Questions about freezing your credit and CPP answered on Finance Friday

On this Finance Friday Dave Schurman from FirstOntario Credit Union joined us to answer questions about freezing your credit, Canada Pension Plan and taxes.

Question 1:

Dave, our family are long time viewers of CHCH & have enjoyed your segments for quite some  time. We found something we wanted to ask you about. Apparently in the USA you can “freeze”  your credit, no one can open an account or new credit card, not even yourself until you unfreeze  it. It sounds like a good precaution but we don’t know if this is available in Canada or if you  would endorse it. Keep up the good work. –Kathryn and Franklyn from St. Catharines .

Both credit bureaus in Canada – Equifax & TransUnion have similar tools.

Fraud Alert – you can add a personal statement & phone number to  your file if worried your identity might be compromised (lost ID, wallet, purse, credit cards, phone,  you got hacked & input personal info, etc).
∙ If you apply for credit this prompts Lenders to call you before extending credit ∙ Stays on your credit report for a few years unless you request it removed 

Fraud Warning is an alert for confirmed victims of fraud/identity theft – Special statement put on  your file includes a phone number to encourage Lenders to call you before extending credit. Most  will call as Lender doesn’t want to get defrauded either. Fraud Warnings stay on file for a few years

Hello Dave, I enjoy watching your segments on CHCH. I’m turning 62 this year & I retired 7 years  ago due to a disability and I’m receiving a company pension. My condition has improved & I’m happy to say I’ve just started working again. I’m considering taking CPP early and investing it. I  understand the reduction penalty but I don’t understand the Post Retirement Benefit. Will I be  ahead if I take CPP now & invest it? My work income & pension totals $90,000, without taking  early CPP. Thanks Dave! -Anita 

Up to 65 you must contribute to CPP. Between 65-70 you choose. It will add a small additional CPP benefit for each year you work & contribute- basically adds 1/40th of the max CPP if you contribute the max.  Also CPP is taxable income, if you take at 62 it’s added to your $90K income & you’ll pay your highest tax rate on that income. So it is a double whammy to take at 62 – 22% lower benefit & you’ll pay a lot of it in income tax.