When it comes to Canada Pension Plan (CPP), there are many misconceptions and myths that often lead to confusion and misunderstanding. As one of the main sources of retirement income for Canadians, it’s important to have a clear understanding of how CPP works to make informed decisions. Let’s debunk some common myths about Canada Pension Plan.
Myth 1: CPP payouts are calculated based on the last 5 years of employment
Many people believe that their CPP payments are solely based on their last 5 years of employment. However, CPP actually looks at your earnings from your entire working career, up to a maximum of 39 years. This means that if you had a lower income during your last few years of work, it won’t significantly impact your CPP payouts.
Myth 2: You can only receive CPP if you have worked in Canada
Some may think that only Canadians who have worked in Canada are eligible for CPP. However, even if you haven’t worked in Canada, you may still be eligible for CPP if you or your spouse have made CPP contributions. In addition, there are agreements between Canada and other countries that allow for the pooling of CPP contributions for those who have lived or worked in both countries.
Myth 3: CPP funds are invested in