lOMoARcPSD|9611256

11/26/2018 VirtualUniversity.CIFP.ca

Assessment >> Formal Assessment

Assessment: Retirement Planning Web - Academic Partners Unit 2 Post-Assessment (C114V18U2L0A25Q20)

Date Submitted: 11/01/2018 08:58:00 PM
Total Correct Answers: 20
Total Incorrect Answers: 0

Your Mark (total correct percentage): 100%

1 Dieter is 17 years old. He works part-time during the school year and full-time during his summer
break. If his contributory earnings for the year amount to $8,000 and the employee CPP contribution
rate is 4.95%, how much must Dieter make in CPP contributions?

Correct
The correct answer: $0
Your answer: $0
Solution:

The CPP contributory period begins the later of January 1, 1966 and an individual's 18th birthday. Given that Dieter is
only 17 years of age, he is not required to make CPP contributions.

2 Eli has employment earnings of $56,000. If the yearly maximum pensionable earnings (YMPE) is
$50,100, what are Eli's CPP contributory earnings?

Correct
The correct answer: $46,600
Your answer: $46,600
Solution:

Based on a YMPE of $50,100 and a year's basic exemption (YBE) of $3,500, Eli's CPP contributory earnings are $46,600,
calculated as [(the lesser of pensionable earnings and YMPE) - YBE] or [(the lesser of $56,000 and $50,100) - $3,500].

3 Lorna has pensionable employment earnings of $32,800. If the year's maximum pensionable earnings are
$55,300, what are Lorna's CPP contributory earnings?

Correct
The correct answer:

$29,300

Your answer:

$29,300

Solution:

The year's basic exemption (YBE) has been frozen at $3,500 for several years. Lorna's CPP contributory earnings are
$29,300, calculated as [(the lesser of pensionable earnings and YMPE) - YBE] or [(the lesser of $32,800 and $55,300) -
$3,500].

4 All of the following people are exempt from making CPP contributions, EXCEPT:

Correct
The correct answer: Jacqueline, who earns $7,000 per year as a result of her part-time job in the mall.
Your answer: Jacqueline, who earns $7,000 per year as a result of her part-time job in the mall.
Solution:

Some groups of workers provide services that are not considered pensionable employment, and individuals in these
groups are exempt from making CPP contributions. These groups include those who do not earn more than the exempt
amount, migratory workers who do not work at least 25 days a year, casual workers and baby-sitters, and members of
religious orders whose entire income is turned over to the order. Jacqueline must make CPP contributions on her
earnings in excess of the basic exemption.

https://virtualuniversity.cifp.ca/TestScore/English/Assessment/AssessmentFormalAsResult.asp 1/6
Downloaded by David Wu He (XeroZOmega@gmail.com)
 lOMoARcPSD|9611256

11/26/2018 VirtualUniversity.CIFP.ca

5 Even at 68 years of age, Avi has no intention of retiring or applying to receive Canada Pension Plan
retirement benefits. If his employment income is $58,000 and the YMPE if $50,100, how much must Avi
pay in CPP premiums this year?

Correct
The correct answer: $2,306.70
Your answer: $2,306.70
Solution:

CPP Contributions must be made until age 70 if the employee continues to work and chooses not to commence receiving
CPP retirement benefits. The year's basic exemption (YBE) has been frozen at $3,500 for several years. Therefore, Avi
must contribute are $2,306.70 to the CPP this year calculated as [((the lesser of earnings and YMPE) - YBE) × employee
CPP contribution rate] or [((the lesser of $58,000 and $50,100) - $3,500) × 4.95%].

6 Who would be INELIGIBLE to receive a CPP retirement pension immediately?

Correct
The correct answer:

Amanda, who just retired at age 58.

Your answer:

Amanda, who just retired at age 58.

Solution:

Amanda will not be eligible to receive her pension until she turns 60 years of age. Belinda still qualifies for benefits even
though she is under 65 years of age because she has attained age 60. Debbie may collect her pension even though she
has not ceased employment because she is over 60 years of age.

7 Wong Li worked and paid the maximum in CPP contributions for 15 years. He was married to Lu Chi for
10 of those 15 years. Lu Chi divorced Wong Li. Lu Chi never worked outside the home. Regarding
Wong's CPP credits, which of the following statements is TRUE?

Correct
The correct answer: The CPP credits that Wong accumulated during the 10 years he was married to Lu Chi will be
divided equally between himself and Lu Chi.
Your answer: The CPP credits that Wong accumulated during the 10 years he was married to Lu Chi will be divided
equally between himself and Lu Chi.
Solution:

Canada Pension Plan keeps a record of the taxpayer''s contributions, which become the CPP pension credits. When the
CPP receives notice of a divorce or annulment, the CPP pension credits accumulated by the couple during the calendar
years they were married or cohabitated are divided equally between them.

8 Annie, who is 21 years old, lives in Saskatchewan and earns about $12,200 per year at her part-time
job. She is attending college on a full-time basis. Both of Annie's parents died earlier this year. Both of
her parents contributed to the CPP throughout their working lives which, in each case, amounted to
over 25 years. If the maximum orphan's benefit is approximately $225, what amount is Annie eligible
to receive from the CPP in survivor benefits?

Correct
The correct answer: approximately $450
Your answer: approximately $450
Solution:

An orphan of a deceased contributor may receive a monthly orphan's benefit up to 18 years of age and up to 25 years
of age if he or she is enrolled full-time in an approved educational institution.

Two orphan's benefits can be received if both parents, who contributed to CPP, are now deceased. Therefore, the
maximum monthly benefit payable to Annie will be approximately $450 calculated as ($225 × 2). Eligibility for orphan's
benefits is not affected by the recipient's earnings or marital status.

https://virtualuniversity.cifp.ca/TestScore/English/Assessment/AssessmentFormalAsResult.asp 2/6
Downloaded by David Wu He (XeroZOmega@gmail.com)
 lOMoARcPSD|9611256

11/26/2018 VirtualUniversity.CIFP.ca

9 Zorba and Helena are both 50 years old. They have been married for 25 years, worked full time and paid
the maximum Canada Pension Plan contributions for 30 years before they had a car accident in which
both became disabled. All of the following statements are true, EXCEPT:

Correct
The correct answer: the CPP benefits they receive are not treated as taxable income.
Your answer: the CPP benefits they receive are not treated as taxable income.
Solution:

Benefits received under either the Canada or Québec Pension Plans are taxable income to the beneficiary.

10 Canada Pension Plan benefits are indexed:

Correct
The correct answer: annually, based on the Pension Index.
Your answer: annually, based on the Pension Index.
Solution:

All CPP benefits are indexed annually by the Pension Index, which is the average of the changes of the annual Consumer
Price Indices for each of 12 consecutive 12-month periods, ending with October of the preceding year.

11 Which of the following statements about CPP employee contributions is TRUE?

Correct
The correct answer: They result in a non-refundable federal tax credit.
Your answer: They result in a non-refundable federal tax credit.
Solution:

An employee who makes CPP contributions can claim federal and provincial non-refundable tax credits (rather than
claim a tax deduction). Tax credits reduce taxes otherwise payable. CPP contributions do not impact an individual's RRSP
contribution room.

12 Krishna was born in 1950. He immigrated to Canada with his family in 1959 however, in 1973, he
moved to Spain. He returned to Canada 12 years ago and has lived here ever since. When he becomes
eligible to receive OAS benefits, what option will NOT be available to Krishna?

Correct
The correct answer: a partial OAS pension under the old rules
Your answer: a partial OAS pension under the old rules
Solution:

The old OAS eligibility rules allowed for either a full pension or no pension (i.e., an all or nothing situation); partial
pensions were not permitted. Under the new OAS rules, a person qualifies for a full pension if he or she has 40 years of
residency in Canada after age 18. Under the new rules, an individual who does not meet the full residency
requirements is eligible for a pro-rated or partial pension based upon a minimum of 10 years of residency after age 18.

An individual can choose between the old rules and the new rules provided he or she was at least 25 years of age as of
July 1, 1977 and he or she had prior residency in Canada after age 18. Krishna fulfills both of these requirements so, he
can apply for his OAS benefits under either the old rules or the new rules depending on which set of rules is more
advantageous to him. Given that he returned to Canada 12 years ago and will remain resident in Canada, he will have
at least 10 consecutive years of residency in Canada prior to applying for OAS benefits. Under the old rules, Krishna will
be entitled to a full pension. A partial pension is not an option under the old rules so, this response is incorrect. Based
on having at least 10 years of residency in Canada after age 18, Krishna would be eligible for a partial pension if he
applied under the new rules.

13 Clarice is 68 years old, and has lived in Canada for the past 26 years. She intends to spend the next 18
months visiting her daughter in Australia. What will happen to her OAS benefits?

Correct
The correct answer: They will continue while she is out of the country.
Your answer: They will continue while she is out of the country.
Solution:

https://virtualuniversity.cifp.ca/TestScore/English/Assessment/AssessmentFormalAsResult.asp 3/6
Downloaded by David Wu He (XeroZOmega@gmail.com)
 lOMoARcPSD|9611256

11/26/2018 VirtualUniversity.CIFP.ca
At the time she leaves Canada she will have lived in Canada for more than 20 years after age 18, so payments will
continue even if she leaves the country for more than six months.

14 Emily, who has lived in Canada for 17 years, is retiring at age 68 and intends to apply for OAS benefits. Aside from
OAS benefits, Emily's income will consist of a CPP benefit that is 65% of the annual maximum payable and a
$28,000 pension from her former employer. If she had already qualified to receive an OAS benefit when
she turned 65 years old, what factor will have the MOST SIGNIFICANT impact on the monthly OAS amount
that Emily will receive going forward?

Correct
The correct answer:

her intention to move permanently to New Zealand next year

Your answer:

her intention to move permanently to New Zealand next year

Solution:

Old Age Security benefits are based on an individual's total number of years of residency in Canada after age 18 and up
to the date of his or her application for benefits. The earliest age an individual can receive OAS benefits is age 65.
Provided an individual has a minimum of 20 years of residency in Canada after age 18, he or she will continue to receive
OAS benefits even if he or she is no longer a resident of Canada. Since Emily will only have 18 years of residency in
Canada as of next year, her decision to move to New Zealand at that time on a permanent basis will mean that she will
lose her OAS entitlement. Clearly, this will be the most significant impact to her OAS benefit going forward.

OAS benefits are indexed to the CPI quarterly and are subject to a clawback of 15% on the portion of net income that
exceeds a prescribed amount. The OAS pension is eligible to be paid commencing at age 65 regardless of the
recipient's employment status. If a person applies for benefits after reaching age 65, the application may be approved
retroactively to age 65 for a period of no more than one year.

As of July 2013, an individual can defer applying for OAS benefits for a maximum of five years beyond their year of
eligibility. If Emily chooses this option, delaying her application to age 68 will increase her OAS entitlement.

15 Malcolm receives the Guaranteed Income Supplement. Which of the following statements is TRUE?

Correct
The correct answer: Malcolm's GIS is reduced by $1 for every $2 of income in excess of the earnings exemption
earned in the previous year, excluding OAS benefits.
Your answer: Malcolm's GIS is reduced by $1 for every $2 of income in excess of the earnings exemption earned in
the previous year, excluding OAS benefits.
Solution:

GIS benefits are reduced by $1 for every $2 of income in excess of the earnings exemption earned in the previous year,
excluding OAS benefits. An individual receiving full OAS benefits may also receive full GIS benefits if he or she has no
other income. GIS payments will be suspended if the recipient leaves Canada for more than six months.

16 Rinna is 67 years old and has lived in Canada since she was 49 years old. She travels to her homeland,
Romania for a holiday and decides to stay there for eight months. Which of the following statements is
TRUE?

Correct
The correct answer: She is eligible for OAS benefits, but her benefits will be suspended during her last two months in
Romania and resume the month she returns to Canada.
Your answer: She is eligible for OAS benefits, but her benefits will be suspended during her last two months in
Romania and resume the month she returns to Canada.
Solution:

Rinna is eligible for partial OAS payments because she has lived in Canada for at least 10 years after the age of 18.
However, her benefits will be suspended if she is absent from Canada for more than six months (excluding the month
she left Canada) because she has less than 20 years residency. Her OAS payments will resume in the month that she
returns to Canada.

17 Assuming an OAS clawback threshold of $69,562, who would be subject to a clawback of their OAS
benefits?
https://virtualuniversity.cifp.ca/TestScore/English/Assessment/AssessmentFormalAsResult.asp 4/6
Downloaded by David Wu He (XeroZOmega@gmail.com)
 lOMoARcPSD|9611256

11/26/2018 VirtualUniversity.CIFP.ca

Correct
The correct answer: Jena, who had $64,000 in net income excluding OAS benefits of $6,540.
Your answer: Jena, who had $64,000 in net income excluding OAS benefits of $6,540.
Solution:

Jena is subject to a clawback of her OAS benefits. OAS payments are included in the calculation of an individual's net
income for purposes of the OAS clawback. Jena's net income is $70,540, calculated as ($64,000 + $6,540). As this
exceeds the OAS clawback threshold, a portion of Jena's OAS benefits will have to be repaid to the government.

18 What statement relating to the OAS program is correct?

Correct
The correct answer: A married couple can earn twice the amount of OAS benefits that a single person may earn
before the OAS payment is fully clawed back.
Your answer: A married couple can earn twice the amount of OAS benefits that a single person may earn before the
OAS payment is fully clawed back.
Solution:

In 2012, a single person can earn net income of approximately $113,000 (i.e. the income leve cut-off) before his or
her OAS benefit is fully clawed back, a married couple can earn approximately twice this amount before their cumulative
OAS payments are fully clawed back.

The Allowance provides an income-tested benefit to individuals age 60 to 64 who are spouses of OAS pensioners or are
widowed. The benefit is equivalent to the combined OAS and GIS payment.

GIS and Allowance benefits are provided by the federal government and supplemented by some provinces and
territories.

The clawback threshold is indexed annually to the change in the CPI.

19 Sonny became disabled last year and began receiving a CPP disability pension. All of the following
statements are true, EXCEPT:

Correct
The correct answer: The amount of disability benefit paid to Sonny is based entirely on his prior earnings.
Your answer: The amount of disability benefit paid to Sonny is based entirely on his prior earnings.
Solution:

The amount of the disability benefit consists of two portions: a flat rate portion and an earnings related portion equal to
75% of the retirement pension that the contributor would have received at age 65. A child of a disabled contributor may
receive a monthly pension up to age 18, and up to age 25 if she is enrolled full time in an approved educational
institution.

20 Flora, who is 64 years of age, enjoys working and sees no reason to retire prior to age 70. If she does in fact defer
collecting her CPP retirement benefits until age 70, by what percentage will her basic benefit increase relative to
Flora collecting her pension at the standard age (disregard the possibility of a post-retirement CPP benefit)?

Correct
The correct answer:

42%

Your answer:

42%

Solution:

Prior to 2011, deferring the commencement of CPP retirement benefits beyond age 65 would have increased the benefit
by 0.5% for every month the start date exceeded the pensioner's 65th birthday, up to a maximum of 30% at age 70.
This increased pension, fully indexed for inflation, would then be paid for the remainder of the pensioner’s life.

As of 2013, an individual who begins collecting benefits after age 65 will receive a monthly increase of 0.70% for each
month following his or her 65th birthday. This equates to a maximum increase of 42% assuming the individual begins
collecting benefits at age 70.

Therefore, Flora will realize an increase of 42% by deferring the collection of CPP benefits from age 65 to age 70.

https://virtualuniversity.cifp.ca/TestScore/English/Assessment/AssessmentFormalAsResult.asp 5/6
Downloaded by David Wu He (XeroZOmega@gmail.com)
 lOMoARcPSD|9611256

11/26/2018 VirtualUniversity.CIFP.ca

Close

CFP®, CERTIFIED FINANCIAL PLANNER® and are certification marks owned outside the U.S. by Financial Planning
Standards Board Ltd. (FPSB). Financial Planning Standards Council is the marks licensing authority for the CFP marks in
Canada, through agreement with FPSB.

Copyright ©2002-2018 www.CIFP.ca. All rights reserved.

Powered by 724Learning.net.

CP3 (3524600) - 11/26/2018 8:23:55 PM

https://virtualuniversity.cifp.ca/TestScore/English/Assessment/AssessmentFormalAsResult.asp 6/6
Downloaded by David Wu He (XeroZOmega@gmail.com)