The CPP and your CAAT Plan pension

The Canada Pension Plan (CPP) recently a number of changes to CPP benefits. These changes are designed to provide flexibility to Canadians as they ease into retirement and are relevant to anyone who starts collecting a CPP pension after 2010. These changes will be of particular interest if you have already retired, were then rehired and are continuing to work, or are thinking of returning to work.

You can collect CPP while continuing to work

As of the start of 2012, you no longer have to stop working or reduce your earnings in order to start your CPP pension before age 65. This change to CPP does not affect the rules for starting your pension from the CAAT Pension Plan. You must end your employment with all CAAT Plan employers before you start your CAAT Plan pension.

Bigger reductions and bigger increases

You can start your CPP pension anytime between ages 60 and 70. Bigger reductions for starting it before age 65 are being phased in, as are bigger increases for delaying its start past 65.
 

• Your CPP pension is reduced for each month before age 65 that you begin receiving it. From 2012 to 2016, the government is gradually changing the early pension reduction from 0.5% per month (6% per year) to 0.6% per month (7.2% per year.) Before the changes, a CPP pension that started at age 60 was 30% lower than if it started at age 65. Because of the changes, by 2016, a CPP pension that starts at age 60 will be 36% less than if it starts at 65.
• Your CPP pension is increased for each month after age 65 that you delay receiving it. From 2011 to 2013, this amount will gradually increase from 0.5% per month (6% per year) to 0.7% per month (8.4% per year.) Before the changes, a CPP pension that started at age 70 was 30% higher than if it was started at age 65. Because of the changes, by 2013, a CPP pension that starts at age 70 will be 42% higher than if it starts at age 65.

A choice to make at age 65

If you start your CPP pension while continuing to work and you are under age 65 you must continue to contribute to the CPP and will build additional benefits. If you continue to work past age 65, you can then choose whether or not to contribute to CPP while collecting it.

• If, after age 65, you decide to continue to contribute to CPP while collecting your pension from CPP, you will build CPP's Post-Retirement Benefit (PRB.) You start collecting this additional benefit the year following the year of contributions and you will receive it for life. You can build and receive the PRB even if you are already receiving the maximum CPP pension.
• If, after age 65, you opt out of contributing to CPP while collecting it, you will contribute to the CAAT Pension Plan at the higher contribution rate on all of your earnings, (rather than at the lower rate on earnings up to the Year’s Maximum Pensionable Earnings (YMPE ) and at the higher rate on your earnings above the YMPE.) During this period of service, you will build a pension at the higher benefit rate on your highest average pensionable earnings (HAPE.)

You can find more information in our booklet "Making Choices - Working Past Age 65."

Learn more about the CPP changes, including the Post-Retirement Benefit, on Service Canada’s website.