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When to start taking your CPP retirement pension — things to consider
You can start taking your CPP retirement pension at any age between 60 and 70. Is it better to take it early and get a reduced monthly amount or wait?
What are Post-Retirement Benefits?
The Post-Retirement Benefit (PRB) is a program that started in 2012. Previously, once you started receiving CPP retirement benefits, you could no longer contribute to the CPP. Now if you are between 60 and 70, receiving CPP, working, and contributing to the CPP, you will earn a PRB for each year of your contributions.
Information for financial planners
The My Service Canada website lets contributors view estimates of their monthly CPP retirement benefits at 60, 65, and 70. The estimates assume that the "average lifetime earnings" that your client has had from age 18 until the last year shown on the SOC will continue until ages 60, 65, or 70. In fact, your client's future earnings may be quite different.
- Information for lawyers about division of unadjusted pensionable earnings (CPP credit splitting):
Division of Unadjusted Pensionable Earnings (DUPE) presentation, given to the Family Law Section of the Canadian Bar Association (CBA), B.C. Branch, Feb. 20, 2014 (PDF file)
CPP Credit Splitting Guide for the Legal Profession from Employment and Social Development Canada
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CPP Rate Table 1 is a list of amounts such as the annual Year's Maximum Pensionable Earnings (YMPE), Average Year's Maximum Pensionable Earnings (AYMPE), and Year's Basic Exemption (YBE) under the Canada Pension Plan (CPP), since 1966. The amounts are used in CPP retirement benefit calculations. CPP Rate Table 2 provides the maximum monthly amounts payable for each CPP benefit type. The Enhanced Rate Table shows the enhanced CPP benefits, which began in 2019.
The following are links to DR Pensions Consulting articles written for the retirehappy.ca website:
Five proposed changes to the Canada Pension Plan explained
The federal and provincial Ministers of Finance recently announced that they had reached agreement on some changes to the enhanced CPP, along with some other changes to the basic CPP. While the legislation to implement these changes has not yet been finalized, it is important to understand what these changes could mean to your CPP benefits.
Understanding the "Enhanced CPP" changes
In June 2016, the Minister of Finance announced an agreement in principle with the provinces that would "strengthen the Canada Pension Plan (CPP) for future generations." What are the changes and how will they affect you?
Do you have to apply for your CPP Post-Retirement Benefit?
The short answer is “No,” but the timing for Service Canada to process PRBs seems to be uncertain, and it sometimes appears necessary to call them before they’ll issue a PRB.
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Often the result of a CPP credit split is a loss of benefits to the couple, with one partner losing more benefits than the other gains. But sometimes both partners lose benefits. This case study examines how that can happen.
Understanding the OAS clawback
Should you be concerned about keeping your income low in your 64th year to avoid having your OAS (Old Age Security) payments clawed back?
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CPP pension sharing is a temporary sharing of CPP retirement pension benefits between spouses in an ongoing relationship. But how does it actually work?
How much is one year of CPP contributions worth?
I’ve had a number of clients recently who wanted to know how their future CPP contributions would affect their retirement pension. After seeing a range of impacts for this group of clients, it struck me that the issue would be a good subject for an article. You may have heard me say previously that each year of maximum CPP contributions is worth about $25 towards an age-65 retirement pension. I stand by that statement as a reasonable average, but it doesn’t apply in all situations.
How receiving a partial Old Age Security pension affects Guaranteed Income Supplement amounts
A pensioner receiving partial OAS will receive more GIS than someone receiving a full OAS pension and will receive GIS up to a higher income.
When is the best month to start CPP?
My client was planning to retire in December 2014 and wanted to apply for her CPP to start the following month. She asked me to calculate what her CPP retirement pension would be effective January 2015. What originally seemed like a simple calculation turned into an eye-opener for her because of the best month to start CPP.
What adjustments are made to CPP after it's in pay?
People who are still working in the year they start receiving their CPP retirement pension will find that their pension amount changes several times in the next year. Such adjustments are not always well explained by Service Canada. What adjustments will be made and when will they happen?
Examples of CPP after age 60 but still working
Working after you turn age 60 can increase your CPP retirement pension, have no effect at all, or even decrease your pension. It all depends on your individual record of pensionable earnings. Here are four people — a maximum contributor, an immigrant to Canada, an entrepreneur, a former stay-at-home parent — whose situations show the range of possibilities.
A case study on CPP combined benefits
When you're eligible for both a CPP retirement pension and a CPP survivor's pension, you get CPP combined benefits. This client's situation is a good example of how receiving a CPP survivor's pension can affect the decision of when to start receiving your CPP retirement pension.
How to calculate your CPP Post-Retirement Benefit (PRB)
Once you're receiving your CPP retirement pension, any further CPP contributions that you make won't affect the amount of your regular pension. However, they aren't wasted, because they will earn you Post-Retirement Benefits (PRB). PRBs are added to your monthly CPP pension and will continue for the rest of your life, indexed to the cost of living. This article tells you how to calculate your PRBs.
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If you think you will be eligible for the Guaranteed Income Supplement (GIS), don't ignore how it is affected by your other income sources, including your CPP retirement pension.
Understanding the Allowance for the Survivor
The Allowance for the Survivor is one of the supplementary benefits payable under the Old Age Security (OAS) Act. In my opinion, there is no valid policy rationale for this benefit. It happened more by accident than by design, and is a good example (in my mind) of how some well-intentioned government programs evolve into something else.
Understanding the Guaranteed Income Supplement (GIS)
The Guaranteed Income Supplement is a monthly non-taxable benefit that is paid to eligible pensioners, in addition to the basic monthly Old Age Security (OAS) amount.
Are you receiving as much CPP as you should be?
You might think that the answer must be "Yes." Why would your Canada Pension Plan (CPP) amount ever be less than it should be? Isn't CPP based on the contributions that you have made? Well, you might be surprised to learn that many people are being underpaid by CPP!
Understanding your CPP Statement of Contributions (SOC)
A client asked me the other day, "What does it mean on my Statement of Contributions when it says that my pension could be a certain amount." I had another client in his mid-thirties who looked at his SOC and said, "Wow, I've only contributed to the CPP for 15 years and already my pension is at the maximum of $1,012.50! How much more it will be by the time I've worked and contributed for another 30 years?"
These questions made me realize that I needed to help everyone better understand what the numbers on their CPP Statement of Contributions really mean!
International social security agreements
Canada currently has international social security agreements with more than 50 countries. These agreements coordinate pension programs for people who have lived or worked for part of their lives outside Canada. Meeting the minimum contributory requirements for CPP and OAS is generally not difficult if you've lived your entire life in Canada; it's much harder if you've moved to or from another country. Without a social security agreement in place, people might not qualify for benefits from one or both of those countries. This article tells you what you need to know about international social security agreements.
CPP disability benefit versus early retirement pension
If you are over 60 and qualify to receive a Canada Pension Plan (CPP) disability benefit, you are better off applying for that benefit than applying to take your CPP early. This article describes who is eligible for a CPP disability benefit, how the benefit is calculated, and what you need to know about your options.
CPP Child Rearing Dropout Provision—The Good
The Child Rearing Dropout (CRDO) provision of the Canada Pension Plan (CPP) isn't an actual benefit paid on its own, but it's an important provision nonetheless. The CRDO provision is generally helpful, but the actual impacts aren't always fair. This is the first of a three-part series on the CRDO provision—the Good, the Bad and the Ugly.
CPP Child Rearing Dropout Provision—The Bad
The intent of the Child-Rearing Dropout (CRDO) provision of the Canada Pension Plan (CPP) is to ensure that a parent who stayed at home to raise children isn't penalized by those years of low or no earnings when their CPP benefit is calculated. It sounds reasonable, but as I said in my previous article on the Child Rearing Dropout provision, the CRDO has its Good, its Bad, and its Ugly aspects. Here is the second installment in this trilogy—the Bad!
CPP Child Rearing Dropout Provision—The Ugly
The impacts of the CRDO provision are downright ugly when it overlaps with another provision of the CPP, known as credit splitting, or more properly, as Division of Unadjusted Pensionable Earnings (DUPE). Although both provisions are generally positive on their own, they were definitely not designed to work together.
CPP for the over 65 and still working
If you're 65 and still working, should you apply to receive your CPP retirement pension at age 65, or should you wait until you stop working, or even until age 70?
Contributing to CPP after age 65
You can choose whether to contribute to the CPP after age 65 up to age 70, regardless of whether you're receiving your CPP retirement pension. But does it make financial sense to continue contributing?
How to calculate your CPP retirement pension
Although you can request an estimate of your CPP benefits on the Service Canada website, the Service Canada estimates can be misleading if you won't be eligible for your pension in the next few years. It's a bit complicated, but you can calculate your CPP retirement pension yourself. See this CPP rate table for the information required for the calculation.
Understanding CPP survivor benefits
How are CPP benefits calculated when someone is eligible for both a CPP retirement pension and CPP survivor benefits? Many people are aware that there is maximum amount to these combined benefits, but don't clearly understand what the maximum is. And being subject to a maximum is only part of the story.
Voluntary deferral of Old Age Security (OAS)
As of July 2013, you can voluntarily delay taking the Old Age Security pension (OAS) in order to receive a higher benefit later. You can delay for up to 5 years, which would increase your OAS pension by 36%.
The following are articles to which DR Pensions Consulting contributed, or about DR Pensions Consulting:
- Globe and Mail, March 12, 2024 (subscribers): A pension expert explains ‘the truths’ about combined CPP and survivor benefits
- Globe and Mail, June 22, 2021 (subscribers): Canada Pension Plan not paying full benefits to recent retirees due to systems delay
- The Star, July 20, 2020: Want to know exactly what you’ll get from CPP when you retire? Here’s how to find out
- MoneySense, Apr. 9, 2020: When is the best time to start taking your CPP payments?
- Globe and Mail, Sept. 27, 2019 (subscribers): Your Canada Pension Plan questions answered
- Globe and Mail, Sept. 20, 2019 (subscribers): How much CPP will you get? Here’s how to find out
- CBC News, June 12, 2019: After death of spouse, CPP survivor's benefit can be a shock
- Financial Post, Jan. 10, 2019: Everything you need to know about the enhanced CPP — from how much you'll pay to how much you'll get
- My Own Advisor, Jan. 8, 2019: Little known facts about Old Age Security you need to know
- Zoomer, Dec. 3, 2018: 13 Things You Need to Know About the Canada Pension Plan
- My Own Advisor, Jan. 24, 2018: Should you defer your Canada Pension Plan to age 65 or 70?
- My Own Advisor, Nov. 15, 2017: When to take your Canada Pension Plan benefit
- Investment Executive, Nov. 14, 2017: CPP: Answering your questions
- MoneySense, Aug. 24, 2017: Survivor benefits: A guide to CPP, OAS, GIS and more
- MoneySense, Aug. 20, 2017: What to expect when applying for GIS
- pressreader (Zoomer), May 8, 2017: Deciphering the CPP
- MoneySense, Sept. 15, 2016: Maximize your CPP payouts
- MoneySense, July 18, 2016: When to tap into government pensions
- Globe and Mail, Nov. 27, 2015: Your questions about Canada Pension Plan benefits answered
- Globe and Mail, Nov. 6, 2015: The boomer’s dilemma: When to start collecting CPP?
- Globe and Mail, Oct. 10, 2014: Approaching retirement: Beware that final five-year stretch
- MoneySense, Sept. 2, 2014: Calculating your CPP payout
- Wealth Professional, Aug. 29, 2014: Picture of a practice: D. R. Pensions Consulting
- The Star, Dec. 14, 2013: Old Age Security: Better to wait or take it now?
- The Star, Nov. 28, 2013: Why CPP may be underpaying some Canadians
- Comox Valley Record, July 24, 2013: Pension expertise available in Comox Valley