retirement may allow the chance to follow a new career path or pursue hobbies and interests which can turn into income-generating enterprises.
Planning for post-retirement employment involves determining the possible impact on your other sources of retirement income, such as the Canada Pension Plan (CPP), the Old Age Security (OAS) program, and/or the Guaranteed Income Supplement (GIS).
If you would like to return to work, you should consider the following:
Under Income Tax Act rules:
You are not permitted to make pension contributions to and receive a pension from the same pension plan concurrently.
Your pension plan contributions must cease no later than November 30th of the year in which you turn age 71 and you must begin drawing your pension on December 1st, even if you are still working.
Your employment earnings may affect the amount of income tax you are required to pay each year.
When you become eligible to collect your OAS benefit at age 65, your overall income may surpass the OAS earnings threshold. If that is the case, your OAS benefit may be subject to a "clawback" and you could be required to repay some or all of your OAS benefit.
35-years of pensionable service cap:
If you did not have 35 years of pensionable service at the time of retirement your pension will cease when you return to work, and you will begin to pay pension contributions and continue to earn pensionable service to 35 years.
On April 1, 2026, this rule will change and the 35-year cap on pensionable service will be eliminated.
If you return to work with an employer who participates in the PSSP, please contact us to determine if your PSSP pension payment will be affected.
If you return to work for an employer who does not participate in the PSSP, you can continue to collect your PSSP pension as well as your income from employment.