Gradual changes to Canada Pension Plan are coming

The Canada Pension Plan (CPP) is changing in gradual phases between 2011 and 2016, with the first big change beginning in 2011.

The Canada Pension Plan (CPP) is changing in gradual phases between 2011 and 2016, with the first big change beginning in 2011.

Does that mean you need to rethink when to begin receiving your CPP pension? Maybe. Here’s why:

• These days, “retirement” means many things — from ceasing employment to working part-time or even starting your own business — and the CPP changes are intended to provide more financial flexibility depending on the retirement “path” you choose. They are also meant to encourage Canadians to work longer before starting to draw a government pension.

• Your monthly CPP pension amount will increase (gradually from 2011 to 2013) by a larger percentage if you take it after age 65, but you’ll see a bigger decrease if you opt to take it between age 60 and 64. If you are age 65 in 2011, the maximum CPP benefit is $960 per month. If you wait until 2013 (and are age 70), your CPP cheque will be 42 per cent more than that.

Taking your CPP pension before age 65 makes sense when:

• Your life expectancy is below the average of age 80 to 85.

• You have an illness that does not qualify for CPP disability.

• You have little or no other income.

• You are permanently unemployed.

Delaying your CPP pension beyond age 65 makes sense when:

• Your health is good.

• Your life expectancy is above average.

• You have a reasonable income and/or intend to continue working after 65.

• The work cessation rule has been eliminated. Before the changes, you had to be at least 60 years of age and not working for at least two months in order to collect CPP. Now, starting at age 60, you can continue working and still receive CPP benefits.

Under the old rules, once you began collecting CPP you never again had to contribute to the plan. Now, however, if you are under 65 and working while receiving a CPP pension, you (and your employer) will have to continue making CPP contributions (that will increase your CPP benefits beginning in 2013).

If you are 65 to 70 and work while receiving CPP benefits, you have the choice of continuing to make CPP contributions (that will increase your CPP benefits beginning in 2013) or not.

• The earnings dropout provision, which allows you to exclude a portion of your pensionable earnings that can reduce your CPP benefit, has been changed.

Previously, if you retired at 65, you could “drop-out” seven of your lowest earning years from age 18 to 65 when you were eligible to contribute to CPP. Under the revised rules, that “drop-out” period increases to 7.5 years in 2012 and eight years in 2014.

Talk to your professional adviser about getting the most out of the new CPP changes — and every other aspect of your financial and retirement life.

J. Kevin Dobbelsteyn is a certified financial planner with Investors Group Financial Services Inc. His column appears every Wednesday.


Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Classes discussed reconciliation, tying in Canada’s discriminatory policies that students had learned in their humanities studies. Photo supplied
Comox Valley students take part in ‘ReconciliACTION’

Lake Trail students are the only youth in district this year involved with a YLR event

Marc Rutten, general manager of engineering services for Comox Strathcona Waste Management. Black Press file photo
Comox Strathcona cutting tax requisition for region’s waste management

Staff also expect to transfer savings associated with COVID-19 to reserves

The opening day on Mount Washington this year was Dec. 4. Screenshot
Mount Washington opens on time, COVID-19 protocols in place

“We’re super excited - it’s been six months in the planning.”

After holding recent meetings socially distanced but in person at Isfeld Secondary, the board of education was back meeting via Zoom because of recent pandemic restrictions. Image, screenshot
Most parents approve of schools’ handling of pandemic, says Comox Valley superintendent

Schools forced to adapt to COVID-19, including finding alternative to regular theatre production

The Gnarly Craft Fair is going virtual this year. Photo by Kim Stallknecht
Gnarly Youth Craft goes virtual

The virtual fair will be open until Dec. 19 and features talented youth aged 9 -19 years

A snow moon rises over Mt. Cheam in Chilliwack on Feb. 8, 2020. Friday, Dec. 11, 2020 is Mountain Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of Dec. 6 to 12

Mountain Day, Dewey Decimal System Day and Lard Day are all coming up this week

Beefs and Bouquets
Comox Valley Beefs & Bouquets for week of Dec. 2

Beef to deer hunters; bouquet from a store owner to shoppers

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Robert Riley Saunders. (File)
First Nations Leadership Council demands justice for victims of B.C. social worker

Union of BC Indian Chiefs calls actions of Robert Saunders ‘nothing short of complete depravity’

Demonstrators, organized by the Public Fishery Alliance, outside the downtown Vancouver offices of Fisheries and Oceans Canada July 6 demand the marking of all hatchery chinook to allow for a sustainable public fishery while wild stocks recover. (Public Fishery Alliance Facebook photo)
Angry B.C. anglers see petition tabled in House of Commons

Salmon fishers demand better access to the healthy stocks in the public fishery

(Hotel Zed/Flytographer)
B.C. hotel grants couple 18 years of free stays after making baby on Valentines Day

Hotel Zed has announced a Kelowna couple has received free Valentines Day stays for next 18 years

Farmers raise slogans during a protest on a highway at the Delhi-Haryana state border, India, Thursday, Dec. 3, 2020. Prime Minister Justin Trudeau rejected the diplomatic scolding Canada’s envoy to India received on Friday for his recent comments in support of protesting Indian farmers. Tens of thousands of farmers have descended upon the borders of New Delhi to protest new farming laws that they say will open them to corporate exploitation. THE CANADIAN PRESS/AP-Manish Swarup
Trudeau brushes off India’s criticism for standing with farmers in anti-Modi protests

The High Commission of India in Ottawa had no comment when contacted Friday

Montreal Alouettes’ Michael Sam is set to make his pro football debut as he warms up before the first half of a CFL game against the Ottawa Redblacks in Ottawa on Friday, Aug. 7, 2015. Sam became the first publicly gay player to be drafted in the NFL. He signed with the Montreal Alouettes after being released by St. Louis, but abruptly left after playing one game. THE CANADIAN PRESS/Justin Tang
Study finds Canada a ‘laggard’ on homophobia in sports

Among females, 44 per cent of Canadians who’ve come out to teammates reported being victimized

Nurse Kath Olmstead prepares a shot as the world’s biggest study of a possible COVID-19 vaccine, developed by the National Institutes of Health and Moderna Inc., gets underway Monday, July 27, 2020, in Binghamton, N.Y. U.S. biotech firm Moderna says its vaccine is showing signs of producing lasting immunity to COVID-19, and that it will have as many as many as 125 million doses available by the end of March. THE CANADIAN PRESS/AP-Hans Pennink
Canada orders more COVID vaccines, refines advice on first doses as cases reach 400K

Canada recorded its 300,000th case of COVID-19 on Nov. 16

Most Read