Canada Pension Plan Close Mirror To Social Security
Canadians have had a government sponsored pension plan since 1966 and in many ways it is similar to Social Security in the United States. The Canada pension plan considers the amount of money workers contributed to the plan and the monthly benefit payments are calculated accordingly. There are three income possibilities for older workers including old age security, the Canada pension plan and private savings accounts and pension plans.
In order to qualify for the Canada pension plan they must have made at least one contribution to the plan during their working life and the amount they receive in benefits is tied to the total contributions they have made as well as their age of retirement. Their benefit amount starts with approximately 25-percent of their contributions and is adjusted by their age at the time they quit working. When the payments begin is also determined by the last month they worked.
Under the Canada pension plan, if a worker hopes to begin retirement in a designated month, October for instance, they can work in September but cannot work at all in October. The current retirement age under the Canada pension plan is 65, but workers can quit working as early as the age of 60, although they will lose some of their retirement benefits.
Protecting Investment In Retirement Funding
When a person decides to retire early, their benefit amount is reduce by one-half of one percent for each month between their date of retirement and their 65th birthday. The retirement amount does not increase after they turn 65. Conversely, if they work past the age of 65, under the Canada pension plan rules, their benefit is increased by one-half of one percent for each month they worked past the retirement age.
Unless a person is receiving disability payments prior to their 65th birthday, the Canada pension plan does not automatically begin sending out pension checks. Those anticipating retirement has to apply for the benefits, stipulating the date on which they want to begin receiving payments from the Canada pension plan. If a person passes away before retirement, survivors can apply for survivor benefits, but in most cases they can receive only 12 months of payments unless the person was over the age of 70.
The total contribution can be affected if there were years in which no contributions, or lower contributions were made while raising children. Persons can apply to the Canada pension plan to have the years of lower contributions exempted from the calculations that determine their monthly benefit amount.
