Any questions about CPP?

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
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adrian2
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Re: Any questions about CPP?

Post by adrian2 » 11 Jan 2017 20:04

KFried wrote:The mother emigrates to Canada with her two year old child. Stays at home till the child is seven, then works, contributes to CPP for 25 years and retires. Is she eligible for the child rearing provision ?
She is definitely eligible if she got the child tax benefit (various names through the ages).
Even if she would have been just eligible to get it, and did not know or bother to apply, she can use the child rearing dropout provision.
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Re: Any questions about CPP?

Post by KFried » 11 Jan 2017 23:08

adrian2 wrote:
KFried wrote:The mother emigrates to Canada with her two year old child. Stays at home till the child is seven, then works, contributes to CPP for 25 years and retires. Is she eligible for the child rearing provision ?
She is definitely eligible if she got the child tax benefit (various names through the ages).
Even if she would have been just eligible to get it, and did not know or bother to apply, she can use the child rearing dropout provision.
Cf. Service Canada "If you stopped working or reduced your hours of work to care for your children ... " you are eligible.
She got the child tax benefit. But she did not "stop working or reduced her hours" in Canada to care for the child - the reason for my asking (and not properly emphasized in my OP)

thanks

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Re: Any questions about CPP?

Post by Dogger1953 » 15 Jan 2017 21:28

KFried wrote:Please consider the following scenario:

The mother emigrates to Canada with her two year old child. Stays at home till the child is seven, then works, contributes to CPP for 25 years and retires. Is she eligible for the child rearing provision ?

Thank you
Yes, starting with the month following the month that she and her child entered Canada until the month that the child turned age 7.
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Re: Any questions about CPP?

Post by KFried » 16 Jan 2017 00:55

Dogger1953 wrote:
KFried wrote:Please consider the following scenario:

The mother emigrates to Canada with her two year old child. Stays at home till the child is seven, then works, contributes to CPP for 25 years and retires. Is she eligible for the child rearing provision ?

Thank you
Yes, starting with the month following the month that she and her child entered Canada until the month that the child turned age 7.
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Re: Any questions about CPP?

Post by CROCKD » 04 Feb 2017 16:07

Thanks Dogger1953 for the advice on how to end overdue CPP assignment. FormISP1014 was filed and accepted by Service Canada.
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Re: Any questions about CPP?

Post by LoriAnn » 06 Feb 2017 15:48

Hello!
I have been a home childcare provider for 11 years, I payed CPP before I started my home childcare. Every year when I take my tax receipts etc...to my book keeper, I ask if I should be paying CPP? He always tells me I don't make enough.

But every year, when networking with other providers, it seems that I am alone in this, as they all pay into CPP...sometimes a lot!

I called CPP and CRA today, they verified that when my expenses are taken off, my income comes in under the $3500 minimum. With the way our business goes, it's like a rollercoaster.Sometimes we have all 5 spots filled and income is at our max, sometimes we have one spot filled and are barely making anything. All the providers I know have the same unsecure income, yet I am the only one not paying into CPP.

How will this affect me? I am 50 now and look forward to retiring...but if I haven't paid into it...then I'm not going to be eligible?

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Re: Any questions about CPP?

Post by Zipper » 06 Feb 2017 21:35

If you are netting less than $3500 year then maybe you should be doing something else.

Looking after children is one of the most difficult jobs imaginable.

Parents with a couple of children in registered day care could pay that in a month.

Maybe there is something more that we don't know?

Do you work for cash?

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Re: Any questions about CPP?

Post by LoriAnn » 06 Feb 2017 23:42

Zipper wrote:If you are netting less than $3500 year then maybe you should be doing something else.

Looking after children is one of the most difficult jobs imaginable.

Parents with a couple of children in registered day care could pay that in a month.

Maybe there is something more that we don't know?

Do you work for cash?
No, I provide receipts for all my families always have always will.

I charge $35 per day per child, which is about the going rate in my area. I can have up to five children, and deduct my expenses.

It looks like I make less than 3500, because of the expenses that are declared. A percentage of
My utilities, weekly groceries, office supplies, toys etc. is all deducted. I don't know the actual percentage amount that is deducted, I give everything to my bookkeeper and he does my taxes. I know my income, and my total amount of expenses… And the expenses are always higher than the income. But I am using those utilities, groceries etc. as well .

I love what I do, even though it's been the hardest thing I've ever done!
My main concern is although I seem to be following the rules for CPP and my income taxes… It seems that most other providers have to pay CPP every year, and I don't. And I can't figure out why they have to pay, and I don't.

It makes me wonder if my bookkeeper is writing off a higher percentage of expenses then he should be? Or perhaps the other providers are choosing to pay even though they also after expenses make under the $3500?

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Re: Any questions about CPP?

Post by OnlyMyOpinion » 07 Feb 2017 10:22

LoriAnn wrote:... How will this affect me? I am 50 now and look forward to retiring...but if I haven't paid into it...then I'm not going to be eligible?
You say you have made some CPP contributions over your working career, so those contributions are what your CPP payout will be based on. Seniors may also be eligible for OAS and GIS. See this link for information on those programs: https://www.canada.ca/en/services/benef ... ments.html

At 50, it is a good time to be looking ahead to understand what your retirement income will look like and to plan/adjust accordingly while you still have some years to go.
This is a subject for a new/different thread, but you will want to review and understand where your retirement income 'streams' are going to come from and how much you can expect from each source. For example, in addition to CPP and OAS/GIS, do you or your partner have RRSP's, TSFA's, an owned home, a company pension, etc. It doesn't sound like you will have a large CPP payment (many people don't), so these other sources will be important.

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Re: Any questions about CPP?

Post by newguy » 10 Feb 2017 13:34

LoriAnn wrote:It makes me wonder if my bookkeeper is writing off a higher percentage of expenses then he should be? Or perhaps the other providers are choosing to pay even though they also after expenses make under the $3500?
You should ask your bookkeeper. I'm too lazy to do the calculation but the amount of incremental CPP you earn on a $3500 salary is very minimal. I wouldn't worry about paying it.

It's better not to declare too much income as long as you aren't breaking any rules.

newguy

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Re: Any questions about CPP?

Post by Stan_W » 06 Mar 2017 13:20

The G&M published this article recommending delaying taking CPP until age 70.

http://www.theglobeandmail.com/globe-in ... e34209897/

Could the five years of zero contributions affect the payout? In my case, I'll have about 33 years of maximum contributions with several close to max and then a drop off due to a year of unemployment and too many years of school.

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Re: Any questions about CPP?

Post by Hogwild » 09 Mar 2017 09:32

I have what may be an unusual question about the department's policy. I'm 50. I asked ESDC Canada or whatever if they could send me a letter to prove what OAS/CPP I qualify for, if nothing changes, when I turn retirement age. They said they couldn't do that. Any particular reason for that? Are they worried about liability because the money might not be there one day?

Thanks

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Re: Any questions about CPP?

Post by Dogger1953 » 13 Mar 2017 23:28

Stan_W wrote:The G&M published this article recommending delaying taking CPP until age 70.

http://www.theglobeandmail.com/globe-in ... e34209897/

Could the five years of zero contributions affect the payout? In my case, I'll have about 33 years of maximum contributions with several close to max and then a drop off due to a year of unemployment and too many years of school.
Stan - No, any years of zero earnings after age 65 will be dropped out (in addition to the 8 years under the 17% dropout), so they won't reduce your CPP payout.
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Re: Any questions about CPP?

Post by ig17 » 14 Mar 2017 00:04

Dogger1953 wrote:
Stan_W wrote:The G&M published this article recommending delaying taking CPP until age 70.

http://www.theglobeandmail.com/globe-in ... e34209897/

Could the five years of zero contributions affect the payout? In my case, I'll have about 33 years of maximum contributions with several close to max and then a drop off due to a year of unemployment and too many years of school.
Stan - No, any years of zero earnings after age 65 will be dropped out (in addition to the 8 years under the 17% dropout), so they won't reduce your CPP payout.
Your statement seems to contradict your own FAQ:

http://www.drpensions.ca/dr-pensions-faq.html
Q: I've contributed the maximum to the CPP for 36 years. I'm retiring this year at 57. Will I be penalized if I wait until I'm 65 to start my receiving my pension?

A: Yes, if you retire at age 57 with only 36 years of maximum contributions, your calculated CPP pension will be lower if you wait until age 65 to start receiving it.

An easy way to determine when your calculated pension will start to be lower is to divide your 36 years of maximum contributions by 83% (to account for the 17% dropout), and add that result to age 18 (when your CPP contributory period started).
So, 36 years/83% = 43.37 years + age 18 = 61.37 years of age.

If you wait to start receiving your CPP beyond that age, your calculated CPP will start to decrease. Your pension will still be increasing for the actuarial age factor but decreasing due to your zero earnings after age 57. In effect, you will be receiving a larger slice of a smaller pie.

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Re: Any questions about CPP?

Post by Stan_W » 14 Mar 2017 11:26

Dogger1953 wrote:
Stan_W wrote:The G&M published this article recommending delaying taking CPP until age 70.

http://www.theglobeandmail.com/globe-in ... e34209897/

Could the five years of zero contributions affect the payout? In my case, I'll have about 33 years of maximum contributions with several close to max and then a drop off due to a year of unemployment and too many years of school.
Stan - No, any years of zero earnings after age 65 will be dropped out (in addition to the 8 years under the 17% dropout), so they won't reduce your CPP payout.
Thanks Dogger!

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Re: Any questions about CPP?

Post by adrian2 » 14 Mar 2017 12:10

ig17 wrote:
Dogger1953 wrote:
Stan_W wrote:The G&M published this article recommending delaying taking CPP until age 70.

http://www.theglobeandmail.com/globe-in ... e34209897/

Could the five years of zero contributions affect the payout? In my case, I'll have about 33 years of maximum contributions with several close to max and then a drop off due to a year of unemployment and too many years of school.
Stan - No, any years of zero earnings after age 65 will be dropped out (in addition to the 8 years under the 17% dropout), so they won't reduce your CPP payout.
Your statement seems to contradict your own FAQ:

http://www.drpensions.ca/dr-pensions-faq.html
Q: I've contributed the maximum to the CPP for 36 years. I'm retiring this year at 57. Will I be penalized if I wait until I'm 65 to start my receiving my pension?

A: Yes, if you retire at age 57 with only 36 years of maximum contributions, your calculated CPP pension will be lower if you wait until age 65 to start receiving it.

An easy way to determine when your calculated pension will start to be lower is to divide your 36 years of maximum contributions by 83% (to account for the 17% dropout), and add that result to age 18 (when your CPP contributory period started).
So, 36 years/83% = 43.37 years + age 18 = 61.37 years of age.

If you wait to start receiving your CPP beyond that age, your calculated CPP will start to decrease. Your pension will still be increasing for the actuarial age factor but decreasing due to your zero earnings after age 57. In effect, you will be receiving a larger slice of a smaller pie.
65 is the magic number:
Stan - No, any years of zero earnings after age 65 will be dropped out (in addition to the 8 years under the 17% dropout), so they won't reduce your CPP payout.
vs.
Yes, if you retire at age 57 with only 36 years of maximum contributions, your calculated CPP pension will be lower if you wait until age 65 to start receiving it
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Re: Any questions about CPP?

Post by ig17 » 14 Mar 2017 12:35

adrian2 wrote:65 is the magic number:
Stan - No, any years of zero earnings after age 65 will be dropped out (in addition to the 8 years under the 17% dropout), so they won't reduce your CPP payout.
vs.
Yes, if you retire at age 57 with only 36 years of maximum contributions, your calculated CPP pension will be lower if you wait until age 65 to start receiving it
Ah, thank you. I missed that distinction.

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Re: Any questions about CPP?

Post by Yasehtor » 20 Mar 2017 19:31

I have a question I hope someone can answer. I want to split CPP with my wife when she turns 60 later this year. She plans on taking CPP at that age and so we will both be getting CPP. I believe I have to send in a marriage certificate along with the form to split the pensions we both will get. However, we don't have any idea where the marriage certificate is .. probably lost in one of many moves and contacting the parish we were married in to get a replacement is not easily done after 40 years. So.. can we just get an affidavit signed saying we are married and send it to CRA?

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Re: Any questions about CPP?

Post by adrian2 » 20 Mar 2017 19:44

Yasehtor wrote:
20 Mar 2017 19:31
I have a question I hope someone can answer. I want to split CPP with my wife when she turns 60 later this year. She plans on taking CPP at that age and so we will both be getting CPP. I believe I have to send in a marriage certificate along with the form to split the pensions we both will get. However, we don't have any idea where the marriage certificate is .. probably lost in one of many moves and contacting the parish we were married in to get a replacement is not easily done after 40 years. So.. can we just get an affidavit signed saying we are married and send it to CRA?
Legal Marriage, Statutory Declaration
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Re: Any questions about CPP?

Post by brucecohen » 20 Mar 2017 19:47

Yasehtor wrote:
20 Mar 2017 19:31
So.. can we just get an affidavit signed saying we are married and send it to CRA?
Essentially yes. You and your spouse complete the Statutory Declaration of Legal Marriage, get it notarized and send it to Service Canada.

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Re: Any questions about CPP?

Post by Yasehtor » 25 Mar 2017 09:47

Thanks guys.. really appreciate the replies and the link.

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Re: Any questions about CPP?

Post by BRIAN5000 » 05 Oct 2017 16:40

Last year I called in to get an estimate of my CPP. They ran a calculation and at 65 the monthly amount was estimated at $1032. When I go to "My Service Canada" I get an estimate of $1582.12 at 65. According to Doug Runchey the online calculator is good for near term estimates but longer term it calculates as if I was still contributing which is not my case. (retired at 55)

Is the phone line estimate using the same calculator or different and is it a better estimate?

Should all/some/most Financial Planners know this downfall in an online calculator supplied by revenue Canada?
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Re: Any questions about CPP?

Post by AltaRed » 05 Oct 2017 16:42

Brian, be careful of your zero years in the calculation. I had to watch that and take my CPP 'early' to avoid those penalties.
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Re: Any questions about CPP?

Post by BRIAN5000 » 05 Oct 2017 16:53

AltaRed wrote:
05 Oct 2017 16:42
Brian, be careful of your zero years in the calculation. I had to watch that and take my CPP 'early' to avoid those penalties.
I sort of remember some info, IIRC you adjust about 2.5% for each (year....?) So for someone retiring at 65 with max contributions it's a 42% increase for myself it's only (???) that's what I'm trying to determine at the moment and how many planners actually know this?

I'm reviewing articles in the finiki to try to find the answers may take a while.
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Re: Any questions about CPP?

Post by AltaRed » 05 Oct 2017 17:07

This is a quote I recently picked up with respect to 'drop out provisions'. IIRC, the counting starts at age 18.
Before the changes when Service Canada calculated your average earnings over your contributory period, 15% of your lowest earnings were automatically dropped. This is called the "general drop-out provision." Under this provision, up to 7 years of your lowest earnings were automatically dropped from the calculation of your average earnings.

Now the percentage is 17%, allowing up to 8 years of your lowest earnings to be dropped from the calculation.
So if you worked and contributed to CPP since age 18, you could have 8 dropout years until the year you collect CPP without affecting the calculation. More than that and there is a factor that reduces your CPP from max.

IIRC, I took my CPP at age 62.5 which took into account 5.5 of my 7 dropout years from retirement and some of my earliest lowest earning years as a university student. I forget the specific details.
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