Employment in a country where a social security agreement has not been signed with Canada
When there is no social security agreement between Canada and the country where the employment is taking place, determine if the employment meets the conditions set out in subsection 16(1) of the Canada Pension Plan Regulations to be pensionable.
First, it must be determined if the employment outside Canada would be pensionable if it were in Canada. Then, it must be determined if the employee meets one of the following conditions:
- ordinarily reports for work at an establishment in Canada of his or her employer
- is resident in Canada and is paid at or from an establishment in Canada of his or her employer
- is an employee, other than an employee engaged locally outside Canada, of Her Majesty in right of Canada
- performs services under an international development assistance program (subject to certain conditions)
- is the spouse or common-law partner of an employee described in the previous two situations (subject to some conditions)
- is an employee of Her Majesty in right of Canada who is locally engaged (subject to certain conditions)
If the worker does not meet any of these conditions, the employment is not pensionable.
There are no procedures or forms to complete for employment covered by subsection 16(1) of the Canada Pension Plan Regulations. When the employment meets the conditions outlined, it is pensionable if it were in Canada.
When employment outside Canada is not considered pensionable under subsection 16(1) of the Canada Pension Plan Regulations and there is no social security agreement, the employer or worker still has the option of including the employment in pensionable employment. However, this option is subject to certain conditions.
The employer may exercise this option provided all of the following conditions are met:
- the employer is operating in Canada and the employment in question would be pensionable if it were in Canada
- the employee was resident and present in Canada at the time he or she was hired and the employer has undertaken to pay both the employee’s and the employer’s contributions for all of his or her employees that have the same employment in that country.
The employer must complete Form CPT8, Application and Undertaking to Cover Employment Outside Canada under the Canada Pension Plan to exercise the option of including the employment in pensionable employment.
If the employer does not choose to include the employee in pensionable employment, the worker may exercise the option of including the employment in pensionable employment if all the following conditions are met:
- The employee is a resident of Canada.
- The employee is not in an employment that would be pensionable under another provision of the Canada Pension Plan or Canada Pension Plan Regulations.
- The employee is not required to contribute to a similar plan in the country where he or she is employed.
- Following the year which the employment took place, the employee exercises this option within one year from June 15. For example, if the employee’s employment ended in August 2022, the employee has one year, starting June 15, 2023 and ending June 15, 2024, in which to choose to pay contributions.
- The employee pays the required contributions.
The worker must complete Form CPT20, Election to Pay Canada Pension Plan Contributions to exercise the option of including his or her employment in pensionable employment.
The employer and employee must pay the required Canada Pension Plan contributions and send the completed forms to their tax services office.
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