# CPP start date of December 2020 versus January 2021



## Dogger1953 (Dec 14, 2012)

If you applied for your CPP retirement pension to begin effective December 2020, you may want to rethink that. This is because of the way that CPP benefits are indexed once they're in pay (based on price increases as measured by the CPI), versus the way that they are calculated when they first go into pay (based on the 5-year average YMPE ending with that year). Although Service Canada hasn't officially released the 2021 CPI increase, it should be 1.0% compared to the 4.9% increase in the YMPE for 2021.
As a result of these two factors, a maximum age-65 CPP benefit of $1,175.83 for 2020 will increase to $1,187.59 effective January 2021 (if I am right about the 1.0% CPI increase). Meanwhile, due to the large increase in the 2021 YMPE, the maximum CPP for 2021 will be $1,203.75 (ignoring the enhanced CPP), plus there would be an extra 0.7% age-adjustment factor due to the one-month deferral, making the net CPP of $1,212.18.
This means that if you deferred your CPP from Dec 2020 to Jan 2021, you would be ahead $24.59 every month, and it would take you only 48 months to breakeven for missing that one month's payment.
If you're age 65 or older as of Dec 2020, you have 6 months during which you can change your CPP start date form Dec 2020 to Jan 2021, but if you're under age 65, you may have to cancel and reapply before the end of December to take full advantage of this rate difference.
If you're slower than that, you could still cancel your Dec 2020 start date and apply in January for a Feb 2021 start date, but now you'd be missing two payments and the breakeven period would be a little longer. Similarly, this same situation would affect CPP benefits which started effective July 2020 or later, but with varying breakeven periods from 4 years for December to almost 9 years for a change from a July 2020 start.


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## saskstu (Oct 21, 2013)

Turned 65 in September and started receiving CPP in October. Only receiving $387 gross a month due to too many years raising our family. Would this be applicable to me and how should it be done?


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## Dogger1953 (Dec 14, 2012)

Your current amount of $387 will be $390.87 effective Jan 2021 after the 1.0% increase for the CPI. If you cancelled that application and reapplied effective January 2021, your CPP will be ~ $404.51 (+ $13.64 per month) and you will breakeven in just over 7 years and be ahead from that point forward.


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## saskstu (Oct 21, 2013)

Thanks for bringing this to everyones attention.


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## Dogger1953 (Dec 14, 2012)

If you want to make this change, you might be successful by just phoning Service Canada, but that is a bit iffy and could depend on whether your who answers your call. The only sure way to make it happen and to control the timing is to write a letter requesting that your current CPP retirement pension be cancelled, and include another hard-copy application requesting a January 2021 effective date. Because you are over age 65, the timing is not so critical because even if your application isn't received until January, you can still request a January 2021 effective date.
If however, you were under age 65 and unless you can find an open Service Canada location, I would strongly recommend that you mail it with an expedited tracking method, so that you have proof that they received it in December 2020.


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