Key Facts Regarding the Canada Pension Plan

CPP reform is a common topic these days and rightly so as many Canadians do not have enough personal savings to have a comfortable retirement. I thought it would be useful for me to outline some of the key facts about the Canada Pension Plan.

1. The amount of CPP you will get is based on your contributions during your working life. There is a mechanism in place where you can strip out a certain number of lower income years to calculate your retirement benefit.

2. You can start collecting CPP as early as age 60. As of 2012 there is no longer a requirement to stop working to receive the CPP between age 60 to 65. If you choose to start collecting CPP prior to age 65, your monthly payments will be reduced by for each month you are under aged 65. If you delay your CPP until after aged 65 your monthly payments will be increased.

3. If you receive CPP early and continue to work, you are still required to contribute to CPP. These additional contributions will result in an increased annual pension benefit known as “post-retirement benefit”.

4. If you continue to work between the age of 65 to 70 you will be subject to CPP contributions. You can elect out of paying CPP by completing form CPT30 – Election to stop contributing to Canada Pension Plan.

5. CPP has a death benefit of $2,500 and a survivor’s benefit. However, if the spouse is already receiving a retirement benefit in their own right, the maximum monthly amount (retirement plus survivor benefit) cannot exceed the maximum retirement benefit.

6. The maximum CPP benefit in 2014 for pensioners aged 65 is $1,038.33.