Changes to the Canada Pension Plan

The Harper Government has implemented a number of changes to the Canada Pension Plan since 2011.  You ought to know the changes that are being phased in. It’s also helpful to speak to a personal injury lawyer to understand the impact these changes can have on you.

The first change affects those taking early retirement.  Starting in 2011, there was a reduction in how much somebody was able to receive in retirement pension starting at age 60.  In 2011, there was a 5% reduction in the pension payout for each month before age 65.  In 2012, the reduction rose to .52% per month.  This translated to a 31.2% reduction penalty for someone who chose retirement before 65.  This increase in penalty will peak to a 36% reduction by 2016.   Conversely, however, the changes affect pensioners positively who wait to retire to a maximum of 42% as of 2013.

The next big change is that if you are under 65 years old and you also work and receive your CPP pension, the government mandates you and your employer must make contributions to the CPP.  The contributions will be credited to you in the subsequent year, increasing your CPP benefits.  If you are between 65 and 70 conversely and you work and also receive CPP, you can chose to make further CPP contributions which will also positively affect your benefits.

Previously, the CPP legislation required pensioners to completely stop work or drastically reduce earnings.  This is no longer the case as pensioners may work and receive their pensions. Contributions made by employers towards benefits for working retirees will actually translate into a benefit to the employer; an incentive to employers to keep retirees working.

In 2013, the maximum monthly CPP retirement pension has increased to a maximum of $1,012.50.  The maximum monthly disability pension amount is $1,212.90 in 2013.

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