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Before making a major financial decision you
should consult a qualified professional.
Make Sure You Apply for the Child Rearing
Provisions
Previously there was only a child rearing drop-out (CRDO). With the
introduction of enhanced
CPP, there is also a child rearing drop-in. These together are now called child
rearing provisions.
If your children were born after December 31, 1958, and your Canada Pension
Plan (CPP) contributions were reduced while you stayed home or reduced your hours of work
to be the primary caregiver for the children, you may be eligible to have the
child rearing provisions applied to your account when you apply
for a CPP benefit (such as retirement or disability
pension, or death or survivor benefits).
The provisions apply for years when you were caring for your
children who were under the age of 7 years. Application of these
provisions increase your monthly CPP benefit.
The child rearing drop-out applies when the base component of your CPP
benefit is calculated. This "drops out", or excludes, the months of
low or no earnings, if it will increase your benefit amount.
The child rearing drop-in applies when the enhanced component of the CPP
benefit is calculated. This provides pension credits for the years when you had
low or no earnings while you were the primary caregiver of a child under 7, and is
based on "enhanced" CPP contributions in the 5 years prior to you
becoming the primary caregiver.
The CPP Child Rearing Provisions application must be completed at the same time
as you apply for any CPP benefit. If you are already collecting a CPP
benefit and did not know about these provisions, contact Service
Canada to apply to get your benefits increased
retroactively.
Other Resources
Finepoint Solutions Inc. Ideas
& Resources by Jason Yee, CFA, P. Eng - scroll down to How to BOGO a
Single CPP Contribution. This would be most useful for owners of
incorporated businesses who have some control over amount and timing of their
remuneration from the business.
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