You can start receiving CPP pension benefits when you reach age 65 (the month after your 65th birthday) which will entitle you to a full CPP benefit depending on how much and how long you have contributed to the CPP.
From 2012 to 2016, the Government of Canada is gradually changing the early pension reduction from 0.5% to 0.6% for each month you receive it before age 65. This means that by 2016, an individual who starts receiving their CPP retirement pension at the age of 60 will receive approximately 36% less than if they had taken it at 65.
If you take your pension after age 65, your monthly payment amount will increase by 0.7 percent for each month that you delay receiving it up to age 70 (8.4% per year).
This means that, an individual who starts receiving their retirement pension at the age of 70 will receive 42% more than if they had taken it at 65. More than twice as much as someone who started taking it at age 60. However, they will have received it for 10 years less.
Your CPP retirement pension dos not start automatically. You must apply for it and before you do, you must:
Generally speaking, we have found that in most cases it is better to start taking your CPP pension benefits as soon as possible. You have the money for longer and at a time when it has more impact to have it. However, each situation is different and should be approached uniquely. The best advice we can give is to talk to us a few months before you turn 60 to discuss what may be best for you.
Thanks to Richard Ouellette of KWB Chartered Accountants for providing this content.
If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.
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