Capital accumulation plan members who retired in 2024 saw the highest CAP outcomes since the start of the coronavirus pandemic, according to a new report by Eckler Ltd.
The consultancy’s latest CAP income tracker found a typical male member retiring at the end of December 2024 achieved a gross income replacement ratio of 66.5 per cent, up from 53.2 per cent in March 2020, while a female member achieved 64.8 per cent, up from 51.6 per cent.
Read: CAP member outcomes continue to rise in Q3 2024: report
The report, which attributed these outcomes to increasing annuity rates and positive equity market returns, also noted plan sponsors can help members by encouraging them to time their retirement in order to maximize their Canada Pension Plan or Quebec Pension Plan benefits.
“CPP/QPP is indexed to inflation which helps ensure that payments increase each year to keep pace with rising costs of living and there are incentives built into the CPP/QPP benefit formulas to encourage Canadians to delay the start of their pensions,” said the report.
“Delaying CPP/QPP and leveraging a higher payout creates not only a larger income stream but also creates a more defined window of time during which to draw down workplace and personal savings.”
Read: Helping employees understand the benefits of delaying CPP/QPP