Canada Pension Plan and Quebec Pension Plan

Transcription

1 CANADA PENSION PLAN AND QUEBEC PENSION PLAN TABS. PAGE1 ( -.' i C1 Canada Pension Plan and Quebec Pension Plan I I

2 () CANADA PENSION PLAN AND QUEBEC PENSION PLAN TAB8.PAGE2 Canada Pension Plan and Quebec Pension Plan :> When the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) came into effect on January 1, 1966, the contribution rates under the federal pension plans were coordinated with those under the CPP or QPP. :> Your contributions and future benefits are coordinated between your federal pension plan and the CPP or QPP. () \ \._)

3 CANADA PENSION PLAN AND 0UEBEC PENSION PLAN TAB8.PAGE3 (J CONTRIBUTORY PERIOD :> The total span of time during your life when you may contribute to the CPP or QPP is called your contributory period (starting at age 18 or after January 1st, 1966). :> The minimum amount you must earn yearly to contribute to CPP or QPP is $3,500. :> The contributory period is used in calculating benefits. The contributory period for CPP and QPP is different. :> In Quebec, prior to the reform, workers who reached age 70 stopped contributing even if they didn't ask for their benefits. :> Now, wtth the reform, all Quebec workers contribute to the QPP, even those who C) have reached age 70. So, if you are over 70 years old and still working, you must now continue to contribute to the QPP, provided you earn more than the general exemption ($3,500). :> Elsewhere in Canada, workers who reach age 70 stop contributing to the CPP.

4 () CANADA PENSION PLAN AND 0UEBEC PENSION PLAN CONTRIBUTIONS TAB8.PAGE4 Prior to January 1 81, 2000, you were contributing a total of 7.5% of your pensionable earnings to the Public Service Superannuation Plan and the Canada Pension Plan or the Quebec Pension Plan. 3.0% superannuation contribution 3.5% CPP or QPP contribution 1.0% indexation [7.5% Between 2002 and 2003 the Federal Government legislated a gradual increase of the CPP/QPP. c J Year Contribution Set Out Contribution on Contribution to the CPPP inthecppp Eligible Earnings Plan and the CPP/QPP Under the CPP/QPP % 3.9% 7.9% % 4.3% 8.3% % 4.7% 8.7% % 4.95% 8.95% % 4.95% 9.35% % 4.95% 9.75% % 4.95% 10.15% % 4.95% 10.55% % 4.95% 10.72% % 4.95% 10.65% % (no change) 4.95% 10.65% % 4.95% 11.05% % 4.95% 11.45% % 11.75% 2013: July % % 13.05

5 CANADA PENSION PLAN AND QUEBEC PENSION PLAN TAB 8. PAGE 5 :> In 2012 the Federal Government made changes to the Pension Plan. The cost sharing changed from 60% ER funded/40% EE funded to a 50/50 cost sharing. Further, they eliminated the cap on the rate of increase (previously.4% per year). In 2013 there was a.3% increase in January and a further.7% increase in July of Examples of annual contributions in 2014 (' ) Employment Employee's Self-employed income for 2014 contribution worker's deducted at source contributions $ $ $ 5, , , , , , , , , , , , , , , ,70 51' ,

6 CANADA PENSION PLAN AND QUEBEC PENSION PLAN TAB8.PAGE6 () NOT WORKING DURING EARLY RETIREMENT If you wish to receive CPP/QPP retirement benefits between age 60 and 65, you must show that you are no longer receiving salary from paid employment or selfemployment once you start receiving benefits. WORKING WHILE YOU RECEIVE CPPIQPP BENEFITS If you continue to work after age 65, you can, once you have reached age 65, apply to receive CPP/QPP benefits. TO RECEIVE YOUR BENEFITS, YOU MUST APPLY! () To receive pension plan benefits, you must apply (six months in advance, if possible). RETROACTIVITY Before age 65: Benefits will only be paid to you starting in the month that follows receipt of your application or the month that follows the date you stopped working. After age 65: Benefits may be paid to you retroactively as of the date you stopped working. ()

7 CANADA PENSION PLAN AND 0UEBEC PENSION PLAN TAB B. PAGEl CPP/QPP Early Retirement Benefits SHOULD YouAPPLYOR WAtT? If you retire prior to your 65 1 h birthday and receive benefits from your pension plan, you must decide whether or not to receive early CPP/QPP benefits. EARLY BENEFITS ARE REDUCED Full CPP/QPP benefits are available at age 65. However, you may opt to receive CPP/QPP benefits at age The benefits will be reduced by 6% for each year prior to age 65. For example: A person at age 60 will receive 70% of the benefits he or she would receive if he or she waited until 65 to receive benefits.

8 n CANADA PENSION PLAN AND 0UEBEC PENSION PLAN EARLY BENEFITS ARE INDEXED TAB8.PAGE8 :> The reduction in benefits for workers choosing early CPP/QPP pensions is lessened because the CPP/QPP is indexed from the time it is received. For example: Those who opt for CPP/QPP pension benefits at age 60 will receive an initial pension of 70% of what they would receive if they waited until age 65. However, the reduced pension they receive at age 60 will be increased each year to reflect the changes in the Consumer Price Index, which occur during the five years between age 60 and 65. C) If inflation averaged 3% per year during this period, a worker opting for early CPP/QPP benefits at age 60 would, at age 65, receive 81.1% of what they would have received if they waited until age 65. FACTORS TO CONSIDER WHEN DECIDING WHETHER OR NOT TO OPT FOR EARLY (REDUCED) CPP!QPP BENEFITS 1. Health and life expectancy 2. Financial situation 3. Inflation rate 4. Immediate needs and family situation 5. Others

9 () CANADA PENSION PLAN AND QUEBEC PENSION PLAN QUEBEC PENSION PLAN FIGURES TAB8.PAGE9 You will find below some basic information on the Quebec Pension Plan and the maximum pensions and death benefit paid under the Plan for the last 3 years. :> Information 2011 A Basic information Maximum Pensionable Earnings Basic Exemption Contribution rate Maximum contribution for workers and employers (4.95 %) Maximum contrigbution for self-employed workers (9.9 %) Indexation rate for benefits as at 1 January 2011 $48, $3, % $2, $4, % Maximum amounts for pensions beginning in 2011 < 1 ) Retirement pension -age 65 - age 60 (70%) -age 72 (130%) Disability pension Orphan's pension and pension for a disabled person's child Surviving spouse's pension (2) - Beneficiary under age 45 - Without dependent children, not disabled - With dependent children, not disabled - Disabled, with or without dependent - Between ages of 45 and 64 - Age 65 or over $ $ $1, $1, $69.38 $ $ $ $ $ Amount for the death benefit $2, (1) Pensions calculated using the average of maximum pensionable earnings for the last 5 years. 1 \ (2) Pension calculated with respect to contributors who die in 2011 and who were not receiving a retirement pension. \j

10 n CANADA PENSION PLAN AND QUEBEC PENSION PLAN TAB 8, PAGE 10 NOTE: Before starting the sections "Calculation Formula for CPP/QPP Benefits" and "How is your retirement pension reduction calculated?", let's examine the meaning of the following terms: MAXIMUM PENSIONABLE EARNINGS Maximum pensionable earnings means: The maximum earnings on which it is possible to contribute and also the maximum earnings used under the CPP/QPP to calculate your benefits. (_) Maximum pensionable earnings under the CPP/QPP over the past five years were: $52,500 for 2014 $51,100 for2013 $50, 100 for 2012 $48,300 for 2011 $47,200for 2010 I I ")

11 () CANADA PENSION PLAN AND 0UEBEC PENSION PLAN TAB8.PAGE11 TABLE OF MAXIMUM PENSIONABLE EARNINGS FOR CPP/QPP FROM 2000 TO PRESENT!) The table indicates for each year since the CPP/QPP came into effect the minimum and maximum pensionable earnings. Year Minimum Pensionable Earnings Maximum Pensionable Earnings C) 2014 $3,500 $52, $3,500 $51, $3,500 $50, $3,500 $48, $3,500 $47, $3,500 $46, $3,500 $44, $3,500 $43, $3,500. $42, $3,500 $41, $3,500 $40, $3,500 $39, $3,500 $39, $3,500 $38, $3,500 $37,600 )

12 n CANADA PENSION PLAN AND 0UEBEC PENSION PLAN TAB 8. PAGE 12 Average Maximum Pensionable Earnings The calculation is based on average earnings (maximum under the CPP/QPP) over five years. For example: A) The maximum pensionable earnings are: () $52,500 for 2014 $51,100 for2013 $50, 100 for 2012 $48,300 for 2011 $47,200 for 2010 Total $249,200 B) $230, (years) = $49,840 C) Therefore, the average maximum pensionable earnings for 2014 is $49,840.

13 () CANADA PENSION PLAN AND QUEBEC PENSION PLAN TABS. PAGE 13 CPP/QPP CALCULATION FORMULA Calculation formula for monthly CPP/QPP benefits: 25% X 1/12 X average maximum pensionable earnings = or average maximum pensionable earnings X = For example: () Should your average maximum pensionable earnings reach $49, % X 1/12 X $49,840 = $ or $49,840 X = $ Your maximum monthly QPP/CPP benefits could be $1,038.33

14 ,-\ \ ) CANADA PENSION PLAN AND QUEBEC PENSION PLAN TAB 8. PAGE 14 When Does the Bridge Pension Go Away? :> Because of the co-ordination with CPP/QPP, your pension plan benefits are reduced on the first of the month following your 65th birthday. :> This reduction applies regardless of whether or not you have applied to receive benefits under the CPP or QPP. Please note that you must apply for CPP or QPP benefits at age 65 or earlier. Apply six months before you want to receive benefits. :> The reduction in your pension plan benefits is lower than the total amount of C) additional benefits you will receive under the CPP/QPP. :> If you become entitled to disability benefits under the CPP or QPP before you reach age 65, your pension plan benefits will be reduced immediately. :> If you opt for early (reduced) benefits under CPP/QPP, your pension plan benefits will only be reduced at age 65.

15 CANADA PENSION PLAN AND QuEBEC PENSION PLAN TAB 8. PAGE 15 Example of Co-ordinated Benefits under your Pension Plan and the CPP/QPP = In the event your CPC pension benefits are $31,318 per year, i.e. $2,610 per month and your CPP/QPP benefits are $1,038 per month and your bridge pension is $872 per month: Pension plan benefit CPP/QPP Reduction = = = $2,610 per month $1,038 per month $872 per month () $2,610 $1,738 $872 + $1,038 = $1,738 = $2,776 NOTE: Once again, remember that at age 65 you become eliible for old age security benefns in addnion to the above amount. ($2, = $3,328)' OAS 2014 = $552 per month ( \ \_j

16 co :z 1!1- co!lf 11:111. :o!:l ;;!: i1l a.: ai fd 8:1 ::I I 0!: ; :o!:l I a! a.: C!i., c fcr., _,, :::1.,, E., :::1 c E.2 - )( -1- cs cs -1- E.,,:!! _, L Q. c -1- _, c 0 Type of benefit Beneficiary's age Rate payable Maximum monthly_ amount Retirement pension 60 70% $ % $ % $ s 88% $ s 94% $ % $ % $ % $ % $ % $ or over 130% $1, Disability pension Under65 $ Pension for a disabled person's child Under 18 $56.65 Surviving spouse's pension (for the Under45 widow or widower) no dependent children $ with dependent $ disabled $ between 45 and 54 $ between 55 and 64 $ or over $ Orphan's pension under 18 $56.65 Death benefit Uniform lump-sum payment $2,500 * It is important to note that amounts may vary depending on the month in which the pension begins between the ages of 60 and 70. I II II II II 2:!.2 5 '() Q) ca t5 0).s:..liC.0..: 2:! - c:. /\..\, /. ' J

17 0 CANADA PENSION PLAN AND QuEBEC PENSION PLAN Canada Pension Plan Payment Rates * January to December 2014 TAB8.PAGE17 Retirement Age of Beneficiary Rate Paid Maximum Monthly Benefits Benefits Calculated at 60years 66.4% $ % per month 61 years 73.12% $759 62years 79.84% $ years 86.56% $ years 93.28% $ years 100% $1,038 Calculated 66 years 108.4% $1,126 at. 7% per month 67years 116.8% $1,213 C) 68 years 125.2% $1, years 133.6% $1,387 70years 142% $1,474 * reflects new rules ( ' \ ) '-- /

18 () CANADA PENSION PLAN AND QUEBEC PENSION PLAN TAB 8. PAGE 18 I.. I a,ovemment Gouvemement T o Canada o;iw Canada Canada Pension Plan (CPP) -Payment Rates (January to December 2014) Canada Pension Plan rates are adjusted every January if there are increases in the cost of living as measured by the Consumer Price Indes. The table below lists the maximum and average monthy rates for Canada Pension Plan benefits for 2014, except for the death benefit which is a one-time payment. More information on CPP rates and the CPI Canada Pension Plan Payment Rates Type of benefit Average monthly Maximum benefit (2014) monthly benefit 2014 Disabili benfit $ $1, (,_) Retirement gen ion (at age $ $1, ) R.. tme6fben rtt'cilt $8.26 $25.96 ge$) Survivors benefit (under age $ $ ) Survivors benefit (age 65 $ $ and over) hildr!i!n Qf disa!;!ld ' $ $ s;ontri!;!ytors benefit Children of d!i!s;eased $ $ contributors benefit Combined survivors & $ $1, retirement benefit (pension at age 65} Death benefit $2, $2, Retirement Pension (at age 65) II $ II $ I. \._)