Archive for December, 2010

Canada Pension Plan changes 2012

December 7, 2010 Leave a comment

Changes have been approved, some for those who started receiving CPP before 2012, some for those who begin during or after 2012.

The following changes to the CPP will be phased in gradually between 2011 and 2016, with the first major change occurring in January 2011 for people retiring after age 65:

  • Your monthly CPP retirement pension amount will increase by a larger percentage if you take it after age 65 (gradually from 2011 to 2013).
  • Your monthly CPP retirement pension amount will decrease by a larger percentage if you take it before age 65 (gradually from 2012 to 2016).

Therefore encouraging older workers to work longer.

  • The number of years of low or zero earnings that are automatically dropped from the calculation of the CPP retirement pension will increase (in 2012 and 2014).

Which will in general help workers.

  • You will be able to begin receiving your CPP retirement pension without any interruption even if you remain working (starting in 2012)
  • If you are under 65 and you work while receiving your CPP retirement pension, you and your employer will have to make CPP contributions.
  • If you are age 65 to 70 and you work while receiving your CPP retirement pension, you can choose to make CPP contributions.

The strategy for these changes is to improve retirement flexibility for working individuals in Canada, enhance pension coverage, and improve equity in the CPP (providing those of us not retiring for some time will still be eligible).

Pension Update Dec.6  What is changing?


Bill C-51, receiving assent in parliament on December 15, 2010, will take affect in 2012. Some of these changes include:

  1. Workers will no longer have to cease work or reduce their earnings in order to collect CPP retirement pension benefits before age 65. Currently, workers must stop working (or keep earnings to a maximum amount) to collect benefits (this is called the “work cessation test”).
  2. The rates of Canadians’ low earning years are excluded from the calculation of their benefits entitlements.  Pensionable earnings levels used to calculate CPP pension benefits will increase, leading to better pensions.
  3. Those workers receiving CPP retirement pension benefit recipients can continue making premium contributions if they choose.
  4. The penalty for early receipt of benefits (before 65 yrs old) will increase and the bonus for not collecting benefits until later will be better.

For more information, see:

Service Canada

Human Resources and Skills Development Canada Guidelines


Pension Update Dec. 6 How CPP May Change

December 7, 2010 Leave a comment

The Canadian Labour Congress wants benefits for CPP doubled, which may hurt the economy due to increased payroll taxes for employers.

Politicians, actuaries, and Canadian workers consider raising the retirement age to 70 years.

Support could be provided to Canadians who save including assistance for employers offering RRSP plans and increases to individuals’ RRSP limits.

The Guaranteed Income Supplement benefit could be enhanced for those with smaller retirement incomes.

Individual Canadians could be allowed to opt out of CPP if they would rather control their own retirement savings and investments.

Related articles:

Is the Piggy bank broken ?

Ideas to enhance CPP

Free Virtual Conference Dec.1-2 (today and tomorrow)

December 1, 2010 Leave a comment