Question

1. If you have been in an employer-sponsored pension plan for three years and you leave your employer well before retirement,

Select one:

a. you are not entitled to the employer's contribution to your plan.

b. you can transfer the funds to a RRIF.

c. you can transfer the plan to your new employer if the RPP is similar.

d. you can withdraw the funds tax-free within 30 days of departure.

2. Morley is retiring on his 66th birthday. How much of a CPP pension will he receive if he is entitled to the maximum monthly benefit of $863.75?

Select one:

a. $936.31

b. $863.75

c. $941.49

d. $811.93

3. The year's maximum pensionable earnings (YMPE) will

Select one:

a. changes each year based on an inflation formula.

b. stays the same when GDP is negative but increase in positive GDP years.

c. changes each year based on a calculation of average incomes in Canada.

d. stays the same since the CPP is a base pension plan to build other plans upon.

4. If the average income in Canada maintains a 2.5 percent annual growth rate, how much will the YMPE be in four years? YMPE is $43 700.

Select one:

a. $43 700

b. $ 47 752

c. $47 060

d.  $48 236

5. Individual Canada Pension Plan contributions amount to 7 percent of all income.

Select one:

Ture

False

Answer 1

Solution 1) You can transfer the plan to your new employer if the RPP is similar. Hence, option C is correct.

Solution 2) A person eligible for CPP receives an extra 0.7% times the number of months.

CPP = $863.75*(1+0.7%*12) = $936.305 = $936.31

Solution 3) YMPE reflects the growth in average Canadian weekly wages and salaries. Hence, it changes each year based on a calculation of average incomes in Canada.

Thus, Option C is correct.

Solution 4) YMPE be in four years = Current YMPE*(1+ growth rate)^4

=  43700*(1 + 2.5%)^4 = $48,236.62

Hence, option D is correct.

Solution 5) Individual Canada Pension Plan contributions amount to 9.9% of the total income. Out of this half is paid by the employer and half is paid by the employee.

Hence, the statement is False.