The Canada Pension Plan (CPP) provides retirement, disability and survivor benefits to individuals who have contributed to the plan and are at least 60 years of age. The amount that you will receive depends upon your average salary and the number of years you have contributed to the plan.

If you begin to receive CPP before the age of 65, the monthly amount you receive is reduced. Conversely, if you delay receiving CPP benefits until you are 70 years old, the monthly amount you will receive is higher. For example, if a person starts receiving CPP in 2013 at age 60, the monthly CPP would be approximately 32 per cent less than another person starting it this year at age 65. Further, if a person starts receiving CPP in 2013 at 70 years, then he/she would receive approximately 42 per cent more than a person starting this year at age 65 would.

Service Canada's website has a CPP calculator to help you determine what age to start receiving CPP is best for you. It will take into account your life expectancy, expected rates of return and inflation effects. By working with your accountant or financial advisor, he/she can also help you make the choice that best suits your needs.

Once you decide at what age you will apply, you should allow for six months, for the application and approval process, before you start receiving your benefits.

Effective 2012, you can still work and receive full CPP benefits, but if you are under age 65, still working and receiving CPP benefits, you and your employer are required to continue to contribute to CPP. Between ages 65 and 70, continuing to contribute is voluntary, although continuing to contribute can result in higher benefits later.

A husband and wife can share their CPP benefits. Therefore, it may be possible to tax a portion of the benefit in the lower income spouse's hands, which can result in lower taxes. If the marriage ends, CPP rules also allow a split of CPP credits that spouses have accumulated during the time they lived together to otherwise equalize their credits, even if one spouse did not contribute to the CPP. An application must be made to Service Canada and complex rules must be navigated properly.

Note: This summary is a reprint of an article by Steve Brown of Crowe Soberman LLP.