Several changes are taking effect on January 1, 2012 that may affect you. You will not be affected by these changes if you started receiving a CPP retirement pension before December 31, 2010, and you remain out of the work force.
If you are between 60 and 65, receiving CPP and still working, you and your employer now must contribute to CPP. The additional contributions will count towards a Post Retirement Benefit (PRB).
If you are between 65 and 70, receiving CPP and still working, you and your employer now have the option to contribute to CPP. The additional contributions will count towards a Post Retirement Benefit (PRB).
If you are between 60 and 70 and not yet collecting CPP, the adjustment factor that will be used will change. For those taking the benefit before December 31, 20110 the adjustment was 0.5% per month above or below age 65. This percentage will gradually increase to 0.7% per month for those taking late retirement and 0.6% for those taking early CPP . These changes will take full effect by 2016.
In addition, the number of years with zero earnings that are automatically dropped from the calculation of the CPP pension will increase.
Starting in 2012, contributors no longer have to stop working or significantly reduce earnings for two consecutive months to receive the CPP retirement pension before the age of 65. This will make it easier for Canadians to make a gradual transition to retirement.
For more information, you can check the Service Canada web site or give me a call.
Service Canada has a retirement calculator on their web site to assist you in calculating your benefit.