What is the Canada Pension Plan Post-Retirement Benefit?

CPP post retirement benefit
As we grow older in life we start to pay a little more attention to our financial future in regards to what pensions we will be able to rely on as source of income.   Most Canadians are aware of the Canada Pension Plan (CPP) and the Old Age Pension.   Often though it is not clear just how much of an income will this actually produce until the individual is ready to start collecting.   There is also another thought that must be given to the CPP and that is the CPP Post Retirement Benefit (PRB). This is one that many may not be so familiar with but is well worth taking a look at depending on the circumstances.


Commonly it is perceived that once you reach the age of 65, that you will just sit back and enjoy your CPP without having to work for it any longer.   That is of course if you have contributed to it during your working years.   Some people opt to take advantage of this pension early starting at the age of 60.  This is an option but comes at a reduced amount of what is paid.


It used to be that once an individual reached the age of 65, even if they remained working they no longer had to or could contribute to their CPP.   Now this is not the case.   Even if an individual is still working, and is collecting their CPP, they can choose to continue making contributions to this pension plan up to the age of 70.


You may be wondering why in the world anyone would want to continue making contributions when it is now an option and not mandatory, but doing so can derive some additional financial benefits.   One of these benefits is that depending on the amount of the contribution it will allow for enjoying increased CPP benefits as they move on in years.


While the exact amount of these additional benefits will be determined on the amount contributed it can certainly mount up over a few years and make a significant difference for those later years of retirement, past the 70 years of age era.


So in summary, if you continue working between the ages of 60 to 64 the CPP continue to be mandatory. Once you hit the 65 year mark and continue working the choice to contribute is optional.


If this is something that is of interest to you then it would be a good idea to talk to an experienced Toronto accountant who can outline whether this would be beneficial to you.   At the same time this expert can help you with additional financial planning, and making the most of potential tax breaks according to your particular circumstances.


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Sam Seidman, CPA, CA, LPA
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Toronto, Ontario
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Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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