Canada Revenue Agency (CRA ) (formerly known as Revenue Canada) has a form for everything. They even have forms that really don’t do much other than tell the government you want to do something specific – which is called “making an election”.
For those of us of a certain generation, you probably thought when you turned 65 a few years ago that your employer would stop deducting CPP because you began collecting it. But the rules changed in 2012 and you can’t just call and say “Hey, CRA I am too old to keep paying into a system that barely gives me enough money to stay alive which is why I have to keep working”. They will tell you that you can’t call them, you have to fill out a form: namely the CPT30 (not to be confused with C3P0).
The CPT30 is a formal way of telling the government that you aren’t going to continue to pay into their pension system. The form should be filed a month before your 65th birthday if you want the deductions to stop as soon as you come of age, or it can be filed any time thereafter until you turn 70. You fill out the form, give one copy to your employer, and send another copy to CRA. And voila, your employer will stop deducting CPP and all will be well. That is, until they get a PIER and you have to prove that you actually filed the return so make sure you keep a copy for yourself and note the date on which it was mailed.
Many of us of a certain age we just assumed that CPP WOULD stop when we turned 65. But the federal government tweaked (not to be confused with the dance of a similar name but it probably resembled it in Parliament) the CPP plan. In doing so they took a note from a local cable company that shall be nameless (unless you Google negative billing cable company) and decided that negative enrolment is always the best way to fool people into giving you money. So if you don’t opt out you will keep paying until you are 70.
“But wait”, you say, “The government must have a reason to have me continue to pay.” They do! If you pay you can continue to increase your CPP benefit by receiving what is called a post retirement benefit. It is especially important to note, and here is the carrot, that the post retirement benefit is indexed to the cost of living increase as measured by the Consumer Price Index.
It comes down to this: you need to figure out if the ultimate increase in the CPP benefit you will get from continuing to pay into the CPP system until you’re 70 is more than what you could get if you stopped paying in and just invested the extra money. For more information you can see the CRA website at http://www.cra-arc.gc.ca/cppchanges-employers/
(originally posted in the Burnaby Business News, March 2014)