There are many things that you should understand including the eligibility requirements for CPP benefits; how contributions the CPP are calculated; the CPP retirement benefits available, including early and delayed pension options; how retirement pensions can be shared between spouses/common-law partners; how CPP pension credits can be split upon divorce or separation; the CPP survivors benefits available; and the CPP benefits available to disabled contributors and their children.
As of 2019, Canada’s Ministers of Finance made 5 changes to CPP benefits:
- increasing the retirement pensions of parents who reduce their income to take care of their children;
- increasing the retirement pensions of people with disabilities, as well as their spouse or common-law partner’s survivor’s pension;
- eliminating the reductions in survivor’s pension for survivors under age 45;
- converting the death benefit to a flat-rate payment of $2,500 for all eligible contributors; and
- providing disability protection for retirement pension recipients under age 65.
They also enhanced the CPP, effectively creating two new plans as supplements to the Base CPP. In some ways, these two new plans just increased the pension benefits; and in other ways, they introduced new costs and features. The greatest distinguishing feature of the two Enhanced CPP plans is a requirement for them to be self-funding, unlike the original plan, the Base CPP, which has been rightly described as a Ponzi scheme.
Essentially, the Canada Pension Plan is now 3 plans: the Base CPP, and the first and the second Enhanced CPP and the 5 changes to CPP benefits. Just a note, the Canada Pension Plan is now much more complicated, and expensive.
The major decisions in managing one’s contributions and benefits from the CPP are:
- if you have a choice, should you contribute;
- when should you commence CPP retirement benefits; and
- should you continue to contribute after commencing to receive your CPP benefits?