Questions - Multiple Choices -
1. Which of the following is not a CPP benefit?
a. Retirement pension
b. Survivor benefit
c. Death benefit
d. Allowance for survivor
2. Which of the following is true?
a. The amount you contribute to CPP depends on the province in which you reside (excluding Quebec).
b. The CPP retirement benefit is not taxable.
c. There is no consideration for inflation in the CPP retirement benefit.
d. A person can receive two CPP benefits at the same time.
3. Annie's salary is $45,000. Using a contribution rate of 4.95% with a YMPE of $46,000, her CPP contribution is:
a. $2,103.75
b. $2,054.25
c. $2,227.50
d. $2,277.00
4. Which of the following statements about the steady-state financing rate is not true?
a. It means CPP rates will not go above 4.95%.
b. Up to half of the CPP fund is being actively managed.
c. It has been an unfunded pension plan.
d. In a few years, the CPP fund will be fully funded like other pension plans.
5. Martin is 63. He is considering semi-retirement. If he takes the CPP retirement benefits now, it would be $9,844 (using generic rates). Which of the following statements is true?
a. He can collect the CPP now if his earned income is less than $9,844 a year for two consecutive months.
b. He cannot collect the CPP now if he still has earned income.
c. He can collect the CPP now and must continue to make contributions until he is 65.
d. He will find that the CPP increases to $11,500 when he turns 65.
6. Chris decides to retire early at the age of 61. If a full pension under the CPP is currently $11,500, how much will his annual retirement be if he has worked and contributed steadily for the past 40 years?
a. $8,188
b. $7,636
c. $11,500
d. None of the above
7. Marty and Steve have been same-sex partners for 30 years. Marty can receive CPP retirement benefits of $3,000 a year after working for 45 years while Steve can receive $10,000 a year after working for 50 years. After pension sharing, how much will Marty receive the first year?
a. $0
b. $5,000
c. $7,000
d. $9,000
8. Marie is deciding if she should retire now at age 61 or wait until age 70. Her health is very good - she expects to live to 90. Which of the following statements is true about her CPP retirement income if she expects to live to age 90 and will be eligible to collect the full retirement benefit at age 65 and is using a discount rate of 3%?
a. She should retire now.
b. She should wait until age 70.
c. It doesn't make any difference.
d. This cannot be assessed without knowing the amount of the full retirement benefit.
9. Jason's father started receiving CPP disability when Jason was 12 years old. The father died when Jason was 16. All of the following are true except:
a. Jason's CPP benefit continued at the same level when his father died.
b. Jason can continue to receive this amount until he is 25 if he stays in school.
c. Jason's mother or guardian will receive the money until he is no longer dependent.
d. The funds are paid to Jason from the beginning.
10. Maggie is 61 and worried. Ben her husband who turned 62 last week, has just left her to spend all His time painting flowers. Maggie has stayed at home running the household, chauffeuring the kids, walking the dog, etc. Maggie and Ben were married for 33 years. Ben has been working for 44 years - since he was 18 years old. The Canada Pension pays a pension of $11,500 for retirement at age 65. How much can Maggie expect to get each year from Ben's CPP entitlement if Ben retires at age 65?
a. $ 0
b. $5,750
c. $8,625
d. $4,312.50
11. Alex has RPP income of $67,000, $11,500 CPP and $6,400 OAS a year. He also receives $6,000 in dividends each year. If the OAS threshold is $68,000, his OAS after the clawback is:
a. $2,965
b. $3,925
c. $3,520
d. $2,560
12. The OAS threshold amount is $68,000 when the OAS is $6,400. If Jamie has taxable income of $72,000 the first year he is retired, what is his OAS after the 15% clawback?
a. $960
b. $600
c. $77,800
d. $5,800
13. Angela figures out that she will need $900,000 by the date of retirement. (Calculated: $50,000 before tax a year for 30 years, discounted at a before-tax, real rate of 4%). She does not have a pension plan at work but does have a substantial amount of savings in her RRSP. She expects to receive CPP retirement pensions of $9,770 and she will use this amount to base her planning. How much will her retirement savings have to cover after she factors in her CPP benefits?
a. $175,701
b. $724,299
c. $168,943
d. $731,057
14. Which of the following statements about RPP is not true?
a. Most DCPP are in the private sector.
b. There are many DBPP in the private sector.
c. Employers who provide DBPP may have to make large contributions to ensure the plan is fully funded due to a drop in the stock market.
d. The limit on benefits received is the same for DCPP and DBPP.
15. All of the following can be included in a registered pension plan except:
a. A proprietor who also is an employee.
b. This proprietor's spouse who works there part-time as a consultant.
c. This proprietor's daughter who works there full-time as an employee.
d. This proprietor's son who works there part-time as an employee.
16. Which of the following is not true about additional voluntary contributions?
a. Any increase to the pension benefit must take into account contributions to earlier pension plans with which the current plan has a reciprocal or portability agreement.
b. If a member has made AVC's to one plan and these contributions are transferred to a second plan, these AVCs will continue to be counted as AVCs unless the member chooses to use them to make contributions in the new plan.
c. Only defined contribution plans allow for additional voluntary contributions.
d. All of the above are true.
17. Which of the following circumstances is not eligible service?
a. John takes an unpaid leave from work to write the novel he has always wanted to write.
b. Anne resigned from her job to run for the provincial legislature. After losing the election six months after her resignation, she was fortunate to get her old job back. She wants to buy back the time between these two events.
c. Martha takes an 18 month leave with her company to work for her church which does not have a pension plan.
d. Kevin takes a one-year adoption leave when he and his spouse adopt a child.
18. All of the following statements are true except:
a. Once an employee benefits are vested, they are also portable.
b. Vested benefits can be transferred to an RRSP or another RPP.
c. An employee can receive vested benefits as a taxable lump sum.
d. An employee can receive their own non-vested contributions as a taxable lump sum.
19. Henry's company provides him with a defined contribution pension plan. The maximum amount of pension he can receive for each year of service is:
a. 2% p.a. times his YMPE
b. 2% p.a. times his pensionable earnings c. $1,722.22
d. There is no maximum
20. For a defined benefit pension plan, all of the following are true except:
a. Benefits might increase each year to reflect inflation.
b. Benefits might be integrated with CPP retirement income.
c. Benefits must end when the retiree dies.
d. A common-law spouse can receive benefits after the retiree dies.
21. Normal retirement age means:
a. An employee cannot retire with a full pension before age 60.
b. The age at which an employee can received the full amount for each year of service. pg174
c. Age 65.
d. There is no minimum number of years of service.
22. Early retirement means the earliest one can retire and:
a. Receive the same total pension income as would be received at age 65.
b. Receive an unreduced pension based on the actual number of years of service.
c. Collect the full CPP retirement benefit.
d. Collect the early OAS benefit.
23. Jennifer wishes to retire early and she is an OMERS member. What will be her early retirement penalty (in %) if she is 61 and has accumulated 27 years of service? The Normal Retirement Age (NRA) for her job is 65, credited service required is 30 years and there is a required factor of 90, with a penalty of 5% per year assessed.
a. 20%
b. 15%
c. 10%
d. There will be no penalty assessed on Jennifer.
24. Joanna is a member of OMERS. She had worked for 28 years in Sudbury City Hall and is 50 years old. The earliest she can retire on an unreduced pension is:
a. In 6 months
b. In 2 years
c. In 15 years
d. In 6 years
25. Leslie is a police officer with the Thunder Bay Police Force. She is 52 and has 31 years of service. Leslie can retire now and receive a pension based on 31 years of service. Which of the following statements is true? This pension:
a. Is unreduced.
b. Is reduced by 30% a year
c. Is reduced by 20% a year
d. Is reduced by 10% a year.
Questions - Short Answer
SHOW ALL YOUR WORK.
1. Jamie earns $48,000 per year. Determine the amount of Jamie's CPP contribution using 2017 CPP contribution rates.
2. Janet is 62, and has worked all of her adult life. She has had several contract positions drafting legislation and implementing new government programs such as Pay Equity and the Office of the Ombudsman. However, she is now finding it increasingly difficult to find work, so she is considering retirement. She might then look for some part-time work, and live off that and her RRSPs and government pensions.
a. If Janet qualifies for a full CPP pension at age 65, what percentage and what is the dollar amount would she receive, based on 2017 CPP benefit rates, if she took the CPP pension on her:
i. 62nd birthday?
ii. 69th birthday?
b. If she takes the pension now, will it go up when she turns 65?
c. How long does Janet have to change her mind and stop her CPP pension if she should get a job?
d. How can Janet find out how much CPP pension she would get?
e. Janet's husband is receiving a partial CPP pension, and she can give him part of her CPP pension, since hers is more. What is this called?
f. If Janet's partner is a woman, could she share her pension?
g. Janet's husband is not yet collecting the CPP pension because he is still working full-time. Would she want to share her pension with him to reduce her taxes?
h. If Janet has been married for 1/3 of her contributory period, how much of her pension could she share? If her pension is $11,800 while her husband's is $9,200 (for a total of $21,000), and he has been married for 36% of his contributory period, how much would each receive?
3. Mark and Grace are 66 and retired. Grace dies, leaving Mark frantic as to how he will get along financially without her. Grace was receiving the maximum CPP pension, while Mark is collecting 90% and the OAS (but not GIS - they have rental income).
a. If Mark were eligible to receive the full survivor benefit, how much would it be, and what percentage is it of the retirement pension?
b. How much survivor benefit can Mark collect, given that he is receiving 90% of the full CPP pension?
4. Craig and Margot think they will be able to collect the maximum CPP, and estimate that they will each collect 50% of the maximum OAS. If they live to age 89 and 90 respectively, and using a discount rate of 8% when inflation is 3.5%, what is the present value before tax at retirement of their government pensions if they retire when Margot is 61 and Craig is 60? Use annual, beginning of the year cash flows.
5. Antoinette has worked for Haggis for 47 years, and her best three years of income average $110,000. Her plan pays 2% for every year of service to a maximum of 35 years.
(a) What is the maximum number of years she can use to calculate her pension?
(b) What is the maximum pension she can receive using:
i. the 2016 money purchase limit of $26,010?
ii. Her actual salary?
(c) How much pension will she receive?
Use the information below for the following two question:
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Question 6
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Question 7
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Needs for NRA 60
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|
Minimum age
|
|
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50
|
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Age
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58
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35
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60
|
|
Years of service
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36
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28
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30
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Factor
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94
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81
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85
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6. Pete retired at age 58 with 36 years of service and his earnings had been:
2016 $75,000
2015 $73,000
2014 $71,000
2013 $69,000
2012 $67,000
Average $71,000
(a) Use actual YMPE values to determine what annual pension Pete would receive when he retires. Does he receive a full pension or a reduced pension?
(b) Based on the OMERS CPP offset provision, how much will Pete's pension be reduced when he turns 65 using actual YPME values and ignoring his annual inflation increases?
(c) If Pete waits until age 65 to collect the CPP retirement benefit, by how much will his pension income increase using CPP rates only, i.e. not including OAS?
7. Joe, a police officer, is 53 and wishes to retire. He has 28 years of service. How much will his pension be reduced if he takes early retirement?