The Canada Pension Plan (CPP) is a government subsidy that provides pensions and benefits to its contributors when they retire or become disabled. Almost everyone between the ages of 18 and 70 who works in Canada and earns a minimum of $3,500 per year contributes to CPP. Your contribution is based on your annual income, or your pensionable earnings. The minimum amount of pensionable earnings is frozen at $3,500 and the maximum amount is set each January based on the average wage in Canada. In 2015, the maximum is $53,600 and the CPP contribution rate is set at 4.95% of your income.
You receive full benefits from the Canadian pension plan at age 65. However you can apply early at age 60 and take a reduction, or apply late at age 70 and take an increase. The exact amount you receive from the Canadian pension plan depends on how many years you've contributed and how much you put into the Canada Pension Plan.
In order to get the maximum CPP benefit, you have to contribute for at least 83% of the time that you're eligible to do so, which is 39 years (of the 47 years from age 18 to age 65). Your total contribution amount also affects your pension income. The more you contribute during each eligible year, the more you'll make during each year of your retirement.
However when planning for retirement, don't assume you're going to receive the maximum payout each month; the average monthly payout is around $550.
If you receive benefits from CPP, then you qualify for a Magical Credit cash loan! Check out our blog for tips on how to live on retirement subsidies.
Magical Credit is a Toronto-based private lender that specializes in providing cash loans to people who are receiving fixed government income, such as the Canadian pension plan benefits. If you need a loan during your retirement, fill out an application or call us at 1-877-213-2088 now!
Our loans are considered short-term loans and have up to a 6-60 month term with an interest rate ranging from 3.4%-20% per month.
Example: $1,500 borrowed for one year at 3.4% per month. Monthly payments are $199.05. Total payback with interest and fee of $194.00 is $2,388.54.
NOTE: You can pay off your loan at any time with no penalty. You will only pay interest up to the date you pay it off.