Are you between the ages of 60 and 65, collecting Canada Pension (CPP) and still working? If so, you will have to contribute toward the Post-Retirement Benefit (PRB) starting in January, 2012.

Are you between the ages of 65 and 70, and still working? If so, you can choose to stop making CPP or PRB contributions by completing a CPT30 form and giving it to your employer.

The PRB contributions will gradually increase your monthly CPP pension amount starting January 1st of the year following the employee's contributions. Employers will be required to make the PRB deductions from their employees as well as remit the employer portion.

CPP benefits are normally calculated at age 65; however, the monthly CPP pension amount will increase by a higher percentage if taken after age 65 and decrease by a larger percentage if taken before age 65. The increase for collecting CPP after 65 started in 2011 and will gradually increase each year until 2013. In 2013 if you start collecting CPP at age 70 your monthly CPP pension will be 42% more than if you would have started at age 65.

The decrease for collecting CPP before age 65 will start in 2012 and gradually decrease each year until 2016. In 2016 if you start collecting CPP at age 60 your monthly CPP pension will be 36% less than if you would have started at age 65.

Starting in 2012, the work cessation test will no longer apply. This means that if you are under the age of 65 and want to start collecting your CPP pension, you will no longer have to stop working or reduce your earnings before being able to collect your CPP pension. This will make it easier on employers and on individuals wishing to start collecting their CPP pension between the ages of 60 and 65 but will continue working.

A longer period of lower earnings will be automatically dropped from the calculation of your CPP pension. Currently 15% of your lowest earnings were automatically dropped which was up to 7 years. In 2012 that will increase to 16% or up to 7.5 years and in 2014 it will increase to 17% or up to 8 years. This change will benefit all CPP contributors who are eligible for CPP benefits in 2012 or later.

These changes will not affect individuals who started collecting their CPP pension before December 31, 2010 and are not working and will stay out of the work force.

Contact Jocelyn Doyle at RLB for any further inquiries.