The Canada Pension Plan (CPP/QPP)
The CPP retirement pension serves as the next layer of income that should be triggered. In this section, I will cover off some mechanics of the benefit and address the most common question people ask about their CPP pension, which is: Start now or start later? I also will describe the significant changes coming to CPP pension in 2012 and how this could possibly affect you going forward.
First, let’s talk about how things will work up to the end of 2011, starting with how your CPP pension is calculated. The benefits payable are dependent upon the level of contributions made (by you and your employer) and the number of years during which they were made. This differs from OAS, which is a uniform amount with universal entitlement. The CPP is designed to replace about 25 per cent of the earnings from employment up to a maximum amount known as the yearly maximum pensionable earnings (YMPE).
In calculating your retirement benefit, 15 per cent of your lowestearning years are removed from the calculation. This can provide a higher income if you have had lower or no earnings in certain years or if you were late in entering the workforce. There is also an adjustment for years when a parent was at home with children under the age of seven. In 2011, an individual aged 65 with entitlement to the maximum retirement benefit will receive a monthly CPP pension of $960.00.
Sharing Your CPP with Your Spouse
Sharing or assigning pensions allows spouses who ...