Will having an RRSP reduce my CPP benefits?

Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark Investments, has the answer.

Jamie Golombek 2 March, 2005 | 2:00PM
Dear Expert,

I heard that having an RRSP will "reduce" my Canada Pension Plan benefits when I retire. Is this true? If so, could you please explain how that works and what I can do (if anything) to minimize that reduction?

Expert Answer:

There is no basis for this rumour. CPP benefits are not related to the amount of RRSPs you have, nor are they "clawed back" in any way. Perhaps you are thinking about Old Age Security (OAS), which begins being clawed back at incomes greater than $60,806 in 2005. If the income you withdraw from your RRSP or RRIF brings your total income over this limit, then the amount of OAS you receive will be reduced. That being said, recent Canada Revenue Agency statistics seem to indicate that 97% of all Canadian seniors age 65 get their full OAS, so the concerns, for most people, are exaggerated.

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Jamie Golombek

Jamie Golombek