CPP changes from 2009 are coming next year

Changes won't impact those already receiving pension plan benefits

On December 15, 2009, several changes to the Canadian Pension Plan (CPP) recommended by the federal, provincial and territorial governments became law with the passing of Bill C-51.

The new rules will gradually restore the pension adjustments for early and late CPP take-up, remove the work cessation test, mandate plan participation for working beneficiaries under age 65 and enhance the general drop-out provision.

These new changes will be gradually phased in over five years starting in 2011.

However, the changes will have no impact on you if you are already receiving a CPP retirement pension, disability benefit, survivor benefit or combined benefits, or if you will begin to receive these benefits in 2010.

Once the new changes come into effect for early CPP take-up, if you are between the ages of 60 and 65 and plan to apply for a CPP pension early your benefits may be reduced.

Below are the details of these changes, including when they come into effect.



Pension adjustments for early and late take-up

Early take-up — Currently if CPP is collected early, your CPP pension benefit is reduced by six per cent per year or half a per cent per month for each month that the pension is taken before your 65th birthday to a maximum of 30 per cent over five years.

In the future for early CPP take-up, there will be a reduction in benefits by 7.2 per cent per year or 0.6 per cent per month for each month that the pension is taken before age 65 to a maximum reduction of 36 per cent. This increase will be implemented gradually over a five year period beginning in 2012.

Late take-up — Currently if CPP is not collected until after age 65, your CPP pension benefit is increased by six per cent per year or half a per cent per month up to the age of 70 to a maximum of 30 per cent over five years.

If you wait until age 70 you will receive an increase of 30 per cent of your basic CPP benefit. In the future for late CPP take-up, there will be an increase in benefits by 8.4 per cent per year or 0.7 per cent per month for each month that the pension is taken after age 65 and up to the age of 70 to a maximum increase of 42 per cent. This increase will be implemented gradually over a three year period beginning in 2011.




Removal of work cessation test for early CPP take-up — Currently before 2012, in order to apply for CPP benefits early, from age 60 to 64, you must either stop working by the end of the month before your CPP retirement pension begins and during the month in which it begins, or your earnings must be less than the current monthly maximum CPP retirement pension benefit in the month before your pension begins and in the month it begins.

In the future, starting in 2012, the requirement to stop working or significantly reduce your earnings to take-up early CPP will no longer apply.




Mandatory contributions to CPP for CPP pensioners under age 65

If you are under age 65 and are receiving your CPP monthly pension and continue to work, you and your employer are required to continue to contribute to CPP. If you are between the ages of 65 to 70 collecting a CPP pension and continue to work, the decision to continue to contribute to the CPP is voluntary so you may elect not to make CPP contributions. However, if you opt to participate in the CPP your employer will be required to also contribute. These contributions will result in increased retirement benefits.




Increase in general low earnings drop-out

As part of your CPP benefit calculation there is a general adjustment in the calculation that allows for a “drop out” of certain periods of low or no income.

Currently the general drop-out provision is 15 per cent of the years where your earnings are low or nil.

In the future the general drop-out provision will increase to 16 per cent in 2012 and 17 per cent in 2014.


In summary, if you plan to start receiving early benefits under the CPP between the ages of 60 and 65, and if you apply for benefits in 2012 or later, the new changes could reduce the benefits you will receive.

This may influence your decision on whether to take a CPP pension early.

Remember to consult your financial advisor before taking any action.

Written by Stuart Kirk, CIM.

Stuart Kirk is a Retirement Planning Specialist with Precision Wealth Management Ltd. The opinions expressed are those of the author and may not necessarily reflect those of Precision Wealth Management Ltd.  For comments or questions Stuart can be reached at  stuart@precisionwealth.ca  or 250-954-0247.





Just Posted

The total earnings of Town of Qualicum Beach council and mayor amounted to $186,649 in 2020, including expenses. (Town of Qualicum Beach photo)
Nine Qualicum Beach town employees earned more than $100K in 2020

Mayor and council received earnings totalling $186,649

(PQB News file photo)
Fireworks report highlights enforcement challenges for Regional District of Nanaimo

Director: ‘I just think it’s wasting everybody’s time’

Terry Mazzei next to a truck after it was struck by lightning, with him inside, on Wednesday afternoon, June 9. He walked away from the incident without injury and the truck sustained only mild damage; a blown front tire and newly broken gas gauge. (Wendy Mazzei photo)
Nanoose Bay man walks away unscathed after lightning strike

VIDEO: ‘We like to think that his dad was watching over him’

Douglas Holmes, current Alberni-Clayoquot Regional District chief administrative officer, is set to take on that position at the Regional District of Nanaimo come late August. (Submitted photo)
Regional District of Nanaimo’s next CAO keen to work on building partnerships

Douglas Holmes to take over top administrator role with RDN this summer

This young fledgling white raven was spotted in the Coombs area on May 16. (Mike Yip photo)
Expert says 2 sets of parents producing rare white ravens in mid-Island area

One of the iconic birds is currently recovering at wildlife centre after being rescued

At an outdoor drive-in convocation ceremony, Mount Royal University bestows an honorary Doctor of Laws on Blackfoot Elder and residential school survivor Clarence Wolfleg in Calgary on Tuesday, June 8, 2021. THE CANADIAN PRESS/Jeff McIntosh
‘You didn’t get the best of me’: Residential school survivor gets honorary doctorate

Clarence Wolfleg receives honorary doctorate from Mount Royal University, the highest honour the school gives out

Indigenous Services Minister Marc Miller is seen during a news conference, Wednesday May 19, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Indigenous child-welfare battle heads to court despite calls for Ottawa to drop cases

Feds are poised to argue against two Canadian Human Rights Tribunal rulings

The Great Ogopogo Bathtub Race has been held in Summerland as a fundraising event. Do you know which Canadian city introduced this sport? (Black Press file photo)
QUIZ: A summer’s day at the water

How much do you know about boats, lakes and water?

Two-year-old Ivy McLeod laughs while playing with Lucky the puppy outside their Chilliwack home on Thursday, June 10, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: B.C. family finds ‘perfect’ puppy with limb difference for 2-year-old Ivy

Ivy has special bond with Lucky the puppy who was also born with limb difference

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

A logging truck carries its load down the Elaho Valley near in Squamish, B.C. in this file photo. THE CANADIAN PRESS/Chuck Stoody
Squamish Nation calls for old-growth logging moratorium in its territory

The nation says 44% of old-growth forests in its 6,900-square kilometre territory are protected while the rest remain at risk

Flowers and cards are left at a makeshift memorial at a monument outside the former Kamloops Indian Residential School to honour the 215 children whose remains are believed to have been discovered buried near the city in Kamloops, B.C., on Monday, May 31, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Pick a Sunday:’ Indigenous leaders ask Catholics to stay home, push for apology

Indigenous leaders are calling on Catholics to stand in solidarity with residential school survivors by not attending church services

Most Read