Page 117 - A Canuck's Guide to Financial Literacy 2020

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Post Retirement Benefits

Since 2012, an employed individual, between the ages of 60-65, who continues to work
must continue to make CPP contributions until they reach age 65. Employers should match
the contributions as well. After 65, CPP contribution is not mandatory but at the option of the
beneficiary. Employers must contribute to the CPP if the employee elects to do so as well.
This contribution provides the employee an additional amount of retirement benefits, known
as the Post Retirement Benefit (PRB). No application is required.

• The maximum Post Retirement Benefit is equal to 1/40th of the maximum CPP
retirement pension. In 2019, the maximum CPP payout was $1,154.58 per month.
PRB would have been $28.86.
• Each year of work after 65 creates an additional PRB that is paid the following year
and will continue to do so during the life of the beneficiary.

Canada Pension Plan Pension Sharing

Spouses and common law partners can choose to share their Canada Pension Plan
retirement pension with one another in order to realize tax savings. In order to do so, you
must:

• Be receiving the pension or be eligible to receive it
• Be living with your spouse or common-law partner
• Be at least 60 years of age or older
• Both receiving CPP unless only one is a contributor

Sharing the Canada Pension Plan pension can result in reduction of your total
income taxes as you're shifting some of the income from the person in the higher tax
bracket to the person with the lower tax bracket. With pension sharing, each person would
receive a portion of the other person's retirement pension. This portion is based on the time
that the couple have lived together, in relation to their contributory period.

• Pension splitting will consist of two parts:

Assignable Pension
• The assignable part should be split equally with your spouse.
• Both spouses's pension has to be assigned, not just the pension of the one with the
higher income.

Unassignable Pension
Example of CPP Pension Splitting

Jorge and Natalie have been married for 20 years. They have both been working for 25
years and have the same number of years of contribution to the CPP. Jorge is entitled to a
CPP Pension of $700 per month while Natalie is entitled to $350 per month.