On December 15, 2009, the Canadian government passed changes to
the Canada Pension Plan (CPP). Some of these changes began taking
effect on January 1, 2012. This article outlines what these changes
are and how they might affect you.
CPP Contribution Requirements
Most notably, if you are 65 years of age or younger, you will
have to contribute to the CPP if you are receiving a CPP retirement
pension and working. If you are 66 to 70 years of age, you will
have this same requirement unless you elect to stop contributing to
If you are self-employed, you can make the election by
completing the applicable section of Schedule 8 - CPP
Contributions on Self-Employment and Other Earnings for 2012.
Once complete, file it with your 2012 income tax return. The first
month following the month of your 65th birthday is the earliest the
election can become effective.
If you are an employee (or are both an employee and
self-employed), you can make this election by completing Form
CPT30, Election to Stop Contributing to the Canada Pension Plan, or
Revocation of a Prior Election. A copy of this form should be
given to each of your employer(s) and the original should be sent
to the Canada Revenue Agency. The election takes effect on the
first day of the month following the date you give a copy of the
completed form to your employer. For example, if you want to stop
contributing to the CPP in March 2012, you must complete and file
Form CPT30 in February 2012. Copies of Form CPT30 can be accessed
If this election is not made, your employer is required to continue
to withhold and match CPP contributions on your behalf.
If you make this election, it will stay in effect until the
earliest of your 70th birthday or the time you revoke it.
Other CPP changes, which took effect on January 1, 2012,
CPP retirement pensions will be lower if taken before age
CPP retirement pensions will be higher if taken after age
Introduction of the Post-Retirement Benefit (PRB). Employers
are now required to make CPP contributions for all employees until
age 65, even if the employee is receiving a pension benefit.
Employers will also be required to make CPP contributions for
employees aged 65 to 70 unless the employee elects not to make CPP
contributions (described above). If the employee does continue to
contribute, the contributions will increase the employee's CPP
Changes were made to the "drop-out" provision. The
number of years of low or zero earnings that are automatically
dropped from the calculation of the CPP retirement benefits will be
increased thus eliminating more low-income years from one's
The work cessation test was eliminated. You will be able to
begin receiving your CPP retirement pension without any work
interruption (i.e., you don't have to stop working to apply for
a CPP benefit).
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