From January 2011 to 2016, the Canada Pension Plan (CPP) will undergo
major changes. To prepare, Wayne Chappell, V.P. and
Director of Odlum Brown Financial Services Limited, unpacked the newly implemented and upcoming rule changes and discussed how these
changes will affect you and the decisions you make about your CPP
benefits.

Topics included:

  • Early and Late CPP Take-Up
  • Removed “Work Cessation” Test 60-64
  • Mandatory Contributions (Under age 65)
  • Increase in General Low Earning Drop-Out

Attached, please find a copy of Mr. Chappell's PowerPoint presentation.

Part One


Part Two

 

Questions & Answers

Q: What is the relationship between the “General Low Earnings Drop-Out” calculation
and the “Child Rearing Provisions”.  

A: The
General Low Earnings Drop-out calculation is intended to allow
individuals to remove up to 7 years of “low earnings” from the
calculation of their individual entitlements to CPP benefits.  By
removing these lower earnings years from the calculation, the average
should be increased thereby offering a larger pension benefit to the
individual.  These low earnings years are taken from the CPP statement,
which in turn, is compiled from the amounts of income reported to Canada
Revenue Agency when filing our income tax returns each year.

The
“Child Rearing Provisions” are a separate calculation and are designed
to recognize that income may be reduced or actually disappear when
individuals are raising their children.  This benefit is claimed at the time the individual applies for CPP. 
The individual will be asked to provide proof of dates of birth of
children which are matched against the time period being claimed.  Each
situation is different and must be applied for.

If you have questions about these or other changes to the Canada Pension Plan, please feel free to contact Wayne Chappell at wchappell@odlumbrown.com.