Here is a summary of Canada Pension Plan provided by Clay Gillespie, managing director at Rogers Group Financial. From The Vancouver Sun January 19, 2012, article: “Government benefits a mystery to many readers”
CPP benefit payments are based on contributions made to the plan during a person’s working years. You can contact Service Canada (www.servicecanada.gc.ca) for an updated CPP statement of contributions. Today, the maximum CPP retirement pension amount is $986.67/month at age 65. You can start your pension as early as 60 or as late as 70. The percentage amounts used to reduce it if taken before age 65 will be gradually increased from 0.52 per cent in 2012 to 0.60 per cent in 2016.
For a person who begins collecting the CPP retirement pension at age 60 after 2015, the pension would be reduced by 36 per cent (60 months x 0.60 per cent). The percentage amounts used to increase the pensions taken after age 65 will be gradually increased from 0.57 per cent in 2011 to 0.70 per cent in 2013. Thus, for a person who begins collecting CPP at age 70 after 2012, the pension would be increased by 42 per cent (60 months x 0.70 per cent).
You can now collect CPP before age 65, even if you are still working.
Many individuals ask if you should take CPP early. This is a difficult question because the answer is based mainly on life expectancy. If you expect to live longer than the average Canadian, you should consider deferring your pension. However, I will typically recommend individuals take it as soon as they retire. Taking it early allows you to get the pension for a longer period of time, but at a lower amount. It might also delay when you need to generate an income from your other assets. If you live to life expectancy, it shouldn’t matter which option you choose.
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