Question

For each Canadian, or resident of Canada, their CPP payments are calculated on their

Select one:

a. income earned between the YBE and YMPE.

b. income earned below the YBE.

c. total employment earnings.

d. total income taxes paid.

Answer 1

Canada Pension Plan (CPP)

           It is a retirement pension is a monthly, taxable benefit that replaces part of your income when you retire. Calculation based on the following factors-

· At least 60 to 70 years old

· Made at least one valid contribution to the CPP

CPP payments are not automatic. You should apply in advance of when you want your pension to start. The amount you receive each month is based on your average earnings throughout your working life. Your contributions to the CPP are based on your earnings. The standard age to start the pension is 65. However, you can start receiving it as early as age 60 or as late as age 70.

Calculation of CPP on the basis of age

Taking before 65 – taking CPP at the age of 60 means your pension payment will be 7.2% less for every year [5 × 7.2% = 36%]

Taking 65 – 70 means your pension payment will be 8.4% higher for every year [5 × 8.4% = 42%]

YBE – Yearly Basic Exemption

YMPE – Yearly Maximum Pension Earnings

Answer - income earned between the YBE and YMPE.