How much can the CPP penalty rise from 2011 to 2016 for early withdrawal?

The correct answer reflects the structure of the Canada Pension Plan (CPP) penalties and how they apply to early retirement. For individuals who choose to start receiving their CPP benefits before the standard age of 65, there is a reduction in the amount received, which is set at a rate of 0.6% for each month that they claim benefits early. This reduction accumulates, leading to a maximum penalty of 36% if benefits are taken at 60 instead of 65.

Each month counts toward this penalty, therefore a total of 0.6% per month translates into a significant potential reduction if one opts for early withdrawal. Understanding this percentage is crucial for individuals planning their retirement, as it directly impacts their long-term financial security.

The implications of these penalties serve to encourage individuals to consider waiting until the standard age to draw their benefits, thereby avoiding significant reductions in their monthly payments.