Proposed changes to the Canada Pension Plan

CPP Proposed Changes

The Minister of Finance recently outlined proposed changes to the Canada Pension Plan* (CPP), starting in 2012, that will provide greater opportunities for individuals to collect pension benefits while still working.

• Ability to apply for CPP even if you’re still working – A person who has attained age 60 can apply for CPP benefits even if he/she continues to work.
• Continued CPP participation while receiving benefits – A person under 65 who chooses to receive CPP benefits may continue working and thus continue to earn CPP benefits, but will be required to continue contributing to CPP.
• Change in calculating average career earnings – Certain years in which a person was attending university or was unemployed are not included in the average career earnings calculation that affects CPP benefits. The period of low earnings that may be dropped from the calculation will increase from 15% of the earnings period to 16% in 2012 and to 17% in 2014.
• Adjustment for early and postponed retirement – The reduction in benefits if CPP starts between age 60 and 65 will gradually be increased over a 5 year period from 6% per year to 7.2% per year. The increase in benefits if CPP starts after age 65 will gradually be raised over a 3 year period from 6% per year to 8.4% per year.

If you are currently receiving CPP benefits or will begin receiving benefits before 2011, you will not be affected by these changes.

Article provided by Rick Kosteczko of The Investors Group