10.2.2 Canada Pension Plan
The Canada Pension Plan (CPP) is an earnings-related social insurance program that provides basic benefits when a contributor to the plan retires or becomes disabled. It provides three kinds of benefits:
- the retirement pension
- disability benefits (for contributors with a disability and their dependent children)
- survivor benefits (including the death benefit, the survivor's pension, and the children's benefit).
On behalf of Employment and Social Development Canada, Service Canada delivers over $62 billion in Canada Pension Plan and Old Age Security benefits annually to millions of Canadians.
The CPP retirement pension
A CPP retirement pension is a monthly benefit paid to people who have contributed to the Canada Pension Plan. The pension is designed to replace about 25 percent of a person's earnings from employment. In 2019, the average monthly payment at age 65 was $672.87, and the maximum monthly payment was $1,154.58.
Contributions to the CPP
With very few exceptions, every person in Canada over 18 who earns more than $3,500 per year must pay into the CPP or Québec Pension Plan (QPP). You and your employer each pay half of the contributions. If you are self-employed, you pay both portions.
The amount you pay is based on your employment earnings. If you are self-employed, it is based on your net business income (after expenses). You pay contributions only on your annual earnings between a minimum and a maximum level (these are called your "pensionable" earnings). The minimum level is frozen at $3,500. The maximum level is adjusted each January, based on increases in the average wage. In 2019, the maximum level was $57,400.
Retirement pension amounts
Your CPP retirement pension is based on how much, and for how long, you contributed to the CPP, or to both the CPP and the QPP. The age at which you choose to retire also affects the amount you receive. Every year, the CPP retirement pension is adjusted to rise with inflation.
You can apply for and receive a full CPP retirement pension at age 65 or receive it as early as age 60 with a reduction, or as late as age 70 with an increase.
The amount of your pension will depend on how much and for how long you have contributed to the CPP and on your age when you want your pension to start. If you take it before age 65, your pension will be reduced, by up to 36% at age 60. If you take it after age 65, your pension may be larger, by up to 42% at age 70.
The chart shows the average and maximum monthly benefits paid under the CPP as of 2020.
|Type of pension or benefit||Average amount for new beneficiaries (January 2020)||Maximum payment amount (2020)|
|Retirement pension (at age 65)||$735.21||$1,175.83|
|Post-retirement benefit (at age 65)||$8.78||$29.40|
|Post-retirement disability benefit||$505.79||$505.79|
|Survivor's pension—younger than 65||$455.20||$638.28|
|Survivor's pension—65 and older||$306.83||$705.50|
|Children of disabled CPP contributors||$255.03||$255.03|
|Children of deceased CPP contributors||$255.03||$255.03|
|Death benefit (one-time payment)||$2,491.89||$2,500.00|
|Combined survivors and retirement pension (at age 65)||$897.87||$1,175.83|
|Combined survivor's and disability benefit||$1,148.56||$1,387.66|
To find out what CPP retirement pension benefits you will qualify for, and how much you can expect to receive, visit your local Service Canada office, call 1-800-277-9914 or visit Service Canada.
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