New research series aims to aid CPP decisions

Lead agency seeks to help retirees make decisions for their best interest

New research series aims to aid CPP decisions
A new report seeks to help Canadians on their decisions about their retirement benefits

A new research initiative promises to enhance the financial outcomes for Canadians navigating their pension options. The National Institute on Ageing (NIA) has launched an eight-part series titled “7 Steps Toward Better CPP/QPP Claiming Decisions,” spearheaded by Dr. Bonnie-Jeanne MacDonald, NIA’s director of financial security research.

According to a news release, this series aims to aid the decision making of individuals around the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP), particularly on the timing of benefit claims which impacts retirees’ financial security. Dr. MacDonald emphasizes that waiting to claim benefits until age 70 could substantially increase monthly pension amounts—by more than double—compared to claiming at age 60. These benefits, which are inflation-adjusted, provide lifelong financial support.

Dr. MacDonald also points out a discrepancy in current practices: despite the advantages of delayed claiming, data shows that 90% of Canadians opt to claim their benefits by age 65. This early claiming, influenced by a lack of awareness and prevalent financial planning norms, might not be in everyone’s best interest.

The inaugural paper in the series, “Opportunities and Obstacles to Shifting the Paradigm,” discusses why such early claiming is common, its implications, and what a significant change in behavior might entail. “We can help older Canadians have happier, healthier, and more financially secure retirements by supporting more informed CPP/QPP benefits claiming choices,” Dr. MacDonald noted. “Achieving this paradigm shift is an impactful and accessible solution to improve Canada’s upcoming retirement financial crisis.”

Equipping the aging population with crucial information

The urgency of this issue is underscored by the daily pension decisions made by over a thousand Canadian Baby Boomers, decisions that will affect their financial stability for life. Findings from the 2023 NIA Ageing in Canada Survey revealed that 40% of CPP/QPP recipients had not consulted any resource or advisor before making their claiming decision.

Dr. MacDonald noted the importance of being informed given the complexity around making crucial choices such as that of claiming decisions. “This is a once-in-a-lifetime, high-stakes financial decision, and its complexity leads people to make choices that are not in their best interest,” she said.

Alyssa Brierley, executive director for the NIA, echoed the sentiments of Dr. MacDonald. “Canadians need to feel empowered with the knowledge required to make informed decisions for their financial security in retirement,” she said.

The NIA’s research series aims to be a cornerstone resource, aiding experts and retirees alike across the entire Canadian retirement income system in making informed decisions that optimize the retirees’ long-term financial health.

The National Institute on Ageing (NIA) serves as an aid to improving the lives of older adults through research, policy development, and public outreach. It has a vision of creating a Canada where the elderly feel valued and supported and the aging population has confidence and dignity.