Pension Rules About to Change

Retirement is a complicated thing. Many look forward to it. Many dread it.

But no matter how anybody feels about it, retirement is here. Except, rules change from time to time, and they will do so again, as of New Year's Day 2012.

So, what's going to be new?

If you are already getting payments from the Canadian Pension Plan (a.k.a. CPP) or the Quebec Pension Plan (a.k.a. QPP), and you're not working, either, you can stop reading now. These changes won't affect you. But if you are an employee or a self-employed person between 60 and 70 years of age, read on.

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Everybody between 60 and 65 will have to continue paying into the CPP. That holds true even for those who are already receiving CPP or QPP pensions.

Those of us between 65 and 70 years of age will have to opt out of paying into the CPP, even as they are receiving their CPP (or QPP) pensions. You can't be under 65 years of age to use this option.

Here's how to do it: go to the CPT 30 form, fill it out, give a copy to your employer, and send the original to the Canada Revenue Agency. The election will take effect on the first day of the month after the employee gives the form to their employer.

If you are self-employed, you'll have to wait until the time you want to file your income tax and benefit return for the year 2012 (or later). The form to complete is called Schedule 8, CPP Contributions on Self-Employment and Other Earnings. The election will be effective on the first day of the month referred to in Schedule 8, says the Canada Revenue Agency.

What's in it for you?

It all began earlier this year, and the changes in CPP retirement pension benefits should be complete by the time the year 2016 rolls around.

Still, should you be curious enough, try Service Canada's calculation tools to figure out whether this was false alarm in your particular case, or whether you will be getting more (or less, as the case may be) once you retire.

A few basic numbers a.k.a. statistics

Since 1998, Canada's average retirement age has been increasing.

From a low of 22 per cent in 1996, the employment rate of individuals 55 and older climbed steadily to 34 per cent in 2010.

According to Statistics Canada's Labour Force Survey, the average retirement age was 60.9 in 1998, and it rose to 62.1 in 2010.

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