Thinking about retirement? Learn about the Canada Pension Plan and the benefits of CPP sharing

July 2015

The CPP and recent changes

The Canada Pension Plan (CPP) provides a base replacement of earnings for retirees throughout Canada, excluding Quebec, where the Quebec Pension Plan (QPP) provides benefits. Changes have recently been made to the CPP that will be become fully implemented as of 2016. The Quebec Pension Plan, which provides benefits in the province of Quebec, has implemented similar changes that are currently effective. 

When can CPP payments be made? 
CPP payments can begin as early as the month after your 60th birthday and as late as age 70. You can choose whether to make early or delayed payments which can be beneficial based on your personal circumstances such as your income, other assets or health and life expectancy.

Post-Retirement Benefit (PRB)
If you continue working after you have begun receiving CPP pension benefits, you are eligible to continue making CPP contributions that will increase your monthly payments through the PRB. Talk to your advisor or access our complementary publication entitled “Canada Pension Plan” to find out about the PRB guidelines.

 

     

Sharing CPP with your spouse

CPP sharing, a form of income splitting, is a tax planning strategy that shifts income from a higher income earner to a lower income earner in order to reduce the overall tax paid by the family.

This strategy may offer significant tax savings for individuals that are in different tax brackets. Canadian residents who receive eligible pension income can allocate up to 50% of their CPP payment to their spouse thereby reducing taxes by shifting income from a higher income earner to a spouse who is in a lower tax bracket. 

Who is eligible?

  • At least one spouse must be a CPP contributor
  • Both spouses must be at least 60 years of age and must be receiving or have already applied for a CPP


     Managing your wealth effectively requires an annual review of all CPP opportunities and CPP sharing benefits. To learn more on how to capitalize on your personal CPP payments and CPP sharing strategies in order to help you save taxes and enhance your family’s wealth please contact your Investment Advisor. You can also receive a complimentary copy of our publications entitled “Canada Pension Plan” and “Canada Pension Plan Sharing”.

 


Previous Tax & Estate Planning Strategies
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