Proposed changes to our Canada Pension Plan will favor seniors who continue to work at age 60 and beyond.

To understand these changes, it helps to know the ABCs of our CPP. The maximum CPP benefit for 2009 is $10,905; adjusted for inflation annually. Your benefits are somewhat based on the years you worked and contributions into the plan.

The normal start-up age for CPP is 65. You can apply for early CPP at age 60 or delay till age 70.

You lose six per cent per year if you apply early and vice-versa.

Therefore, you'll receive only 70 per cent of your normal benefit at age 60 and 130 per cent at age 70.

Currently, you have to stop working (or have very low earnings) for two months to qualify for early CPP between the ages of 60 and 65 even though it's perfectly legal to resume working after you qualify for early CPP.

This administrative hurdle is a nuisance if you wish to receive early CPP as supplementary income while you phase into retirement.

The first proposed change will eliminate this work-interruption test effective 2012.

Currently, as soon as you are receiving CPP pension, you stop contributing into the CPP. As a result, you cannot build up your CPP as you continue to work.

The second proposed change, effective 2012, requires you to pay into the CPP if you work while receiving early CPP between the ages of 60 and 65.

This new, forced contribution increases your CPP annual pension by 1/40 of the maximum pension for each year of additional contribution.

If you collect CPP pension and continue to work at age 65 or later, further CPP contributions will be voluntary, with improved pension benefits as above.

The third proposed change increases the early CPP penalty from six per cent to 7.2 per cent annually and the late CPP bonus from six per cent to 8.4 per cent annually.

Therefore, you would receive 64 per cent of your normal pension if you opted to start at age 60 and 142 per cent if you delay till age 70. This change will be phased in over five years starting in 2012.

The final proposed change is an automatic, if minor, improvement to the pension. Your CPP pension is a black box calculation. One component is the general low-income drop out rule.

In simple terms, you work and contribute into the CPP for 47 years - from ages 18 to 65.

The more you contribute, the higher your pension. A low income year means low CPP contribution, which erodes your pension.

The general low-income drop-out rule eliminates seven of those lowest income years.

Dropping those low or nil income years pushes up your average annual contribution and your CPP pension.

The proposed change allows for 7.5 years to be eliminated in 2012 and eight years in 2014.

For more on these proposes changes, go to: http://www.fin.gc.ca/n08/data/09-051_1-eng.asp

For more CPP information, go to http://www.hrsdc.gc.ca/eng/isp/cpp/cpptoc.shtml

Since the CPP pension isn't exactly a simple calculation, current CPP pensioners might wonder if they are receiving the correct amount.

If you are unsure, The Retirement Planning Institute: http://www.rpi-ipr.com/pssa/en/cpp.cfm will audit your CPP pension for a nominal fee of $50, plus 20 per cent of retroactive pension payments, if the institute is successful.

The institute boasts that one in six audits yields increased benefits.