Changes to the Canada Pension Plan

CANADA PENSION PLAN Changes to the Canada Pension Plan The Canada Pension Plan (CPP) is changing to better reflect how Canadians choose to live, work, and retire. The Government of Canada is adapting the CPP to ensure it remains fair and sustainable, and that it responds to the evolving needs of Canada’s aging population and to changes in the economy and labour market. The changes, which the Government will gradually introduce from 2011 to 2016, will give you more options so that you can make decisions that are right for you as you make the transition from work to retirement. Note The CPP operates throughout Canada, except in Quebec, where the Quebec Pension Plan (QPP) provides benefits. These changes do

not apply to the QPP. For information about the QPP, visit the QPP Web site at www.rrq.gouv.qc.ca. What are the changes being made to the CPP? Your monthly CPP retirement pension amount will Î increase by a larger percentage if you take it after age 65. Your monthly CPP retirement pension amount will Î decrease by a larger percentage if you take it before age 65. If you are under 65 and you work while receiving your CPP retirement pension, you Î and your employer will have to make CPP contributions. These contributions will increase your CPP retirement benefits. If you are age 65 to 70 and you work while receiving your CPP retirement pension, you can Î choose to make CPP contributions. These contributions will increase your CPP retirement benefits. The number of years of low or zero earnings that are automatically dropped from the calculation Î of your CPP pension will increase. You will be able to begin receiving your CPP retirement pension without any work interruption. Î Your monthly CPP retirement pension amount will increase by a larger percentage if you take it after age 65. Example Although Amrita enjoys her job as a nurse, she plans to retire when she reaches 65 in 2014. Based on her CPP Statement of Contributions, she expects her CPP retirement pension in 2014 to be $6,220 annually. This amount will then grow with the cost of living, as measured by the Consumer Price Index. However, if Amrita decides to delay taking her CPP pension until she reaches 66 in 2015, her CPP retirement pension will increase by 8.4% (0.7% x 12 months). Based on this change, the annual amount of her pension will increase by $522, and will then grow with the cost of living, as measured by the Consumer Price Index. Without the change, the increase would have been $373. Before the changes, your CPP retirement pension increased by 0.5% for each month after age 65 (and up to age 70) that you delayed receiving it. This meant that, if you started receiving your CPP pension at 70, your pension amount was 30% more than it would have been if you had taken it at 65. From 2011 to 2013, the Government of Canada will gradually increase this percentage from 0.5% per month (6% per year) to 0.7% per month (8.4% per year). This means that, by 2013, if...

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