“Normal retirement age” in Canada is age 65. This is when you can begin to collect your full Canada Pension (CPP), Old Age Security (OAS), and employer pension payments.You may choose to continue working and delay receiving your pension payment.But you can’t delay your pension payments forever.Income Tax Act regulations mean you can only delay CPP and OAS payments until you turn 71, and you can only delay your employer pension payments until the end of the year in which you turn 71. This is because you’ve deferred the taxes you must pay on pension contributions and, of course, the Canada Revenue Agency wants to eventually collect the taxes you owe!There can be benefits to deferring your pension payments beyond age 65, particularly if you want to keep working.
If you have a Defined Benefit Employer Pension Plan
- If you continue working and contributing to your employer pension plan, you may earn more pension credit and your average earnings may be higher. In other words, the employer pension benefits you receive may be higher.
- Contact your employer pension plan directly for further information about your specific situation.
If you have a Defined Contribution Employer Pension Plan
You and your employer can continue to contribute to your plan, which will hopefully increase the amount of money you receive in retirement.
Contact your employer pension plan directly for further information about your specific situation.
Canada Pension Plan
If you choose to delay your CPP payments until age 70, your CPP payments could increase to a maximum of 42 per cent. For more information,
visit CPP’s website.
Old Age Security
If you choose to delay your OAS payments until age 70, your OAS payments could increase to a maximum of 36 per cent. For more information
visit OAS’s website.While there may be some financial benefits to deferring your pension, there are also some additional things to consider:
- Your health and life expectancy
- The tax implications you might face
- Your overall financial situation
- Your plans for retirement.
- Collecting your pension does not mean that you must stop working. You can continue to work beyond the age of 71.
However, if you do keep working beyond age 71, there could be financial implications because you will have to pay taxes on your work income and your pension income from various sources (including RRSPs, employer pensions, CPP, OAS, and possibly others).For help deciding when it’s best for you to begin receiving your pension payments — or if it makes sense for you to continue working beyond age 71 – please consider speaking to a financial planner and/or tax expert.
Other Contract Enforcement Blawgs