Comparing Nest Eggs: How CPP Reform Affects Retirement Choices

Important changes are now underway to Canada Pension Plan “adjustment factors” that will increase the penalty for those who retire before age 65, and will raise the amount of additional CPP benefits available for those who delay retirement beyond 65. The new pension adjustment factors have moved in the right direction, but still fall short of offering many Canadians who retire at different ages the same value for their CPP benefits. In particular, those affected by the GIS clawbacks continue to face substantial financial disincentives to working longer. The simplest remedy would be to sever the link between work after age 60 and lower future GIS payments by exempting the actuarial-adjustment portion of the CPP earned by delaying retirement past 60 from GIS clawbacks.