Benefits report

Snow has arrived, shoveled three times already, the roads are slippery and winter is here.  It’s hard to believe Christmas is just around the corner, end of the year is near and soon will be the beginning of a new year 2012.  With the commencement of a new year, many new things will be on the horizon.  New holiday entitlement, a year for a new contract, for many of you this will be a new experience and also new changes to the Canada’s Pension Plan (CPP) which will effect some of our members who are 60 years and older.

In my last article, (Nov 2011) I mentioned that there would be some new changes to the CPP beginning January 2012.  I will attempt to explain some of the changes, but if anyone needs further clarification please don’t hesitate to call me at the Hall.

The CPP was designed to replace about 25% of your average pre-retirement employment earning up to a maximum amount.  Other components of retirement income include the Canada Old Age Security (OAS) employer pension plans, and personal savings and investments.

Beginning in 2012, you will be able to begin receiving your CPP without any work interruption.  Before the change if you were to take your CPP before 65 you had to either stop working or significantly reduce your earnings for at least two months, this was called the “work cessation test.”  Starting in 2012 the work cessation teat will no longer apply meaning you will be able to take your CPP retirement as early as age 60 without having to stop working or reduce your earnings.

Before the change, if you were receiving a CPP retirement pension and working, regardless of your age, you did not have to pay CPP contributions.  Starting in 2012, if you are under the age 65 and you work while receiving your CPP, “you and your employer will have to make mandatory CPP contributions.  These contributions will go towards a new Post-Retirement Benefit (PRB) which will be added to your current retirement benefit gradually increasing you retirement income.  The (PRB) will be effective January 1^st of the year following your (PRB) contribution.  If you need clarification on this call me.

On the down side of all this, your monthly CPP retirement pension amount will slightly decrease if you take it before age 65.  Before the changes, your CPP amount was reduced by 0.5% for each month before age 65 that you began receiving it.

It meant that if you started receiving your CPP at age 60 your pension amount would have been 30% less than taking it at age 65.  Starting in 2012 to 2016 the Government will gradually increase the penalty from 0.5% to 0.6% per month.  This means that by 2016 if you start receiving your CPP at age 60 you will be penalized 36% as opposed to the 30% previously.  On the other hand your monthly CPP amount will increase by a larger amount if you take it after age 65. (up to age 70.)

These are just some of the changes happening, these changes will affect you if you are

• An employee who contributes to the CPP, whether you are just staring your career or planning on retiring soon:
• A self-employed person who contributes to the CPP Plan
• A person between the ages of 60 and 70 and you work while receiving a CPP Pension.

You will not be affected by these changes if you started receiving a CPP pension before December 31, 2010 and you remain out of the work force or if you are currently 70 years of age or older.  If you are under the age of 65 and working while receiving CPP, your employer will have to make CPP contributions.  The Company’s payroll department has advised me that they will be contacting all those presently working over the age 60 and effected by these changes.

In closing I would like to wish all our members and their families a very Merry Christmas and a Happy, Healthy and Prosperous New Year.  I ask all of our members to think about the past year, what we have accomplished and how each one of us has personally contributed.  Your Union is only as strong as its members and that is ‘you.’

See you at the open house

In solidarity

Army.