CPP Changes
Over the next five years, legislative amendments take effect to neutralize the effect of taking the CPP early:
- Under current legislation, the pension benefit is reduced by 0.5%/month for each month before the recipient's 65th birthday to a maximum of 30% if taken early. This will be reduced such that the pension benefit by 0.6%/month to a maximum of 36% if taken early and will also reward additional years of work with a benefit increase of 0.7%/month to a maximum of 42% until age 70.
- Currently, an individual receiving CPP can return to work without resuming contributions to the CPP; the amendments will require individuals under 65 to resume contributions to the CPP if they return to work.
- Currently, an individual wishing to take benefits before 65 must reduce their earnings for 2 months to qualify for CPP. Going forward, an interruption in work or reduction of hours will not be required to qualify.
- Currently, an individual can "drop" 15% of periods (7 years) of low earnings from the calculation of their average career earnings. This will increase to 16% (7.5 years) in 2012 and 17% in 2014 (8 years).
These changes will not affect persons currently receiving retirement benefits under the CPP.
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