Ottawa Investment Advisor John Bruce

Are You Prepared For Changes To The CPP That Are Coming This Year?

February 1, 2011

New rules regarding the Canada Pension Plan are being introduced this year. If you begin collecting your CPP at age 65, you will get the payments you are entitled to. If you start to draw upon your payments before you turn 65 the penalty will increase from 0.5% per month to 0.6% per month.

What this means, is that if you want to start your CPP payments 12 months earlier, instead of receiving 6.0% less of a pension (which were the rules before) you will now get 7.2% less. If you wish to collect starting at age 60 (the earliest that you can start), the cutback will be 36% instead of 30%.

It is a double edged sword, for if you delay collecting until after your 65th birthday, every month you delay you will get 0.7% more pension for life instead of 0.5%. At the maximum age of 70, you will get 42% more instead of 30% more.

All the more reason to contribute the maximum amount to the Tax Free Savings Account (TFSA) now and get that money working for you. If you need to start withdrawing funds from your savings you will have a reserve that can be used while your RRSP keeps building, tax deferred, and you can allow the CPP to grow to its maximum potential.

To learn more about these changes go to the Government of Canada website.

Please contact me toll free at 1-877-860-4190, if you would like to discuss this further.

John S. Bruce
Ottawa Investment Advisor
Also licensed in ON, BC, AB, QC, NS
Mackie Research Capital
Direct Line- 613-425-3732
Toll Free- 866-860-4190

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