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I'm a Canada Pension Plan (CPP) expert. Any questions?

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Mike15 wrote: If I had to hazard a guess, Canada is making the payments in CAD, and the rate converted would be determined by the recipient bank.

Guess I was wrong though, they do deposit in local currency for a number of countries,
https://www.tpsgc-pwgsc.gc.ca/cgi-bin/r ... Language=E

I don't know if this is a markup over the previous day's BoC rate, or if it's something else altogether.
Yep, that'd be the link. They do deposit in local currency like you said at the calculation rates for that date.

To the person who asked that question, you are most assuredly better off taking advantage of the exchange rate determined by Service Canada, who likely uses the Bank of Canada's noon rate with a modest premium (if any). Unless you don't need the money, I would close all your Canadian bank accounts anyway especially since all the FATCA complications. ;)

Cheers,
Doug
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dmehus wrote: Correct. CPP is not affected by other income; it's a complicated formula few fully understand, particularly with respect to survivor benefits, and OAS is only affected by increases to your taxable income. The clawback does not begin until you reach $75-77,000 per person on a pre-tax basis. It is fully clawed back at something like $120-125,000 (arguably too high in my opinion). Watch out for the dividend gross-up on eligible and other than eligible dividends from Canadian corporations in non-registered accounts, though.

GIS is for low income seniors, but correct, TFSA withdrawals do not affect your entitlement - many low income seniors are under-utilizing their TFSA for this purpose (though, arguably, many don't have the savings to put in).

Cheers,
Doug
Thanks. Yes, I was most concerned about GIS since that starts to get clawed back immediately after any extra income (I'm very far away from OAS clawback). But I am looking into putting a few hundred into the HISA and wanted to ensure I don't lose anything on GIS for the interest I make if I use it as TFSA.
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Messerschmitt wrote: Thanks. Yes, I was most concerned about GIS since that starts to get clawed back immediately after any higher income (I'm very far away from OAS clawback). But I am looking into putting a few hundred into the HISA and wanted to ensure I don't lose anything on GIS for the interest I make if I use it as TFSA.
Yeah, that's the advantage to a TFSA versus an RRSP/RRIF for GIS recipients. Withdrawals do not effect GIS eligibility. Interest income inside the TFSA is unaffected and the only thing CRA sees is the year-over-year growth in your TFSA balance and number of transactions inside your TFSA. Assuming you had $50,000 in a TFSA earning you 3% in a GIC, which paid interest to your TFSA annually, that'd work out to an extra $1,500 on tax-free income you could withdraw each year and would be not affect your GIS eligibility one iota.

Here's that article I referred to:

https://www.advisor.ca/news/industry-ne ... rch-finds/

Cheers,
Doug
Banking & Savings: Tangerine & EQ Bank
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From a link in the Globe and Mail, I read this article on situations where taking CPP at 60 makes sense. I get the first two the scenarios but can't makes sense of the 3rd situation. I thought payment at 60 would always be less than 65. Is this accurate?

LINK

3.) You Have No Contributions from age 55 to 60

Did you retire at age 55? Or maybe leave your career as a salaried employee to start a business in your fifties? Business owners can choose to pay themselves dividends rather than a salary, and therefore would not have to make CPP contributions. How do those years of zero contributions affect your CPP retirement benefit?

When you take CPP at 60, your benefits are based on your best 35 years of earnings, rather than your best 39 years of earnings if you were to take it at 65. Depending on your earnings from age 18 to 54, your CPP benefit might still be close to the maximum if you take it at age 60, but it will definitely be reduced if you wait until age 65.
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dmehus wrote: Correct. CPP is not affected by other income; it's a complicated formula few fully understand, particularly with respect to survivor benefits, and OAS is only affected by increases to your taxable income. The clawback does not begin until you reach $75-77,000 per person on a pre-tax basis. It is fully clawed back at something like $120-125,000 (arguably too high in my opinion). Watch out for the dividend gross-up on eligible and other than eligible dividends from Canadian corporations in non-registered accounts, though.

GIS is for low income seniors, but correct, TFSA withdrawals do not affect your entitlement - many low income seniors are under-utilizing their TFSA for this purpose (though, arguably, many don't have the savings to put in).

Cheers,
Doug
Good point Doug.
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venturevul wrote: From a link in the Globe and Mail, I read this article on situations where taking CPP at 60 makes sense. I get the first two the scenarios but can't makes sense of the 3rd situation. I thought payment at 60 would always be less than 65. Is this accurate?

LINK

3.) You Have No Contributions from age 55 to 60

Did you retire at age 55? Or maybe leave your career as a salaried employee to start a business in your fifties? Business owners can choose to pay themselves dividends rather than a salary, and therefore would not have to make CPP contributions. How do those years of zero contributions affect your CPP retirement benefit?

When you take CPP at 60, your benefits are based on your best 35 years of earnings, rather than your best 39 years of earnings if you were to take it at 65. Depending on your earnings from age 18 to 54, your CPP benefit might still be close to the maximum if you take it at age 60, but it will definitely be reduced if you wait until age 65.
You're correct that the amount of CPP payment will always be less at age 60 than at age 65. The point that I think they're try to make is that you might qualify for 64% of the maximum at age 60 or 100% of something less than maximum at age 65. I refer this as waiting until age 65 to get a larger slice of a smaller pie, but you'll always get more pie if you wait.
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Dogger1953 wrote: You're correct that the amount of CPP payment will always be less at age 60 than at age 65. The point that I think they're try to make is that you might qualify for 64% of the maximum at age 60 or 100% of something less than maximum at age 65. I refer this as waiting until age 65 to get a larger slice of a smaller pie, but you'll always get more pie if you wait.
Just wondering if the article is referring to the drop out period used in the CPP benefit calculation.

Someone who retires at 55 and collects CPP at 60 has an extra five years of no contribution. Whereby the same person would have an extra 10 years of no contributions if they collect at 65. Add that period to any period before like when attending University with no or low contributions. This longer no contribution period should reduce the CPP benefit at 65. There may be a sweet spot between 60 and 65 to collect in this situation.
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DaveTheDude wrote: Just wondering if the article is referring to the drop out period used in the CPP benefit calculation.

Someone who retires at 55 and collects CPP at 60 has an extra five years of no contribution. Whereby the same person would have an extra 10 years of no contributions if they collect at 65. Add that period to any period before like when attending University with no or low contributions. This longer no contribution period should reduce the CPP benefit at 65. There may be a sweet spot between 60 and 65 to collect in this situation.
Hi Dave - Yes, the CPP benefit will reduce at age 65 compared to if the person kept working, but it will not reduce to an amount that is lower than the net amount payable at age 60. Service Canada uses terminology like "calculated CPP" to mean the pension payable prior to any age-adjustment factor being applied if the contributor starts receiving their CPP earlier or later than age 65. I agree 100% that a person's "calculated CPP" will decrease between age 60 and age 65 if they retire at age 55, but the actual CPP benefit that they will receive at age 65 will never be less than the actual amount they would have received at age 60. This is because the increase for the age-adjustment factor if they wait until age 65 will always exceed any decrease in their "calculated CPP" due to the 5 extra years of zero earnings.

What confuses most people though, is that if they look at the CPP statement of contributions (SOC) at age 60 and see that it says (for example) that they could receive $1,154.58 "if they were age 65 today" or 64% of that amount immediately ($1,154.58 x 64% = $738.93). If they wait until age 65, the $1,154.58 could indeed decrease by as much as approx. 12.5% (2.5% per year) by age 65 to an amount of approx. $1,010.25, but that's obviously still more than the $738.93 that they would have received at age 60. So the amount of CPP may indeed decrease from the amount on the SOC printed at age 60, but it will not be less than what the person would have received at age 60.
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DaveTheDude wrote: Just wondering if the article is referring to the drop out period used in the CPP benefit calculation.

Someone who retires at 55 and collects CPP at 60 has an extra five years of no contribution. Whereby the same person would have an extra 10 years of no contributions if they collect at 65. Add that period to any period before like when attending University with no or low contributions. This longer no contribution period should reduce the CPP benefit at 65. There may be a sweet spot between 60 and 65 to collect in this situation.
Assuming the 35 year contributory period (after dropout provision) vs 39 year is accurate (47 years minus 8 vs 42 minus 7?), 35/39ths of a size 100 pie is always going to be bigger than 35/35ths of a size 64 pie. There’s no intercept where you’d be losing more from the longer noncontributory period than you’re gaining from waiting (0.6% per month).

If you’re talking about breakeven time to start taking payments vs life expectancy, sure. There are indeed scenarios where taking a lower payment from an earlier time puts you ahead... key word lower payment.
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venturevul wrote: From a link in the Globe and Mail, I read this article on situations where taking CPP at 60 makes sense. I get the first two the scenarios but can't makes sense of the 3rd situation. I thought payment at 60 would always be less than 65. Is this accurate?

LINK

3.) You Have No Contributions from age 55 to 60

Did you retire at age 55? Or maybe leave your career as a salaried employee to start a business in your fifties? Business owners can choose to pay themselves dividends rather than a salary, and therefore would not have to make CPP contributions. How do those years of zero contributions affect your CPP retirement benefit?

When you take CPP at 60, your benefits are based on your best 35 years of earnings, rather than your best 39 years of earnings if you were to take it at 65. Depending on your earnings from age 18 to 54, your CPP benefit might still be close to the maximum if you take it at age 60, but it will definitely be reduced if you wait until age 65.
I was just wondering exactly this because my wife is effectively retiring (will continue doing some minimal part-time work for our own business). She will be 55 when she quits her current job.

From previous posts, it STILL seems that starting CPP at age 65 will be a higher payment than starting at 60 no matter the exact scenario but maybe not that much. She would be eligible to claim the child-rearing drop out for a few years and then effectively 10 years of no or minimal earnings for CPP purposes between now and age 65.
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robsaw wrote: I was just wondering exactly this because my wife is effectively retiring (will continue doing some minimal part-time work for our own business). She will be 55 when she quits her current job.

From previous posts, it STILL seems that starting CPP at age 65 will be a higher payment than starting at 60 no matter the exact scenario but maybe not that much. She would be eligible to claim the child-rearing drop out for a few years and then effectively 10 years of no or minimal earnings for CPP purposes between now and age 65.
If you have CRA login then you can check this. Login to CRA tax returns. Then on right side bottom you will see about CPP and click. No need to login again as it uses same with your permission. off-course. Then you can see exact amount for year 60,65. Even at 70.

By the way this thread is really good as there are few regulars, with the knowledge they have and also explain much better.
So Thanks for all those users.
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callernamet wrote: If you have CRA login then you can check this. Login to CRA tax returns. Then on right side bottom you will see about CPP and click. No need to login again as it uses same with your permission. off-course. Then you can see exact amount for year 60,65. Even at 70.

By the way this thread is really good as there are few regulars, with the knowledge they have and also explain much better.
So Thanks for all those users.
I hate to disillusion you, but the online estimates are not exact calculations unless you are currently that exact age and unless you are only eligible to claim the general (17%) dropout. Otherwise the estimates can be quite inaccurate. Read this article to better understand: https://retirehappy.ca/understanding-cp ... tions-soc/
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Dogger1953 wrote: I hate to disillusion you, but the online estimates are not exact calculations unless you are currently that exact age and unless you are only eligible to claim the general (17%) dropout. Otherwise the estimates can be quite inaccurate. Read this article to better understand: https://retirehappy.ca/understanding-cp ... tions-soc/
Thanks. Not that first time I am wrong or disillusion.
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Hi Dogger,

Thanks for doing this forum. I am trying to complete a change in income for 2019 and was wondering how to complete the form in section 2 for the following situation:

Lost full time job in 2018 and was only able to secure a part time job for 2019. Income is significantly reduced, but none of the options on section 2 applies (retirement, seasonal employment, reduction in benefits). Does that mean I am not eligible to complete the change in income form?

Thanks!
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steviee32m wrote: Hi Dogger,

Thanks for doing this forum. I am trying to complete a change in income for 2019 and was wondering how to complete the form in section 2 for the following situation:

Lost full time job in 2018 and was only able to secure a part time job for 2019. Income is significantly reduced, but none of the options on section 2 applies (retirement, seasonal employment, reduction in benefits). Does that mean I am not eligible to complete the change in income form?

Thanks!
As per our telephone conversation, I recommend that you indicate that it was retirement and attach a separate sheet clarifying exactly what happened.
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Dogger1953 wrote:

What confuses most people though, is that if they look at the CPP statement of contributions (SOC) at age 60 and see that it says (for example) that they could receive $1,154.58 "if they were age 65 today" or 64% of that amount immediately ($1,154.58 x 64% = $738.93). If they wait until age 65, the $1,154.58 could indeed decrease by as much as approx. 12.5% (2.5% per year) by age 65 to an amount of approx. $1,010.25, but that's obviously still more than the $738.93 that they would have received at age 60. So the amount of CPP may indeed decrease from the amount on the SOC printed at age 60, but it will not be less than what the person would have received at age 60.
Hi Dogger,
Just to dumb this down for guys like me, are you saying for the most part you agree with the article? If one were to retire at 55, there is no advantage to waiting until 65 to collect CPP. If you retire at 55 go ahead and collect CPP after 60? The specific age after 60 is subjective depending on your circumstances?
Thanks
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rfduser199 wrote: Hi Dogger,
Just to dumb this down for guys like me, are you saying for the most part you agree with the article? If one were to retire at 55, there is no advantage to waiting until 65 to collect CPP. If you retire at 55 go ahead and collect CPP after 60? The specific age after 60 is subjective depending on your circumstances?
Thanks
There's truly no one-size-fits-all to that question. Using Dogger's numbers above, waiting until 65 to collect $1,010.25/mo beats collecting $738.93 from age 60 if you're still alive at age 79 and beyond. That said, that's not considering being able to better utilize or invest that "upfront" $44,000 when you're 60-65 years old, interaction with spousal CPP survivor benefits if one spouse predeceases the other, etc..
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rfduser199 wrote: Hi Dogger,
Just to dumb this down for guys like me, are you saying for the most part you agree with the article? If one were to retire at 55, there is no advantage to waiting until 65 to collect CPP. If you retire at 55 go ahead and collect CPP after 60? The specific age after 60 is subjective depending on your circumstances?
Thanks
I agree with Mike15's answer. There is on one-size-fits-all answer. What are your other income streams? What are your debts or expenses? How long are you going to live?
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slickone19 wrote: Hello Dogger,

You are providing an invaluable service to the RFD community. Thank you for keeping this thread alive.

Now my personal situation:

- I am on CPP disability for almost 2 years, I am paid a little over 1197.00 per month.
- I will be 60 years old in late October of 2019.
- I have no other source of income.
- I am a Canadian Citizen born in Canada.
- I have checked online for my CPP entitlements on the Canadian Government website.
- My wife is working minimum wage 36 hours per week.
- She is 56 years old and will likely work till she turns 65. She has only worked the last 6.5 years.
- Our mortgage is 79K, we pay 498.32 per month till Dec 1,2020.
- I have 98K in my RRSP, my wife doesn't have any RRSPs
- I am entitled to a 464.00 per month pension from a former employer, starting age 60 (worked for them 8.5 years)
- Previously worked in Telecom for 18 years (expected pension from them got biffed when they declared bankruptcy, employed in a family business for 7 years prior to that.

My questions:


If I apply for my Pension, I would guess that my disability payment would end. Is this correct?
I just need to hear this from an expert.

At what age would I qualify for GIS and OAS given my circumstances?

Is there an Ontario component of a pension I should be applying for separately? Or is the Federal pension all encompassing?

Given my age and financial position, should I forgo the disabilty pension and apply for CPP, OAS and GIS?

Please let me know if I am missing anything.



Many Thanks for your time and insight.
My answers:

1) Your CPP disability pension will not be impacted at all if you decide to apply for your former employer's pension, as long as you continue to be disabled.

2) OAS and GIS are payable at age 65, at the earliest.

3) I'm not an expert on provincial programs, but I know that GAINS will start automatically if/when you qualify for sufficient GIS.

4) Keep receiving CPP until age 65 if you remain disabled.

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