What level of public retirement income can Canadians expect? The main source for working Canadians is the Canada Pension Plan (CPP). I chose this topic today because the Canada Pension Plan Investment Board released its annual report concerning the health of the funds within the Canada Pension Plan on May 17, 2006. The board's fiscal year ends on March 31 and its report for March 31, 2006 is here.

For 2005, the maximum CPP retirement pension is $828.75 per month ($9,945 per year) if taken at the age of 65. It is possible to take the retirement pension early, but beware - you get a lower benefit rate if you do. On the other hand, you can wait as late as 70 and obtain a higher monthly benefit. Taking the CPP at age 60 reduces the monthly benefit by 30% compared to the age 65 rate, while delaying it to the age of 70 increases the benefit by 30% compared the the age 65 rate.

While the maximum CPP retirement pension is $828.75 monthly, you get that only if you contributed the maximum amounts. On average, 2005 CPP monthly benefits were $463.95.

The CPP is not subject to a "clawback" if you earn other income although it is treated as taxable income when determining eligibility for other income-based programs such as the Old Age Security program.

So if you have contributed the maximum amount to the CPP over the years, you will be entitled to the maximum pension of almost $10,000 per year. This is not enough to retire on by itself but it can provide a nice little boost to your privately-funded retirement accounts.

There are some interesting questions that arise out of the CPP annual report and the levels of benefits received compared to premiums paid over your working life. I'm going to delve into those in the coming weeks.

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