This article was published in the London Free Press on January 5th 2012. To see this story and to read related stories on the London Free Press website, please click here
CHANGES: Amendments to the federal plan mean Canadians over 60 can improve retirement incomes while working on the job
Changes to the Canada Pension Plan could help seniors who un-retire while they collect, and add to, their pensions.
Pension amendments, which quietly took effect Jan. 1, allow people older than 60 the option of improving their retirement incomes at the same time as they work at a job.
“There there are some people who are growling but for the larger part, the changes are positive,” said Susan Eng, vice-president of advocacy at CARP, Canada’s national organization for older people.
She said it’s a safe way for people to increase their savings for retirement and it allows them to ease into retirement with guaranteed incomes if they wish.
It also helps a growing number of people who work beyond retirement age out of choice or necessity and who can now have added benefits both as they work and after they stop work.
Before Jan. 1, anyone who wanted to — or had to — retire before age 65 would see permanent reductions in their CPP benefits. If they went back to work, though, they wouldn’t have to pay CPP.
Now, people who retire early and who also work will have to contribute to CPP until they are 65; the up-side is that those contributions will add to the life-long, indexed-to-inflation monthly pension amounts they receive.
Monthly pension increases that they receive will then start to come their way the following year.
But the change has not been welcome for some early retirees who are now self-employed, and who have to pay both the employer and employee CPP contributions.
“It was a very convoluted mess,” said Eng, whose group lobbied for these changes. “A lot of people feel like they were blindsided,” something she attributed to people not getting the right advice from their retirement advisors and to poor communication from the feds.
“The main thing is that you have opportunity even after you retire to contribute to your pension,” Eng said. “People need a safe, affordable place where they can save for their retirement.”
A spokesperson for CPP said the changes will affect 217,000 working CPP beneficiaries between the ages of 60 and 64; plus another 227,000 working Canadians ages 65 to 69.
Additional pension contributions will range between $576 million and $799 million annually and will generate fully-indexed, payable-for-life benefits in 2013 of as much as $62 million.