Sags - My goal is not really to convince anyone to make the voluntary contributions after age 65. It's mostly that I'd like them to do so (or not) with an accurate understanding of what they'll receive for their money. Having said that, I do think the PRB payback is pretty good for an employee (not so much for the self-employed), and I do think it's generally a good investment (minimum return of approx. 13% per year, indexed, for life); although nobody's going to get rich from their PRBs.
Having said that, there are two situations where the payback is even better than usual, and that's for a low wage earner or for someone nearing age 70.
For the low wage earner, it's a better payback because you don't contribute on the first $3,500 of income (the YBE), so they're in effect paying much less than 4.95% of their overall earnings. For example, if someone earned $3,501 their total CPP contribution would be $0.05 for the year and their PRB the following year would be about $1.75/month or $21.00/year. A pretty good return on a 5 cent investment?
For someone nearing age 70, their PRB would be increased by 42% (60 mths x 0.7%), so their max contribution of $2,356 would buy them a monthly PRB of approx $35.50 ($25 x 142%) or approx. $426/year (a return of about 18% per year, indexed, for life). Again, a pretty good ROI in my opinion?
Does this make it sound any better? Again, for self-employed the returns are only half as good because the contribution cost is double.