Changes to CPP

30 Jun

Changes to CPP system

Canada DayAs the fireworks crackle, sparkle and boom, I am reminded of how lucky we are to live in this country. Canada is a privileged country where we get to choose our government and to speak our minds, without risk of censure or torture or worse. We are blessed with a very stable economic system. We have even more to celebrate this year. The icing on our Canada Day cake has got to be the recent changes to CPP systems.

If you are further along in your earning years like I am, the changes announced June 20th won’t impact on the amount of pension that from you will receive from our public system. These recent changes will have the most impact on our younger workers – Canadians who are now in their twenties, thirties, and even younger.

For these lucky individuals, changes to CPP will gradually increase both the amount you will be allowed to contribute to the plan and the amount of the payout you will receive – under the new rules, allowable contributions will be equal to an absolute percentage of salary or wages.

The changes to CPP will significantly enhance the retirement payouts of CPP by about $4400 per year for workers earning $55,000, and by an additional $5,000 per year for workers earning $82,700. The new benefits will be fully phased in by 2025.

As a Financial Advisor, I am very happy to see that our governments have thought about how to improve public pensions for our young people, especially because most may never have a workplace Defined Benefit Plan.

I’m also glad that Ontario will not be setting up its own pension plan because that means the tax payer won’t be called upon to underwrite the costs of doing so. This July 1st I’ll be cheering for both of these very positive developments!

I would also like to remind you that a Cash Flow Plan can help you to plan for a retirement free of debt. A Cash Flow Plan takes into account your income, expenses, proximity to retirement (or other major goals), assets and liabilities and recommends how much you can spend on the things you can control in order to achieve your dreams.

Whether you’ve saved a little or a lot so far in life, it is never too late to make changes. Don’t be one of the fifty-nine percent of Canadians retiring with debt* (*CIBC poll conducted by Harris/Decima in spring 2012). Your retirement can be more enjoyable without that particular monkey on your back.

Want to know more? Contact me at As a Canada Day gift to one of my newsletter subscribers, I am offering a half-price Cash Flow Plan at $475 instead of $950 (plus HST). As most plans find in the range of $1500 to $2500 per month in extra income, this is a smart investment. If you want your name in the hat, email me without delay – the winner will be chosen on July 11.

Just good advice!