2011 Marked the start of a 5 Year Implimentation of the Canada Pension Plan Overhaul.
2012 Marks the first year where you will see major changes on your benefits & contributions.
Over 60 & Still Working
There are 2 major changes that affect how your CPP eligabilty and contributions are determined. How you can collect, and what you need to contribute.
If you are already receiving CPP, you will, or have already noticed a change to your first paycheck of 2012.
Under the old CPP rules, Once you met the eligibility requirements to claim CPP, and started drawing CPP benefits you were exempt from continuing your regular contributions if you rejoined the workforce.
Under the new rules, and effective Jan 1, 2012, You are now required to continue making CPP contributions while collecting CPP. The additional amounts paid will be included in recalculating your next years CPP benefits, and will increase your monthly benefit check for life.
Over 60 and not collecting:
Under the old rules, you needed to retire for a period of 8 weeks in order to start collecting.
Under the NEW RULES, once you turn 60, all Canadians that would normally be eligable for CPP at 65 can now claim without a break in employment. Your overall benefits will decrease by .6% for every month that you decide to draw your CPP prior to age 60. (Max Reduction is 36% if taken on your 60th birthday)
Regardless of whether you choose to collect or not, you are still required to contribute. There were no grandfather provisions made under the current changes.
Are you Over 65?
For those that are over 65, you must ELECT NOT TO contribute to CPP if you are still working.
Under the old rules, once you turned 65, you were automatically entitled to collect CPP benefits, and by doing so, you were no longer required to contribute into the plan.
Under the new rules, you may continue contributing into CPP until the age of 70, however contributions are optional, and not manditory.
The biggest change is that YOU MUST ELECT NOT TO CONTRIBUTE. If you do not complete the form CPT30 and provide this to Canada Revenue and your employer to stop contributions.
If you choose to continue paying into CPP you will be eligable for a post retirement benefit on your CPP starting the next year. The amount you recieve varies based on your current earning and previous CPP earnings and contributions. Service Canada has a PBR (Post Retirement benefit) Calaculator
If you choose to not contribute and complete the CPT30 election, contributions will stop the following month, however the amounts for the current month are not refundable. Please make sure that you complete your form at least 2 months in advance
If you are self-employed and 65 or older and wish to continue paying into your CPP, Ask your tax advisor to complete a CPT 20 to include on your return.
In order to ensure our accuracy, and make sure you pay the least amount possible we ask that all clients complete our registration forms. New this year are 3 seperate forms: One for new clients, one for returning clients and one for deceased clients. Additional forms may be required based on your answers and tax situation.