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Your Retirement Income Blueprint: A Six-Step Plan to Design and Build a Secure Retirement by Daryl Diamond

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The New CPP Rules for 2012

Starting in 2012, there will be four key changes to the Canada Pension Plan. The changes will be phased in starting in 2012 and will be fully implemented by 2016.
First, there is a positive change in the calculation of career earnings. Simply stated, by increasing the dropout percentage for years of low or no earnings from the current 15 per cent of average career earnings to 16 per cent in 2012 and 17 per cent in 2014, you should have a higher retirement benefit when you elect to receive it.
Second, the removal of the work cessation test is a welcome end to this unnecessary annoyance. You will no longer be required to cease employment or have a reduced income for a two-month period in order to be eligible to apply for your benefit.
The above two amendments are constructive, but the following two amendments create very significant changes for those who wish to take their retirement benefits prior to age 65 and particularly for those who are earning employment income during this period.
The third proposed change will further reduce the payments for those who start before 65 and further enhance them for those who start after 65. From a practical and actuarial perspective, these adjustments are appropriate given the longer life expectancy of today’s retirees compared to those who retired 20 years ago.
When fully implemented, the early receipt reduction per month will be 0.6 per cent compared to the 0.5 per cent that it is in 2011. The changes for ...

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