# Starting your CPP in 2013 versus 2014



## Dogger1953 (Dec 14, 2012)

If you're between age 60 and 65 now, and you're thinking of starting your CPP early in 2014, you may want to consider applying immediately for a December 2013 start date instead. That's because the reduction factor for starting your CPP earlier than age 65 increases to 0.56%/mth in 2014, from 0.54%/mth in 2013.

Using the most extreme example, if your 60th birthday was in Nov 2013 your retirement pension would be reduced by 32.4% (60 x 0.54%) if you start receiving it in December, but it will be reduced by 33.04% (59 x 0.56%) if you start receiving it in January. That means that if you wait until January 2014,you have passed up on a December payment of 67.6% plus your ongoing payment will be approx. 0.64% less monthly.

There is a slight advantage to waiting for 2014, in that the general dropout increases from 16% to 17%. It is highly doubtful however, that this extra dropout period will make up for passing up on the December payment, plus the greater % decrease in benefit in 2014.

If this applies to you, your application must be received by Service Canada on or before Nov 30th in order to request a December 2013 start date.


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## fraser (May 15, 2010)

I started my CPP at age 60 in Dec. 2012. 

I called CPP folks and got the monthly rate for starting in Dec. 2012 and the rate for starting in Jan. 2013.

The Dec. 2012 rate was the higher of the two-by about $10. month.


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## Dogger1953 (Dec 14, 2012)

fraser said:


> I started my CPP at age 60 in Dec. 2012.
> 
> I called CPP folks and got the monthly rate for starting in Dec. 2012 and the rate for starting in Jan. 2013.
> 
> The Dec. 2012 rate was the higher of the two-by about $10. month.


fraser - Yes, the same situation happened last year and will happen again for the next 2 years, until the reduction factor for taking it early reaches the maximum amount of 0.6%./mth. It sounds like you got good information last year and made the right decision. Congrats!


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## Taraz (Nov 24, 2013)

Note that when you take CPP before age 65 and continue to work, you will have to pay into the PRB (Post-retirement benefit). So if you were hoping to reduce your payroll deductions by not having to pay into CPP, taking early CPP won't help much as one might think. 

That said, I'd definitely take CPP early, especially if you're going to stop working anyways. (Otherwise the "years off" can negatively affect your CPP income.)


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## fraser (May 15, 2010)

.....and then I got the cost of living raise (smaller) in Jan 2013!

I had $25K of unexpected earned income this year so I assume that a PRB will catch up with me at some point in time next year.

The CPP person that I spoke with was very good. I have called CPP twice with questions/issues. On both occasions the CSR was very professional, very helpful. In both instances, the telephone wait time was very low. Of course, I did not call at the beginning or end of the month, or during lunch hours when I assumed call volume would be at its highest level.


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## Dogger1953 (Dec 14, 2012)

Taraz said:


> Note that when you take CPP before age 65 and continue to work, you will have to pay into the PRB (Post-retirement benefit). So if you were hoping to reduce your payroll deductions by not having to pay into CPP, taking early CPP won't help much as one might think.
> 
> That said, I'd definitely take CPP early, especially if you're going to stop working anyways. (Otherwise the "years off" can negatively affect your CPP income.)


Taraz - These are both good points that you're raising. The only caution that I'd add is that retiring early and waiting until later to start your CPP doesn't always reduce the "calculated retirement pension", and it never reduces it by more than the age factor increases your pension, so I still think deciding when to start receiving your CPP should be a decision made on the specifics of the individual, rather than an across-the-board always take it early or always wait.


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## Dogger1953 (Dec 14, 2012)

fraser said:


> .....and then I got the cost of living raise (smaller) in Jan 2013!
> 
> I had $25K of unexpected earned income this year so I assume that a PRB will catch up with me at some point in time next year.
> 
> The CPP person that I spoke with was very good. I have called CPP twice with questions/issues. On both occasions the CSR was very professional, very helpful. In both instances, the telephone wait time was very low. Of course, I did not call at the beginning or end of the month, or during lunch hours when I assumed call volume would be at its highest level.


fraser - Your PRB based on your 2013 earnings will be effective Jan 2014, but depending on when your 2013 tax return is submitted and assessed, I would guess that you'll receive your first payment in April or May, with full retroactivity back to January. If your $25k is accurate, I'm going to predict that your PRB for 2014 will be $9.36 monthly.


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## fraser (May 15, 2010)

Thanks. We always file in mid-late April because we one of us always has to pay!


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## Guban (Jul 5, 2011)

fraser said:


> Thanks. We always file in mid-late April because we one of us always has to pay!


If you have all of your information before mid-late April, go ahead and file earlier. One spouse may get a refund well before the other has to pay. The money is due to CRA at the end of April irrespective of when you actually file your tax return.


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## fraser (May 15, 2010)

Alas, we did our pro forma last week. 

We will both have to pay-and then pay installments. 

Not complaining. We are so very fortunate to live in a country like Canada.


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