60 the new 65

Study finds more collecting CPP/QPP benefits at younger age

A growing proportion of workers, and more women than men, are choosing to collect benefits from the Canadian Pension Plan and Quebec Pension Plan (CPP/QPP) at the age of 60, according to a new study.

“Public pensions at work” in Statistics Canada’s Perspectives on Labour and Income finds that in 1995, 32.5 per cent of men and women had chosen to take their CPP/QPP benefits at the age of 60 but, by 2003, this proportion had increased to 36.4 per cent. (For women, the increase was from 31.1 per cent to 37.8 per cent.)

Although 65 remains the benchmark age for benefit calculation, contributors can collect benefits as soon as 60 with a 30-per-cent penalty or as late as 70 with a 30-per-cent premium. Despite this, less than one in 10 delay CPP/QPP take-up past 65.
The study finds income from an existing employer-sponsored registered pension plan (RPP) tends to generate a demand for employees to take CPP/QPP benefits early. Nearly four out of five RPP beneficiaries with no employment in 2003 began receiving CPP/QPP benefits at 60 in 2003, the highest rate of all groups.

“Although the single-year retirement rate is still highest at age 65, the base population in each cohort has been greatly diminished by retirement between 60 and 64,” writes author Ted Wannell of the labour and household surveys analysis division of Statistics Canada. “As a result, more than twice as many people retired at 60 in 2003 as retired at 65.”

However the study also shows an aging workforce is leading to more older Canadians continuing to work, some even after they begin to collect CPP/QPP pension benefits. In 1995, 39.8 per cent of men who had started receiving a CPP/QPP pension continued to work. By 2004, this proportion had increased to 49.9 per cent. Among females, the number rose from 37.7 per cent to 45.8 per cent.

Even those who had received RPP benefits at 59, and did not work, were increasingly finding their way back into paid jobs in their 60s. The study found the incidence of continuing employment was highest for individuals without RPP benefits or coverage in the year prior to starting CPP/QPP benefits.

Those working and not collecting RPP benefits were much less likely to commence their benefits at 60. But those without RPP coverage in their current job were more likely (26.4 per cent) to start benefits at 60 than those with coverage (17.0 per cent).

“Overall, the supply and demand factors related to older workers seem to be moving in the direction desired by many commentators — toward longer careers,” concludes Wannell.

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