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Changes to Canada Pension Plan Participation

CPPService Canada, the Agency responsible for the administration of Canada Pension Plan, has announced some significant changes to the plan effective January 1, 2012. The changes involve opting into the plan after receiving benefits among other things.

 

If you have employees between 60 and 65 years of age and in receipt of CPP or QPP retirement pension, they will now have to contribute to CPP with the first pay date in 2012. If an employee is 65 and in receipt of CPP retirment pension, they can now file an election to stop CPP contributions using a CPT30 form Election to stop contributing to the Canada Pension Plan, or revocation of a prior election. Employees who are under 70 years of age who work and receive a CPP/QPP retirement pension will also have to contribute to the CPP if they have pensionable earnings, unless they file the CPT30 form. The election to stop contributing to the CPP is considered to be made when the employee gives a copy of a signed and completed CPT30 form to the employer, providing the employer has proof of the employee's age and the fact that he/she is in receipt of a CPP/QPP pension. This can be accomplished by requesting a copy of the Service Canada pension statement or proof of receipt of benefits, from the employee. The election takes effect the first day of the month following the month the employee has submitted the form. An employee cannot elect to stop and restart paying CPP contirbutions during the same calendar year.

The Government site for more information is: http://www.servicecanada.gc.ca/eng/isp/cpp/postrtrben/main.shtml

In addition, the Canadian Payroll Association has developed a very comprehensive paper on the changes. The CPA has also developed an interactive decision tool to help determine if a particular employee is affected by the CPP changes coming into effect on January 1, 2012. They have also developed an employee memo template that employers can provide to their employees to explain these changes and the restarting of CPP contributions effective the first pay date of 2012.

If you are not a member, and cannot access this info, then I would highly recommend you consider joining. This info and the tools are worth the price of the admission alone. To join the CPA - go to: http://www.payroll.ca/AM/Template.cfm?Section=Become_a_CPA_Member For an extremely low fee, you regularly receive articles like this one together with free access to a "Hot Line".