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More options than ever under CPP

New Canada Pension Plan rules are giving working Canadians greater choice and flexibility when it comes to taking their CPP retirement pension. *

As always, CPP contributors can opt to draw a pension anytime between age 60 and 70 with the understanding that the longer you wait, the more you get! Under new rules being phased in by 2016, the penalties for taking CPP before 65 increases slightly and the rewards for delaying it raise proportionately more. You’ll earn an extra 0.7% for each month after 65 you postpone CPP, for a total increase of 42% if you wait until 70, and forfeit 0.6% for each month you start before 65, for a maximum reduction of 36% at 60. 

Before age 65
Another significant change is that you can start collecting CPP before your 65th birthday even if you’re still working. Previously, you had to stop work or reduce earnings for two months to qualify between 60 and 64. If you’re under 65 and you work while getting CPP, you and your employer must keep making CPP contributions (or if you work outside of Quebec while receiving a QPP retirement pension). But the good news is that these additions to the kitty will increase your CPP benefits by way of a "Post Retirement Benefit" or PRB.

After age 65
If you’re still working between 65 and 70 and taking CPP (or if you work outside of Quebec while receiving QPP), you can choose to make CPP contributions in order to boost your CPP pension with a PRB. If you contribute, your employer will have to make contributions as well. 

Keeps growing
Do you know the maximum CPP retirement pension? 

As of 2013, the monthly maximum retirement pension at age 65 is $1,012.50 and the maximum PRB that has been created to date under the CPP changes is $25.31 at age 65. Along with providing a secure, lifelong source of income, CPP and PRB are fully indexed to inflation – a considerable benefit as life expectancies increase. With the phasing in of new rules and so many choices, it’s important to plan well ahead to ensure you select the best CPP option for your personal situation and retirement goals. We would be happy to review your retirement plan in light of the new changes.

*Note that the CPP changes do not apply to the QPP. For information about the QPP, visit www.rrq.gouv.qc.ca

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