Question

henry and mark, age 59, were common-law partners for 20 years. henry spent his entire career working for a large bank, whereas mark was never employed. the couple has recently ended their relationship, and, as per the court order, henry was required to give mark a portion of his canada pension plan (cpp) credits. as such, henry is wondering when he will start receiving payments and if there are any disadvantages to starting early. which statement best describes this situation?a)mark is ineligible for receiving a regular cp retirement pension as he has never contributed to cppb)if henry elects to begin receiving his cpp retirement pension early at 59, he cannot subsequently cancel.c)mark can elect to begin receiving cpp retirement benefits at age 60d)henry's regular cpp retirement benefits will start automatically at age 65, or he could apply to start as early as 60, subject to a reduction.

Answer 1

The correct statement describing the situation is D Henry's regular CPP retirement benefits will start automatically at age 65, or he could apply to start as early as 60, subject to a reduction. Thus option D is correct.

Step-by-step explanation:

Henry, having worked for a large bank, contributed to the Canada Pension Plan (CPP) throughout his career. As per the court order, Henry is required to give Mark a portion of his CPP credits. CPP retirement benefits can commence as early as age 60, subject to a reduction in payments. Henry, being 59, can choose to start receiving his CPP retirement benefits early but will face a reduction in the amount received compared to if he waits until his full retirement age of 65. The reduction is about 0.6% for each month prior to turning 65, up to a maximum reduction of 36%.

Given Henry's age of 59, if he opts to begin receiving CPP retirement benefits early, the reduction could be around 36% (5 years x 0.6% per month) from the full pension he would receive if he waits until age 65. Consequently, starting early at 60 may significantly reduce the total amount he receives over his lifetime.

Therefore, while Henry has the option to begin receiving CPP retirement benefits as early as 60, it's crucial to consider the long-term impact. Starting earlier than the full retirement age of 65 would result in a reduced monthly payment. Henry should weigh the financial implications and decide based on his current needs versus the potential reduction in lifetime benefits before making a decision. Thus the correct option is D.