NORTH PERTH – The Canadian Pension Plan is a sure thing, right? One local resident expresses concern that it may not be all it’s cracked up to be and brings to light some common misconceptions.
The Canadian Pension Plan (CPP) is a monthly retirement pension and a taxable benefit that replaces a part of your income when you retire. You receive CPP for the rest of your life, however you must be at least 60 years old and have made at least one valid contribution to the CPP, meaning work you did in Canada or receiving credits from a former spouse at the end of the relationship.
Everyone is entitled to CPP regardless of how many years you’ve worked, how much you receive however depends on your earnings and contributions. Your CPP monthly amount depends on your contributions and your average annual earnings.
“The amount you receive each month is based on your average earnings throughout your working life, your contributions to the CPP, and the age you decide to start your CPP retirement pension. Your contributions to the CPP are based on your earnings,” states the CPP Government of Canada website.
The standard age to begin receiving CPP is 65, but it can be received as early as 60 and as late as 70 years old. The later you start, the larger the monthly amount you receive is. However, local resident, Chad Ward, expresses his skepticism about the age on which you withdraw CPP.
“So you’ve been putting in for 45 to 50 years and then you might get it for eight or ten (until you pass away),” stated Ward.
“But they will ask you, you know, if you don’t need it, you don’t have to take it at 65. You can wait till you’re 70... but then again, you’re putting more money into it and you’re going to get less out of it.”
This is due to the fact that the average life expectancy in Canada is 81.75 years on average. By the time you draw from the pension plan at the average age of 65, you have a little over 15 years on average to collect the contributions you’ve been making for the past 45 to 50 years.
In addition to the CPP retirement pension, there are other CPP benefits available, such as the post-retirement benefit, survivor’s pension, death benefit and so on. However, if you are already withdrawing the maximum amount from CPP, you cannot receive these benefits.
“You can only pull the maximum amount out. So if you’re already at (the maximum), you get nothing (from the death benefit). So that person that has died, that put in for, you know, 30 or 40 years, even the beneficiary doesn’t get any of it,” stated Ward.
“That’s unfair because the government (doesn’t contribute) to CPP, it’s all your money.”
Additionally, Ward expressed concern in his recent interview with the Banner, regarding the low CPP amount in relation to the high cost of living.
Since 2019, the CPP contribution has been gradually increasing, meaning there will be higher benefits in exchange for higher CPP contributions while working.
This enhancement will only affect people working and making contributions since 2019, however.
In 2022, the maximum monthly amount you can receive as a new recipient starting at age 65 is $1,253.59. The average monthly amount as of July this year is $727.61.
This is considerably low, considering the cost of living in Ontario is $2,014 per month, for a single individual, according to livingcost.org.
This is 1.17 times more expensive than the average in Canada.
“You know, you realize why there’s so many seniors that choose between their medication and food,” stated Ward.
Further, the CPP website is difficult for seniors to navigate and find the answers they are looking for.
“It’s so confusing… to try and even find (information) on the government pages,” stated Ward, “They don’t give you the information unless you ask the right questions.”
To learn more about CPP, visit https://www.canada.ca/en/services/benefits/publicpensions/cpp.html.
Melissa Dunphy, Local Journalism Initiative Reporter, Listowel Banner